IT IS easy to react cynically when political leaders claim the credit for positive developments in an economy. After all, economic performance is dependent on so many variables that singling out just one or two can often be very misleading.

Earlier this month, however, when Philippine presidential spokesman Edwin Lacierda claimed that President Benigno Aquino III was the single most important reason the country had improved its international competitiveness ranking, he was making an important point.

On Sept 6, the World Economic Forum (WEF) released its annual Global Competitiveness Report showing that out of 114 countries surveyed, the Philippines had made significant gains. From 85th position in 2010, the country was rated 75th last year, rising further to 65th position this year.

The performance, said the WEF, marked the country out as having one of the most improved economies in the world. It also placed the Philippines in the top half of the rankings for the first time since the annual report’s inception in 2005. Mr Aquino took office in June 2010.

Mr Lacierda put the improvement down to Mr Aquino’s leadership by example, and “the fact that he is clearly known to the world as not susceptible to corruption”.

The WEF report seemed to agree. It noted that the most significant gains the country made this year were in the area of public institutions, where the Philippines improved by 23 notches to land at No. 94, and trust in politicians, which went up 33 places to No. 95. “The perception is that corruption and red tape are finally being addressed decisively, even though they remain pervasive,” the organisation said.

Here, of course, is where the difficulty lies.

The WEF report is made up of 110 variables, of which two-thirds are extracted from a survey of almost 14,000 executives in more than 100 countries. In other words, much of the report is based on opinion rather than fact.

And there is no way to be absolutely sure that all the respondents had the necessary hands-on comparative experience to make carefully considered assessments.

I saw this myself when working as regional manager in Singapore for the Political and Economic Risk Consultancy in the 1990s. Our regular surveys on levels of corruption and red tape in Asian countries were best seen as gauges of changing business sentiment rather than objective measures of reality.

Indeed, the results of such polls were often influenced by the sort of reports respondents were reading in the local and international media.

The administration of Mrs Gloria Arroyo, Mr Aquino’s immediate predecessor, was plagued by corruption scandals.

With a new President working from such a low base, a better ranking was almost inevitable. That said, Mr Aquino probably does deserve credit for his efforts to improve the working of the nation’s bureaucracy.

Of course, the Global Competitiveness Report also included other less subjective variables in its ranking. And in some of these, such as fiscal performance, inflation and government debt, his economic managers have also performed creditably. These achievements helped lift the country’s ranking as well.

Even so, the Philippines still trailed most of its Asean neighbours this year. Singapore was ranked No. 2 overall. Malaysia was No. 25, Thailand, No. 38; and Indonesia, No. 50. Only Vietnam and Cambodia were seen as less competitive than the Philippines.

Moreover, further improvements in the ranking will not be achieved quite so quickly. Declaring to the international business community you are serious about tackling corruption, for example, is not the same as eliminating it.

There are also other factors holding the country back. As the WEF report pointed out, “the Philippines is lagging behind its neighbours in the Association of South-east Asian Nations in terms of quality infrastructure and in particular, the quality of roads”.

Fixing these problems is not something that can be done in one or two years. And while public spending on infrastructure has increased under the new administration, the apparent inability of the President to attract foreign investment in the sector is a serious concern.

Since the President launched his public-private sector initiative in November 2010, only one project – the 1.96 billion peso (S$58 million) Daang Hari-South Luzon Expressway link – has so far been awarded.

Tellingly, several neighbouring countries have managed to increase their already significant foreign investment levels despite the uncertainties in the current global environment.

Perhaps, while continuing to work on the public-private sector initiative, the government could try to fast-track more controversial reforms such as the passage of Bills reforming excise taxes, fiscal incentives and mining policies.

The Philippines has done well so far. But the easy measures have already been taken.

(C) Singapore Press Holdings Limited