The Philippines was deemed the most able to adopt to changes as well as tap resulting opportunities among lower middle-income countries, mainly on the back of governance reforms, according to a report of global audit, advisory and tax services firm KPMG and Oxford Economics.
The 2015 Change Readiness Index (CRI) released last month showed that the Philippines ranked 33rd overall out of 127 countries in terms of “how effectively a country’s government, private and public enterprises, people and wider civil society anticipate, prepare for, manage and respond to change and cultivate opportunity.”
The country has an overall CRI score of 0.609 in 2015, up from 0.597 in 2013.
The report explained that changes would mean “shocks such as financial and social instability and natural disasters” as well as “political and economic opportunities and risks such as technology, competition and changes in government.”
The Philippines placed 30th in enterprise capability to adopt to change with a 2015 score of 0.627 (up from 0.577 in 2013); 24th in government capability with a score of 0.613 (down from 0.638), and 39th in people and civil society capability with a score of 0.585 (up from 0.575).
The CRI’s enterprise capability pillar measured “the ability of private and state-owned organizations to manage change and grow within a dynamic economic environment.” The government capability pillar, meanwhile, covered the ability of governmental and public regulatory institutions to manage and influence change; while the people and civil society capability measured a country’s change readiness in terms of the ability of individual citizens and wider society to cope with change and respond to opportunities, the report said.
Among the enterprise capability pillar’s subcategories, the Philippines secured the highest score in the informal sector, but had the lowest in technology infrastructure. In terms of government capability, the country scored high in the government strategic planning and horizon scanning subcategory, but had a low score in regulation. As for people and civil society capability, the top scoring subcategory was gender, while technology use posted the lowest score.
The report further noted that the country “leads the lower-middle income nations” in this year’s CRI.
“The Philippines, as in 2013, is again the top ranked lower-middle income country in the CRI. It ranks 33rd in the overall index, above high-income countries such as Spain and Italy. Strong performance in the government capability pillar has been driven by effective fiscal and budgeting processes, and government strategic planning and horizon scanning,” according to the report.
It added that the country had shown “a further sign of the economic transformation” through recent credit rating upgrades.
Last Monday, the Philippines secured from Japan Credit Rating Agency Ltd. another credit-rating increase to BBB+ or a notch below A, the highest that the country had received from top global debt watchers.
The report advised its private investor-clients to “carry out more detailed risk assessments on target countries, using the CRI scores as a starting point.”
In the case of the Philippines, the report urged investors to “perform an in-depth review of the [country] (which currently scores highly on government capability) to determine whether, for example, its talent pool and infrastructure is sufficient to support a growing business.”
Ranked next to the Philippines among lower middle-income nations were Indonesia (43rd overall), Cape Verde (51st), El Salvador (54th) and Morocco (56th).
Among high-income countries, Singapore ranked the highest in the 2015 CRI, placing 1st overall. Taiwan, which ranked 23rd overall, was the top placer among upper middle-income nations; Cambodia, at 50th place, performed the best among low-income countries. Across East Asia and the Pacific, the Philippines had the 9th highest CRI ranking, following top ranked Singapore, Hong Kong (3rd overall), New Zealand (6th), Japan (15th), Australia (16th), Taiwan, Malaysia (24th), and South Korea (25th).