THE PHILIPPINES was ranked in the bottom third among 75 economies assessed in the International Chamber of Commerce (ICC) Open Markets Index (OMI), as the country was still deemed by the international investor community to have trade restrictive measures and a protectionist regime.
Based on the third edition of the OMI, the Philippines placed 60th with a score of 2.9 out of 6. The Philippines thus fell under the “below average openness” category based on four key components.
These are observed openness to trade; trade policy; foreign direct investment (FDI) openness; and infrastructure for trade.
The Philippines was also one of only nine economies whose scores have steadily declined since 2011.
Based on data from the third edition of the OMI, the Philippines got the lowest score of 1.9 in terms of FDI openness, which reflects a country’s policy toward investment and attractiveness to foreign investors; 2 in terms of trade openness; and 3 in terms of trade enabling structure.
The Philippines’ highest score was 4.2 under the trade policy regime component, which looks at average applied tariff levels, complexity of tariff profile, non tariff barriers and efficiency of border administration.
According to the ICC’s index, Singapore and Hong Kong were the most open economies, with a score of 5.5; followed by Luxembourg (4.9); Belgium and Netherlands (4.8); Ireland, Switzerland, United Arab Emirates and Iceland (4.7) and Sweden (4.5).
Ranked as the weakest and least open economies were Sudan, which ranked 75th with a score of 1.8; Ethiopia, ranked 74th (1.9); and Bangladesh, which placed 73rd (1.9).
The OMI, which comes out every two years, was developed to measure the openness of key economies and better understand the extent to which governments are following through on their commitments to create genuinely open economies.
The ICC has been advocating for liberalized trade at both the intergovernmental and national levels.
According to the ICC, a critical aspect of liberalized trade is the extent to which individual economies, especially those heavily reliant on trade for growth, bring down barriers to trade and commerce.
ICC secretary general John Danilovich explained in the report that despite the sluggishness in the recovery of trade growth, the world economy is expected to see moderate expansion, with both gross domestic product and trade growth forecast to increase in both 2015 and 2016.
To maintain this momentum, governments must continue to open borders and bring down barriers to trade and investment.
Unfortunately, evidence points to the continued protectionism trend since the outbreak of the global financial crisis in 2008, Danilovich said.
“[The] ICC has long called for along the reduction of protectionist measures. In the ICC World Trade Agenda, we have pressed for inter alia duty-free and quota-free market access for exports from least-developed countries, the phase-out of agricultural export subsidies, and the renouncement of food export controls,” Danilovich added.
Overall, ICC said the average of the aggregate scores of the 75 economies under review has increased incrementally from 3.5 in OMI 2011 to 3.6 in OMI 2013 and 3.7 in OMI 2015. This rise suggested that the international community is successfully resisting temptations to increase protectionism.
“Despite the past progress made, countries still have much to do to improve the openness of their economies. Many of the world’s biggest economies (including the United States, Japan and France) obtain only average scores, while half of the 32 developing countries reviewed in the index rate below average,” ICC said.
“The two highest performing economies—and the only two ranked as excellent in terms of overall openness (scoring above 5.0)—are again Hong Kong and Singapore. Meanwhile, the worst performing economies (scoring below 2.0) are Pakistan, Bangladesh, Ethiopia and Sudan,” it added.