The next frontier of competitiveness

The ease of doing business conversation in the Philippines has, for too long, been framed as a governance story. Reduce red tape. Cut processing times. Eliminate opportunities for corruption. These are all worthy goals, for sure, and the Philippines has taken great strides of improvement. However, these are inputs, not outcomes. The outcome we should be measuring ourselves against is far more demanding: whether the Philippines is becoming more or less competitive as a destination for capital, talent, and enterprise in a rapidly shifting global economy.

That distinction matters enormously. An economy can score well on permit processing times and still be losing the competitiveness race. Rankings are lagging indicators. By the time we celebrate moving up twenty notches on a global index, the investment decisions that will shape the next decade have already been made, and made elsewhere.

COMPETITIVENESS IS ABOUT RELATIVE POSITION
National competitiveness is not an absolute standard. It is a relative one. We are not competing against our own past performance; we are competing against regional peers. Vietnam, for instance, attracted $27.6 billion in realized foreign direct investments (FDI) in 2025, its highest in five years, with manufacturing absorbing over 80% of those inflows as global supply chains continue their deliberate diversification away from China. We are competing against Indonesia, which drew $24.2 billion in FDI in 2024 alone. We are competing against Singapore, which long ago stopped playing the permit-reduction game and instead built its advantage on trust infrastructure, regulatory predictability, and the seamless movement of capital, data, and talent.

Despite a 38.5% rise in FDI inflows in 2024, the Philippines attracted only 4% of the total FDI flowing into Southeast Asia, which reached $225 billion that year. That is the context for this conversation — not whether we improved, because we did. The true question is whether we are improving fast enough, and in the right dimensions.

The uncomfortable truth is that while the Philippines has been achieving and celebrating incremental reforms, its competitors have been transforming the underlying architecture of their economies. Reducing friction at the margins is not the same as building structural advantage.

THE COST OF DOING NOTHING
Consider what low competitiveness actually costs in concrete economic outcomes.

MSMEs represent 99.6% of all business establishments in the Philippines, generate 67% of total employment, and contribute an estimated 40% of the country’s GDP. These are not marginal economic actors; they are the operating system of the Philippine economy. However, a significant portion of these businesses cannot access formal credit, cannot easily verify their financial reputation to suppliers or investors, and cannot participate in regional supply chains that increasingly require digital documentation, verifiable compliance records, and interoperable payment systems.

The drag this creates on productivity, on MSME growth, and on the depth of domestic capital markets is not a rounding error. It is a structural constraint on how fast our economy can grow.

Financial exclusion compounds the problem. Approximately 37.6 million Filipinos (roughly 33% of the adult population) remain unbanked, placing the country among the top 10 globally with the highest number of unbanked adults. And the most recent World Bank Global Findex data show that financial account ownership actually declined slightly from 51.4% in 2021 to 50.2% in 2024. This is a sobering reminder that digital payment growth and financial inclusion are not the same thing, and that progress in one does not automatically produce progress in the other.

WHAT INVESTORS AND BUSINESSES ACTUALLY LOOK FOR
When a regional headquarters decides where to locate in Southeast Asia, the checklist goes far beyond how long it takes to register a company. The real questions are more fundamental: Can capital move efficiently across borders? Is the digital infrastructure reliable? Can qualified partners and suppliers be found and verified quickly? Is the regulatory environment predictable, proportionate, and open to innovation?

These are the questions that directly shape FDI decisions, and right now, Vietnam, Malaysia, Indonesia, and Thailand are answering them more completely than the Philippines. Apple has shifted significant production of AirPods, iPads, and Apple Watches to Vietnam, with Logitech, SharkNinja, and Wyze following suit. NVIDIA has partnered with local firm FPT on a $200-million AI factory there, while also announcing advanced AI infrastructure partnerships in Malaysia. Indonesia and Thailand, despite their own economic headwinds, have secured investments at a scale the Philippines has yet to match.

This is the new Ease of Doing Business: call it EODB 2.0. And the Philippines, while closer than many realize, does not yet have complete answers to all of it. The progress is real: digital payments now account for 57.4% of total monthly retail payment volume and 59% of overall transaction value as of 2024, a remarkable leap from barely 1% in 2013. The National ID system has reached approximately 80% of the population as of late 2025, and the country climbed to 53^rd in the 2024 UN Global Cybersecurity Index, just 1.51 points shy of Tier 1 status, up from 61^st in 2020. These are not small achievements, but they remain pieces of an architecture that has not yet been fully assembled, and in competitiveness, partial assembly does not earn partial credit.

COMPETITIVENESS IS A POLICY CHOICE
The most important insight from the countries pulling ahead is that this kind of competitiveness does not happen by accident or by market forces alone. It is a policy choice and it requires government to see itself not just as a regulator or a service provider, but as a platform on which private enterprise, innovation, and investment can build.

India made a deliberate decision to treat digital payments as public infrastructure. The result: Unified Payments Interface (UPI) processed approximately 172 billion transactions in 2024 (up 46% year on year) with $2.7 trillion in value moving through the system. UPI grew from 30 million users in 2017 to 400 million by 2024. That’s financial inclusion at a national scale, not a slogan.

The UK made a deliberate decision to mandate open banking. The result: 16.5 million active user connections, 24 billion API calls, and 351 million payment transactions in 2025, a 57% year-on-year increase. Singapore made a deliberate decision to integrate digital governance into its national strategy at the highest levels of government. The results are visible in every global competitiveness ranking.

These countries understood something fundamental: reducing economic friction in the 21^st century is not about reducing lines in government offices. It is about reducing information asymmetry: across credit markets, identity systems, regulatory environments, and cross-border commerce.

That is the game we need to be playing.

A CALL TO ACTION
The Philippines has the ingredients for a genuine competitiveness transformation: a young, digitally fluent population, a growing fintech ecosystem, over 3.3 billion digital transactions processed in 2024, a diaspora that connects us to global markets, and reformers in both government and the private sector who understand what is at stake.

What we need now is the policy ambition to match.

This means treating digital identity interoperability, full picture credit frameworks, cross-border data governance, and cybersecurity standards not as technology projects, but as competitiveness infrastructure. It means measuring EODB not only by permits and processing times, but by the cost of trust, the accessibility of capital, and the ease with which Filipinos can prove their worth in formal economic systems.

Ease of doing business was never just about bureaucracy. At its core, it has always been about whether this country makes it easy (or hard) for its people and its businesses to compete, to grow, and to succeed.

Right now, too many Filipinos, and too many businesses, are still working against the grain of systems not built for them.

It is time we built better ones.

The views expressed herein are the author’s own and do not necessarily reflect the opinion of his office as well as FINEX.

Ira Paulo Pozon is senior partner at Pozon Recto Petrache and Laiz Law Offices and Chair of the Ease of Doing Business Committee at the Management Association of the Philippines and a fellow of the Institute of Corporate Directors. He holds an MBA (DLSU), JD (FEU), and LLM (University of Nottingham), and has been a fellow at the Asia Global Institute (University of Hong Kong) and the Lee Kuan Yew School of Public Policy (National University of Singapore). He was a Chevening UK Government Scholar, Confucius Institute Scholar, and alumnus of the US State Department’s International Visitor Leadership Program (IVLP).

irapaulopozon@gmail.com