A holistic approach

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

The Philippines climbed a spot in the 2025 World Competitiveness Yearbook, taking 51st place out of 69 economies.

The country ranked 51st based on performance across four key pillars, namely economic performance, government efficiency, business efficiency and infrastructure in the report prepared by IMD World Competitiveness Center of the Switzerland-based IMD-International Institute for Management Development.

Switzerland, Singapore and Hong Kong were named the world’s most competitive economies in the 2025 IMD World Competitiveness Ranking while Canada, Germany and Luxembourg were the most improved.

The US ranked 13th, China at 16th, Malaysia at 23rd, Thailand at 30th, Japan at 35th spot and Indonesia at 40th.

In terms of the domestic economy, the Philippines was 22nd, climbing five spots; in international trade 55th, improving by three places; in terms of prices, 39th moving up by nine spots and in terms of employment, seventh, rising three places. In terms of international investments, the country ranked 45th, down by one spot.

According to the AIM-RSN Policy Center for Competitiveness, which is IMD’s partner in the Philippines, among the challenges facing the country are in terms of rekindling the country’s economic dynamism and growth trajectory, addressing inflation expectations, promoting investments in inclusive technology to boost labor productivity and empower entrepreneurship, improving education and health care to promote inclusive growth and reduce vulnerabilities and adapting to shifting global economic and geo-political dynamics.

In the same report, the Philippines’s gross domestic product of $461.5 billion was 31st on the list but its real GDP growth of 5.6 percent was third. In terms of consumer price inflation at 3.2 percent, it was 46th; in terms of unemployment rate at 3.8 percent, 23rd place; in terms of labor force of 50.7 million it placed ninth; its current account balance of negative 3.8 percent at 60th spot; stocks inward of $119 billion at 44th and flows inward at 1.4 percent of GDP at 39th place.

In economic performance, the country was at 33rd place compared to 57th in 2021, 53th place in 2022 and 40th place in both 2023 and 2024.

WCC director Arturo Bris, reacting to the 2025 result, noted that in a fragmented world, in the context of a trade war with economies protecting their own assets and investments, it is important that the private and public sector work together.

He also pointed out that strong currencies are emerging as an indicator of long-term success and at the same time, the reorganization of global trade networks is exposing how accessible countries have been acting in their best interests and consensus is revealing itself to be a good thing for economies in stark contrast to the effects of polarization.

The report also revealed that Asia performed strongly across multiple categories, with four of its economies ranking in the global top 10 for economic opportunities. But the region showed above average political differences at 56.1 percent and social inequalities at 57.9 percent. Bris emphasized that the external environment is also penalizing some Asian economies, with tariffs that have been imposed on Southeast Asian economies stamping out the benefits of their goods policies.

The country’s improved ranking is, however, still far from being a source of jubilation. Compared to its neighbors, the Philippines’ standing remains low, as it ranked 13th out of 14 economies included in the Asia-Pacific region.

The Philippines also ranked last of the five included economies in the ASEAN region.

In the business efficiency pillar, its ranking dropped from 43rd place in 2024 to 46th in 2025. In the labor market, the country’s rank fell from 32nd to 37th, and in terms of attitude and values, it also dropped from 33rd to 38th spot.

In the government efficiency pillar, it declined from 51st to 49th, while in the tax policy ranking, it slipped from 15th to 17th.

In terms of ease of doing business, the Philippines still has much room for improvement, although a number of changes have been recently introduced to create a more business-friendly environment and attract foreign investments.

Consulting firm ACCLIME noted that for the Philippines which ranked 32nd in the World Bank Ease of Doing Business in Asia and 95th globally, it approved the CREATE More Act to boost foreign investment and economic recovery. Expanding on the 2021 CREATE Act, the government introduced significant improvements to the country’s tax incentive framework, making the country a more competitive destination for global businesses.

Changes like the reduced corporate tax of 20 percent for registered business enterprises under the Enhanced Deductions Regime which aligns with the OECD’s global minimum tax requirement of 15 percent, the increase in the deductions on power expenses from 50 percent to 100 percent, the expansion of eligibility for tax incentives to foreign and local businesses replacing just export-oriented firms and the tax incentives which can now be enjoyed for up 27 years compared with the previous 17-year limit, are all designed to attract energy-intensive sectors as well as technology and manufacturing industries thus positioning the Philippines as a more competitive Southeast Asian player and promoting job creation, innovation and economic growth, it said.

Meanwhile, to address low stock trading volumes compared to more active markets like Indonesia and Thailand which are being limited by high transaction costs and limited investment options, the stock transaction tax in the Philippines has been reduced from 0.6 percent to 0.1 percent of the gross selling price or gross money in value, applying to both local and foreign stock exchanges.

The recently passed Capital Markets Efficiency Promotion Act also aimed to standardize final withholding tax on dividends which have deterred non-resident investors who have previously been discouraged by uneven tax treatment. All interest income is also now uniformly taxed at a 20 percent final rate unlike before where it was taxed at different rates while a 15 percent final capital gains tax is now imposed on net gains from the sale, exchange or transfer of shares in foreign corporations, giving them the same tax treatment as domestic shares. The documentary stamp tax on the original issuance of shares has likewise been reduced to 0.75 percent from one percent of the share’s par value, thus lowering the cost of capital formation.

When foreign investors look at the region, they immediately see Indonesia, Malaysia, Vietnam and even Thailand and compare what they have to offer to ours.

Our rules have to be competition-driven. In terms of international investments, our country has unfortunately always lagged behind our neighbors. Choosing where to locate involves a multitude of factors, all of which our government has to consider and approach holistically to make the Philippines the first choice for foreign investments. No stone should be left unturned.

For comments, e-mail at [email protected]