Johannesburg — SA CONTINUED to lose ground to its nearest rivals in economic competitiveness, slipping nine places to 54 out of 139 countries in the latest World Economic Forum (WEF) global competitiveness index published yesterday.

Despite the country's favourable ranking for policy and financial institutions, poor healthcare and education and high crime and corruption levels weighed down on the overall ranking.

However, SA claimed the number one spot for auditing and reporting standards.

Last year it was number two and in 2008 number four in this category. Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors, said the ranking should be a comfort for businesses, financial institutions and overseas investors.

He said that after the global financial crisis there had been more attention paid to auditing and accounting standards.

But SA scored lower in the competitiveness ranking.

"While (SA) has dropped somewhat in rank since last year, its performance has in fact remained stable and the decline reflects improvement in other countries," the report's authors said. The factors measured in the WEF report are fundamental to investment decisions. SA cannot afford to lag behind its peers in terms of competitiveness as it tries to attract foreign investment.

"SA attracts its fair share of portfolio or hot investment but we are not attracting enough fixed investment. We are falling behind our peers. That is why these rankings matter," Stanlib economist Kevin Lings said.

Friede Dowie, a director at Business Leadership SA, said SA's weaknesses need to be vigorously addressed. "We need to focus on the problem areas of education and health not only for foreign investors but for South African businesses and the broader society too. South African businesses are influenced by the same factors that influence foreign investors," Ms Dowie said.

Mr Lings said SA's problem in addressing these issues is not a lack of funding or policy direction, but an inability to implement policies. "For example, it does not help to have a great education policy if you can't get the textbooks to the schools before the first day of school."

The fact that SA lost ground to its peers is clearly illustrated by the performance of several key developing nations such as Vietnam, which shot up from 75th place to 59th, and Montenegro, which climbed 13 places to 49. Mauritius, SA's closest rival in Africa, climbed two places to 55.

"A number of attributes make SA the most competitive economy in the region (but) in order to further enhance its competitiveness it will need to address some weaknesses," the WEF said.

These weaknesses include labour market efficiency (ranked 97th), inflexible hiring and firing practices (135th) and a lack of flexibility in wage determination (131st). Another hindrance is the high costs to business of crime and violence, with SA ranked at 137th.

The effect of HIV/AIDS also remains a concern (138th) as does the quality of primary education (109th).

The rankings are calculated from publicly available data and a survey of 13500 business leaders in 139 countries. The rankings consider 12 factors, including institutions, infrastructure, macroeconomic environment, financial market development, health and primary education.

Switzerland remained in first place for the second year running while Sweden moved up two places to second place. Singapore remained in third while the US fell two places to fourth. Greece's financial problems sent it down 12 places to 83rd, the lowest in the European Union.