Saturday, July 30, 2016

BWorld 75, How to profit from urban congestion

* This is my 2nd article in BusinessWorld special Anniversary issue last Monday.

Worsening traffic congestion in Metro Manila and other big cities in the Philippines has led people to believe that this will negatively affect people’s health, temper, and eventually, the economy. Thus, the solution is to decongest heavily urbanized cities and spread out development and modernization to the peripheral cities and provinces.

This subject was partly tackled during the first BusinessWorld Economic Forum last July 12, 2016 during the panel discussion about succession and transition. Among the speakers were Ernesto M. Pernia, Socioeconomic Planning secretary; Kevin L. Tan, senior vice-president & head of Megaworld Lifestyle Malls, Megaworld Corporation; Bienvenido V. Tantoco III, president of Rustans Commercial Corporation; Nina D. Aguas, CEO of Insular Life; and Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corporation.

Although the focus of the discussion was about how companies prepared for smooth corporate succession, the speakers also provided a wider perspective and tackled some national issues and transition. All agreed that Metro Manila is very congested and that developments should be driven to less urban and rural areas. Mr. Tan in particular highlighted that many real estate developers are going out of Metro Manila because there are more developments in several provinces and big cities, more BPOs, other businesses.

If we look around the world, each country has one or more political and/or financial capital and these places experience congestion where the demand for certain services outpaces the supply. This happens because congestion is natural and part of human nature’s demand for socialization and interaction. It is faster and easier if the office, the kids’ school, the bank, grocery store, car repair shop, etc. are just a few kilometers away instead of dozens or hundreds of kilometers.

Let us check the degree of congestion of the Philippines compared to other ASEAN nations, and from two small, highly congested neighbors. A 50-year gap, 1964 to 2014, table is constructed. The per capita income in purchasing power parity (PPP) valuation over a 30-years gap is also shown.

What the above table shows are the following:

1. Highly-congested Singapore, Macau, and Hong Kong also have very high per capita income. There are many explanations for this and the efficiency gains of having almost everything nearby is definitely one of them. Brunei is a different case, small population but relatively big land area rich with energy resources for export, like natural gas.

2. Less-congested Cambodia, Myanmar, and Laos also have low per capita income of only $5,100 or less. Again, there are many reasons for this and the inefficiencies and inconvenience of being far from various economic units like big banks, big grocery stores, etc. should be one of those reasons.

3. The Philippines is second most congested country in the ASEAN after Singapore. Its population has more than tripled over the past 50 years.

Let us check the numbers for Metro Manila. From 636 square kilometers originally, the megacity now has a land area of 644 square kilometers (owing to reclaimed areas at the CCP-SM MOA) and a population of 12.877 million, as of the August 2015 census. Based on these numbers, its population density is 19,995 persons/sq. kms., comparable to that of Macau.

But one report says World Bank data shows that Metro Manila has a 1,300 square-kilometer land area as of 2010. Or a population density of 9,906 people per sq. km. in 2015, still higher than those in Singapore and Hong Kong.

So if congestion is natural for people, how can we optimize and benefit from the presence of many people per square kilometer of land?

ACDimatatac-301. More land reclamation. The 800 or so hectares in the CCP-SM MOA-Entertainment City have created lots of businesses and jobs for Filipinos. The planned additional reclamation projects in Manila Bay should proceed, and at a fast rate.

Aside from creating new lands in the sea, there is also a need to remove huge volume of silt, mud, and solid wastes in river beds of the Pasig, Las Piñas, and Marilao rivers that drain into Manila Bay. These smelly solid wastes cannot be brought to dumpsites where most LGUs declare a “not in my backyard” (NIMBY) policy.

2. More skyways, elevated interchanges and U-turns, tunnels. Traffic congestion is an engineering problem with engineering solutions. Such solutions should veer away from hiring more traffic officers and officials, avoid having more stoplights. Instead, officials should build more hard infrastructure that can provide service to the public and motorists 24/7 for decades to come.

3. More trains, LRT/MRT, running along C5 and C6, above ground and underground, extending north and sound, east and west, of Metro Manila. In Tokyo, Seoul, and Singapore, it is common to see multi-level train stations and shops underground. Public Private Partnership (PPP) schemes are already existing to encourage more private funding and construction of these projects.

4. More low-cost medium- and high-rise residential condos. This immediately frees up space for more urban forestry and public parks, unlike in horizontal low-cost housing. Multiple regulations and taxation by both national and local governments should also decline. These are costs that are ultimately passed on to condo unit buyers and renters, that make vertical housing less affordable to the poor and lower middle class.

People and businesses respond to incentives and disincentives. If there are many disincentives and inconvenience in taking (often multi-ride) public transportation, then more people will drive their cars or motorcycles, which contribute to heavy traffic congestion. Government taxation and regulations that distort the market for urban transportation, housing, and other services should be reduced.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is a Fellow of SEANET and President of Minimal Government Thinkers.

See also:
BWorld 72, Economic integration and disruption, July 25, 2016 
BWorld 73, Transco and the big beneficiaries of feed in tariff, July 27, 2016

BWorld 74, Pres. Duterte's anti-corruption programs and Transparency Intl., July 30, 2016

Rule of law 27, Exchanges in July 2009

I stumbled upon these exchanges seven years ago in my fb account. I think I have not uploaded this before, so here it is.

Nonoy is writing an essay, "Rule of law, lawlessness of the State, and State of the nation". Some relevant quotes: "The rules must apply to those who lay them down and those who apply and that nobody has the power to grant exceptions.” – Friedrich Hayek "
July 28, 2009 at 11:21am


Selwyn Clyde M. Alojipan Here's my contribution to your body of knowledge: "With great freedom, comes great irresponsibility."
July 28, 2009 at 11:45am

Nonoy Oplas Right! Therefore we should not allow the State to have more freedom so that it will have less irresponsibility.
July 28, 2009 at 11:47am

Selwyn Clyde M. Alojipan Level of responsibility and accountability should match the level of authority practiced by a leader of the State. It should be easy for a person of high authority to be chastised, his freedom of action curtailed, and/or removed from power if he violates the rule of law. Unfortunately, our Constitution allows any President to have almost complete freedom of action during the entire term of office. Use of power quickly expands to the limits set by the legal restraints and there are few Constitutional restraints set on a President who wants to use all the powers at his/her disposal. People should examine if they want to elect another President who can do as he or she wants under our current Constitution unless pulled down by another People Power revolt.

That's why I now prefer a Parliamentary form of government so that each citizen just elects a person in their district who should be qualified to become Prime Minister but who must also be acceptable to his fellow MPs.
July 28, 2009 at 12:48pm

Bruce Hall To make it easier to overthrow the president, we don't have to change the entire system. All we need to do is making removing the president easier. Switching to a parliamentary system is overkill. It is more change that we need to achieve the stated goal.

The biggest problem that I see is the centralization of power. I don't see how increasing the centralization by merging the legislature and executive would help.

Governments need to be more accountable to the people. We can get that by making governance more local. That's why small countries tend to be the best run -- Singapore, the Netherlands, Switzerland, Sweden. The Iloilo government should be responsible for Iloilo--for road, water, electricity, schools, police, trash, fire, etc. Then the voters will choose those candidates for local office that will really do the work. Voters are more familiar with local officials than national. Imperial Manila is so far away and out of touch--and arrogant--that it's an abstraction.
July 29, 2009 at 11:21am

Bruce Hall To uphold the rule of law we need competing power bases fighting against each other, holding each other accountable. We don't need all government power concentrated in one single body, called Parliament or Glorious Leader or whatever. The House should fight against and hold the Senate accountable, and vice versa. President v. Congress. National v. Provincial. Provincial v. Local. Local v. barangay. Voters v. all government. Just as the defense holds the prosecution accountable and as Cebu Pacific holds Philippine Airlines accountable, we need competing bodies and governments to make sure that everyone is following the law. Monopolies undermine accountability and the rule of law. Power corrupts. Absolute power corrupts absolutely. No to monopolies of any kind, government or corporate.
July 29, 2009 at 11:29am

Nonoy Oplas Thanks Bruce. Although I don't think that having various levels of government constantly checking or fighting each other will result in the supremacy of the rule of law. National governments will create laws that will weaken the provincial and the local can't fight back easily.

So we stick to the original premise: the law applies to everyone, no one is exempted, and no one can grant exemption, to the application of the law. No stealing means no stealing whether in national or local govt. or in private houses. No killing means no killing whether one is a politician or a policeman or a petty robber or a beggar. That's the rule of law.
July 29, 2009 at 2:02pm

Bruce Hall The problem becomes how do you enforce the law. After all laws are just words on a piece of paper. You need real institutions, backed up by force, driven by human passions and failures, to enforce the law. People Power is one force to hold govs accountable. Competing governments and institutions are others. Money is the most important.

If we give existing non-national governments more power, for instance over taxes, then those governments can enforce the laws against the national government, including the laws such as a constitution that limit national government's power. Since we don't want to increase taxes, we should under a constitution give to the national government very limited taxing powers and give non-national governments less limited power to tax, doing away with most of the IRA in the process. The national government uses money--the IRA and other funds--to control local. What if they never had the money in the first place? What if VAT went to directly to cities?
July 29, 2009 at 3:09pm

Nonoy Oplas One important implication of the rule of law is that the number of laws in a country or society will be as few as possible. Because laws as prohibitions and restrictions, will also apply to those who administer the law, the enforcers of the law would rather have few laws to enforce which will also restrict them. Thus, there will be few traffic rules like "no left turn, no U-turn,..." because police and govt. cars will also have to obey such rules. Most traffic problems will have engineering solutions rather than legal and bureaucratic solutions.

Rule of law states that no one is exempted and no one can grant exemption from the law, then those various subsidies will drastically be cut or abolished because those subsidies are favoring certain sectors and exempting other sectors. Less taxes to be imposed as there are less or zero subsidies needed. A strict rule of law regime can later lead to a small or limited government.
July 29, 2009 at 3:24pm

Bruce Hall Designers of governments should not expect people to follow the law just because it is the law. Human beings don't work that way. Some will follow a law out of propriety but not enough. You need real consequences for people who break the law. That means there always must be some other group with some power over the powerful. If there is a single source of power, if all the power is concentrated in one group or person, if there is a monopoly, then there will be no consequences when that group or individual violates the law. Absolute power corrupts absolutely.

Elections, if they are frequent, regular and free can be that check. However if the powerful group also controls the elections, say through a COMELEC, that check on its power is limited.

Media, popular opinion, other institutions (private, commercial, governmental) are also checks.

One way to make sure that the Rule of Law does not exist is to concentrate all power--government, commercial, moral, etc.--into one.
July 29, 2009 at 3:25pm

See also: 

Rule of Law 5: Lawless State, Corruption and Coercion, August 01, 2009

BWorld 74, Pres. Duterte's anti-corruption programs and Transparency Intl.

* This is my article in BusinessWorld Special Anniversary issue last Monday.

The Duterte administration's anti-corruption plans

Corruption takes place when a person has the power to dispense certain actions or render services that other parties needs. Voters who sell their ballots in exchange for money and politicians buying them are both engaged in electoral corruption. Similarly, procurement officers who favor certain suppliers even if others can offer the same products or services at lower prices are also committing corruption.

Elevate the scene to a city or country level, and we can see or suspect large-scale corruption in various levels. Like a cabinet secretary favoring a particular supplier of construction materials and equipment, or arms and soldier uniforms, or school buildings and textbooks, or hospital equipment and medicines, even if other suppliers can deliver those goods and services at a lower price and/or better quality, corruption occurs.

To reduce or eliminate corruption, the process of procurement and signing of contracts should be made as transparent as possible. And the possibility of prosecution and imprisonment for wrongdoing should also be made as certain as possible. Because while the punishment can be as severe like the death penalty but if the chance of being caught and prosecuted is very small, then people will remain corrupt.

During the BusinessWorld Economic Forum last July 12, 2016, Department of Finace (DoF) Secretary Carlos G. Dominguez III outlined some important anti-corruption measures of the Duterte administration. Among these are the following:

1. Reduce income tax (personal and corporate), raise the income tax exemption, all in at P1 million a year. This will reduce corruption in the payment and collection of income taxes, broaden the tax base and hence, can actually raise revenues overall.

2. Rationalize import permit papers, reduce the number of signatures, conduct random audit of shipments, and undertake certain processes outside Manila ports. This will reduce corruption at the Bureau of Customs (BoC).

3. Accelerate the Run After the Tax Evaders (RATE), Run After the Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs of the DoF. Undersecretary Gil Beltran was appointed as the anti-red tape czar of the Department tasked to cut the transaction processes at the BIR, BoC, and other agencies under the DoF.

4. Maintain transparency in all dealings — the Executive Order (EO) on Freedom of Information (FoI) that will cover the Executive Department will be signed very soon. This will encourage zero tolerance for corruption.

There are other proposals and programs to reduce corruption at the DoF and other agencies, but the above were highlighted in his speech that day.

These are good proposals. Few permits and bureaucratic signatures can lead to a leaner and smaller government. Instead of 8 or 10 directors in one bureau that require 8 or 10 signatures, make it 4 or 5 and the transaction procedures will significantly improve. The number of officials and their offices will also decline and hence, the need for taxes and fees to keep them going will also be reduced. If people have more money in their pockets because government taxation and mandatory fees have declined, that is already one form of public service. Concrete, down to earth public service.

The extent of corruption in the Philippines is captured in various international reports and studies that are reported annually. One such important report is Transparency International’s (TI) Corruption Perception Index (CPI). TI interviews thousands of expats in many countries worldwide and see their perception of corruption or absence of it in the countries where they do business.

Other selected reports are also included in a separate table by TI. For this piece, four of such reports are included in the table below. These are the (a) World Economic Forum’s (WEF) Executive Opinion Survey (EOS), (b) World Justice Project’s (WJP) Rule of Law Index (RLI), (c) Economist Intelligence Unit (EIU), and (d) IHS Global Insights (GI).

The Philippines has consistently scored only between 34 to 38 over the last four years of TI’s CPI annual reports. So out of 167 countries covered in the 2015 Report, the Philippines ranked 95th or within the lower half of the countries covered. And the Philippines’ low ranking is affirmed in its low score in the four other reports.

I am hoping that reforms initiated by the DoF and other departments of the Duterte administration will be implemented and sustained for the next six years. There will be significant improvement in the country’s corruption perception and reduction in actual practices of corruption in many government agencies, from local to national, and from the Executive to the Legislative and Judiciary.

Transparent and lean government is good. It will be beneficial for businesses and taxpayers and good for the officials and ordinary personnel in government. Trust and respect for both sides will also improve.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is the head of Minimal Government Thinkers and a SEANET Fellow.

See also:

Climate Tricks 56, Using the CHR for climate harassment

There's a new development, unprecedented so far -- having the Commission on Human Rights (CHR) -- to accuse and harass multinational firms engaged in oil, cement, coal and mining.

From The Guardian last July 27:

"In a potential landmark legal case, the Commission on Human Rights of the Philippines (CHR), a constitutional body with the power to investigate human rights violations, has sent 47 “carbon majors” including Shell, BP, Chevron, BHP Billiton and Anglo American, a 60-page document accusing them of breaching people’s fundamental rights to “life, food, water, sanitation, adequate housing, and to self determination”.

I support the CHR and its Chairman Chito Gascon, a friend, in their fight against extra judicial killings (EJKs), hundreds of these cases so far nationwide since mid-May 2016 alone. Their time and resources can easily be depleted if they go person to person cases, dead or imprisoned. 

But I can not support the CHR in this new climate harassment. 

The first round of climate extortion is by governments of developing countries, demanding $100 B a year from governments of rich countries, under the various UN FCCC annual negotiations. So this is the 2nd round of extortion, NGOs and the Climate Change Commission (CCC) that prodded the CHR ultimately to result in demand for big money from big multinationals as "climate justice." So whether we have bad El Nino (drought, less rain/no rain, rise in global and Pacific Ocean's Nino regions temperature) those multinationals should give money. Or a bad La Nina (lots of rains, lots of flooding, decline in global temp.) those multinationals should still give money. Pera-pera na lahat.

A similar situation would be Mr. X having less money and more money and people say that it is proof that he's poor, so government should send him more money and other subsidies.

I remember that last January, Chito posted about the CCC-CHR meeting. So it was the CCC that influenced the CHR to launch this HR investigation. The hypothesis "more CO2 emission = more global warming/anthropogenic climate change" is a global and UN-hyped movement. Then later via other schemes, these firms should pay huge amount of money to the "climate victims" like the thousands who died in Tacloban City in November 2013 during typhoon Haiyan (local name "Yolanda"). 

In November 1912 or 101 years before Haiyan struck Tacloban, a huge storm also struck the same city and killed some 15k people. Haiyan killed more than 8,000 people out of some 98 M people in 2013, but that storm in 1912 killed 15,000 people out of only around 7.6 M Philippine population that time. Those big multinationals in oil, mining, cement, coal were responsible for that "man-made climate crime"? 
The CCC, WWF, other anti-fossil fuel environmentalists/NGOs/UN agencies have a great grand plan at climate extortion. They use their cars too often (not walking or cycling often), they frequently jetset to nice big beautiful cities abroad (not hitching with witches and manananggals who are fossil-fuel-free), they enjoy huge beautiful buildings and hotels made of cement and steel, they enjoy their electricity 24/7 (largely coming from coal power). Then turn around and demonize the oil, cement, coal and mining companies and demand huge money from these firms to compensate for their "climate crimes". Bright, very bright scheme.

Chito replied that "the CHR, in the course of these proceedings, will not go to the extent of imposing monetary penalties... the outcome of the process will be a report on the matter."

I thanked Chito and apologized for any misunderstanding but I am referring more to the CCC, not CHR, on the money issue. Because it is not in CHR nature to demand money from the accused firms (except the case of the Marcos' HR victims during Martial  Law). But ultimately it will lead there via other channels, with the CCC leading the charge.

Meanwhile, a good chart comparing various computer models' projections of "more global  warming" vs. actual warming starting 1975. 

A paleo-climate data over the past 1,100 years. Even the first UN IPCC report in 1990 recognized this.

That chart was removed by succeeding IPCC reports. The UN and various country governments will never accept the theory of cyclical/natural/nature-made CC. It will invalidate their grand plans for global ecological central planning, the various climate rackets and junkets lined up in the coming decades or even century.

See also:  

Wednesday, July 27, 2016

BWorld 73, Transco and the big beneficiaries of feed in tariff

* This is my article in BusinessWorld last July 20, 2016.

The Philippines’ expensive electricity prices in Asia -- second only to Japan -- was highlighted once again in a paper by The Lantau Group (TLG) during the Asia Clean Energy Forum (ACEF) 2016 at the ADB last June.

Metro Manila’s residential electricity prices were even higher than those in Amsterdam, Hong Kong, and Singapore, twice than those of Hanoi and Beijing, and about three times than those of Taipei and Kuala Lumpur (see chart).

This will have negative consequences for the Philippines’ bid for industrialization. Many energy-intensive sectors and big foreign companies will put up their manufacturing plants in Vietnam, Thailand, Indonesia or Malaysia, where they enjoy cheaper and stable electricity there, then export these products to the Philippines at zero tariff because of the ASEAN Economic Community (AEC). So instead of attracting more manufacturing and higher-paying industrial jobs here, our neighboring countries will snap up those jobs instead.

The quick lesson from this reality is that we should find ways to further bring down the costs of electricity here. Identify those charges, costs, bureaucratic delays, taxes and royalties that contribute to our expensive electricity, and significantly shrink or abolish them.

Unfortunately, we are not moving towards that direction.

Instead we go the opposite, by creating new measures, new indirect taxes that contribute to even more expensive electricity via the feed in tariff (FiT) scheme for renewable energy (RE) companies, among others.

The FiT scheme as designed is very anomalous for three reasons, among others: (1) guaranteed price for 20 years, (2) initial price will be adjusted upwards yearly indexed to inflation, and (3) even consumers in Mindanao, who are not connected to the Visayas and Luzon grids, do not have Wholesale Electricity Spot Market (WESM), and suffer from frequent blackouts due to insufficient power supply for, pay for FiT.

Here are the adjusted FiT rates for 2016 and the corresponding FiT payments that electricity consumers must pay to RE companies via Transco. Wind 1 and 2 and Solar 1 and 2 refer to two tiers of FiT-eligible RE firms, the second tier is given lower rate in exchange for expanding the FiT-eligible new capacity addition (see Table 1).

Last July 6, 2016, this column attempted to quantify how much the big RE companies have cornered the FiT revenues. The next day after it was published, I wrote to the National Transmission Corporation (Transco), a government corporation in charge of administering the FiT-All, and asked: (1) if my estimates of (a) P2.63 B for EDC Burgos, (b) P1.92 B for Caparispisan, (c) P0.73 B for San Lorenzo Trans Asia, etc. are correct; (2) if my estimate of P12.2 billion total FiT revenue for 2015 is correct; and (3) what are the correct numbers if those estimates are wrong.

I mentioned in my letter/e-mail that President Duterte will soon issue an EO for FoI since these are public funds collected from electricity consumers nationwide and administered by a public entity, Transco and hence, the numbers should be made public too.

Transco replied one week after and said the following:

1. My estimates of (a) P2.63 B for EDC Burgos, (b) P1.92 B for Caparispisan, (c) P0.73 B for San Lorenzo Trans Asia, etc. are “roughly higher by 10% of what has been billed to Transco by these 3 companies in 2015.”

2. My estimates of P12.2 B FiT-All for 2015 alone “are higher than the 2016 FiT-All Application levels of Transco on the basis of the following:

a. There are RE plants in the Application that have not billed Transco in 2015. Although their generation may be in 2015, these plants have not gotten the final eligibility for FiT in 2015 (processing on going). Thus, they will bill Transco only upon completion of all necessary approvals;

b. Transco also implements one month current-one month backlog billing consistent with the REPA (Renewable Energy Payment Agreement). Thus, there are plants that have gotten their FiT eligibility much later than their Commercial Operation Date (start date for FiT eligibility) and have not become current in terms of billing by the end of the December 2015 billing period;

c. Transco estimate of FiT Revenue for 2014-2015 is about P10 B. it added that although the year has passed, it has yet to accrue all amounts pertaining to 2014-2015 since the concerned REs have yet to receive their final eligibility documents/are yet to bill Transco; and

d. What has been actually billed to the FiT-All Fund for 2014-2015 energy generation is only around P8 billion.

Thank you Transco for the reply, which allows me to construct new estimates of FiT revenues per company (see Table 2).

The 12.40 centavos/kWh FiT rate granted by ERC in February this year will soon be revised upwards because it was just a provisional order.

Forcing electricity consumers to pay more expensive electricity from new renewables is wrong. Consumer choice is compromised or killed. If people really believe that the new renewables’ costs are indeed falling and attaining grid parity with coal and natural gas, then they should support the abolition of RE law of 2008 or RA 9513. This way, RE developers can sell electricity to willing customers without any guilt or embarrassment.

Bienvenido S. Oplas, Jr. is a Fellow of SEANET and Stratbase-ADRi, and head of Minimal Government Thinkers.

See also:

Welfarism 32, On forcing restaurants to give their excess food to charities

Sen. Bam Aquino is a bright legislator but from time to time, may churn out lousy bills. Like this one. Food donation can be done voluntarily, no need for legislation and national coercion with penalties.

Good comment from Rone EbidoYee, friend of Louie:

"my resto dito sa amin sir na ganyan ang nka gawian na nila pinamimigay yung mga pagkain na sobra sa order ng customer yun bang inorder pero di nagalaw sa sobrang dami na.. at yung mga tira sa buffet table nila pinababalot nila at pinamimigay.. isang araw my reklamo sa kanila sa pamimigay daw ng kontaminadong pagkain.. na madumi daw.. na kesyo panis daw.. na halata naman na namemera lang yung nagreklamo.

binayaran ng resto yung mga nagreklamo pero nagsara na rin ito dahil sa issue na kontaminado yung pagkain nila.. minsan di mo rin masisisi kung di ipamigay ng mga resto ang left overs nila or yung mga pagkain na sobra dahil sa mga ganitong reason.. na tumutulong ka na nga pinakakain mo na sila ikaw pa masama kasi nga gusto ng ibang tao pati buhay nila gawin mong mas maganda.. ng Libre."

This is an example that giving away excess food can be done voluntarily, NO national coercion, no legislation with penalties needed. OA na. Pati micro decisions, papakialaman pa ng gobyerno? Ano kasunod, pag di mo pinamigay ang sobrang tubig mo sa banyo sa mga mahihirap, penalize by the state ka na rin? OA mga statists.

About excess buffet food, some restos do not allow take home. If they do, they make the customers sign a waiver. Pag na food poisoning sila dahil after many hours pa nila kinain yong binalot nila, mag demanda sa resto?

From the news report, it seems that all burden and costs will be on the restos, hotels, supermarkets, etc. Like the cost of transporting the excess food to charities/food banks. And if along the way, the food gets contaminated (from resto to food banks, from food banks to needy people), who will be sued and dragged to jails, most likely not the DSWD or food banks people, but the restos.

Kung canned and manufactured/uncooked food, baka pwede pa. But the Senator's target are restos with cooked food and hence, very short time (maybe 3-6 hours max) before food spoiling can occur.

Some guys cannot take contrary opinions and resort to personal insults quickly. Like this onion-skinned and near low-life counter-comment by Gus Cerdeña after my similar comments above on his wall:

"Nonoy, siempre naisip na nila yan. Common sense yan. Mas matalino sayo si Bam Aquino palagay ko. In fact, sa existing Food Donations Act, may protection ang nagdodonate. May sistema na iminumungkahi ang panukala. Alamin mo ang detalye kung gusto mo. Anong pinaglalabanan mo? Ang patunayan na mas May common sense ka? Puwes, mukhang in this case, wala.... If you want restaurants to throw away food instead of giving them to hungry people, the you're a bad, lousy person."

In my wall, all of my postings and comments are fair game. People can contradict them anytime, no need to resort to personal insults. Focus on the issue, the message, not the messenger. My main message is simple: Things that can be done voluntarily, like food donation by restos and hotels, NO need for legislation and coercion, with penalties, with new bureaucracies to monitor and enforce the new legislation. Statists are OA most of the time. Any "bright idea" they have should be legislated, should be enforced via national coercion. No room for voluntary, civil society action.

The restos decide whether to give away their excess food or throw them away if there is suspicion of any contamination (heavy coughing in front of the food by one or more customers) or saliva contamination by some children or unhygienic persons. That is why it should be voluntary NOT mandatory via legislation and national coercion. The statists are angry that their usual interventionism is contradicted as if they are the only ones who have the monopoly of truth and social concern. OA.

So this bill is bullying. The mandatory price discount of 20% given by restos (and drugstores, airlines, buslines, etc.) to (both rich and poor) senior citizens and persons with disabilities (PWDs) + VAT exemptions (nearly 30% of forced discounts) is another bullying because the cost of forced discounts cannot be credited as tax liabilities. So there will be additional costs to restos, hotels, plus raising the "war chest" vs future legal battles if some poor or pretending to be poor people (pushed by some enterprising lawyers) will sue them because the restos "gave them spoiled food."

One indicator that an idea is lousy is that it should be done via legislation and national coercion. Food donation lang, legislation pa? Many restos and hotels will voluntarily do that, it gives them good PR to the public, that they care for the poor. If they throw away excess food, that is to protect the public from eating partially-spoiled or partly-contaminated food. May buffet food, bayad na, hindi nagalaw, pero may umuubo ng ubo among the customers, spreading possible air-borne virus into the food. If the restos think this can endanger public health, better throw away the food. Now the government will criminalize the resto for that decision? Lousy.

Classical liberalism -- more individual liberty, more personal and parental responsibility, more civil society action -- is the ideological opposite of socialism and welfarism. The latter wants more state, more government, more bureaucracies. You as a person are incapable of helping your less fortunate neighbors, so the state should coerce, force and arm-twist you to help the poor via more taxes, more regulations, more fines, more imprisonment if you don't obey state orders and laws.

I hope that Sen. Kiko Pangilinan will not support this bill by his LP partymate, Sen. Bam Aquino. Keep the liberal philosophy -- liberate the people from too much state nannyism, regulations, prohibitions, penalties, bureaucratism. If people want to donate their excess to others, fine. If not, fine.

Soon, there will be new bills mandating the planting of organic agri only, mandating the donation of excess shoes and clothes to the poor, mandating that kasambahays' kids be provided education scholarship by their amos/employers -- with fines, imprisonment and harassment to violators. Statism by the socialists and state worshippers is lousy, very anti-liberal. Parang wala nang utak ang mga tao for voluntary solidarity with fellowmen, si gobyerno lang ang may utak -- utak pakialamero.

See also:
Welfarism 29: Is Poverty Government Corruption-Created or Self-Inflicted?, October 05, 2014 
Welfarism 30: Big Government and Corruption of People's Values, December 06, 2014

Welfarism 31: More CCT and Subsidy Programs Won't Solve Self-inflicted Poverty, February 12, 2022

The PH drugs war, part 2

President Duterte, I am supporting many of your economic, education, healthcare, agri, energy, etc. policies. But NOT extra judicial killings  (EJKs) by the PNP and other state agencies. Or the  lack of action by the PNP to control EJKs by civilian/vigilante criminals. STOP it, please.

Photo here that became viral, the girl's name is Jennelyn Olaires. Her murdered husband is Michael Siaron, a 30-year-old pedicab driver.

On average, nearly 10 people a day are killed here since mid-May 2016. Zero chance by the dead to defend themselves from accusations.

This "war on drugs" has become a war on human rights. There are many drug pushers and drug addicts, true, but many of these murdered people are also innocent and falsely accused.

Just legalize but regulate the use of drugs. The only things that should be criminalized are murder, stealing, destruction/burning of property, abduction, rape, deception. Many murders were committed when people are not under the influence of drugs or alcohol. Nag-sagutan lang sa parking or nagkatinginan lang ng di magana, nagbarilan or nagpaluan na. Nagselos, na-insulto, etc.
"Less than a month into his presidency, over 300 drug-related killings have been recorded. Most have been shot during police operations. Others were killed by unidentified gunmen and vigilantes."

In Baguio city alone, 9 killed in one week.

During Pres. Duterte's State of the Nation Address (SONA) last Monday, he referred to the above photo and headlined by the Inquirer:

“Eh tapos nandiyan ka nakabulagta and you are portrayed in a broadsheet na parang Mother Mary cradling the dead cadaver of Jesus Christ. Eh yan yang mga yan magda-dramahan tayo dito.”

Very insensitive, arrogant statement from a President. Digong, I can NOT support your arrogance on this.

Comments from some friends:

(1) Ted Te: "Human rights must work to uplift human dignity. But human rights cannot be used as a shield or an excuse to destroy the country --- your country and my country." - The President, The SONA, July 25, 2016.

Excuse me? The statement should have ended after "human dignity." It is the first time I have heard "human rights" being characterized as a means of destroying the country. That the Constitution itself declares, as a principle and State policy, that "(t)he State values the dignity of every human person and guarantees full respect for human rights" (Article II, sec. 11) should be enough basis to consider the second sentence as misplaced. It is, by the way, the same Constitution he swore to "preserve and defend."

(This is a personal post made because there is still freedom of expression, even for those who disagree. No attribution should be made to my official designation nor to the institution I belong to.)" 

(2) Ruben Carranza: "Extrajudicial killings -- ordering them to be carried out, carrying them out, knowingly condoning those who carry them out, deliberately failing to protect citizens from being extrajudicial killed -- those acts are human rights violations and those acts are arguably impeachable 'culpable violation of the Constitution' offenses. Neither lengthy applause nor high trust ratings can change that. In a better world, the rights of poor pedicab drivers would be protected as much as that of plundering presidents. In a just world, dead ex-dictators would be humiliated with those cardboard signs, not citizens who remain innocent until last their breath because a former prosecutor-turned-president does not in fact know how to prosecute crimes. In a better and just world, impeachment -- not change -- would be coming.

… It is  more decent to say it now, even when they face the disagreement of thousands. It is more urgent to say it now than later -- when the lives that can be saved aren't around anymore."

(3) Bernard Ong: “The Ones Who Walk Away from Omelas” belong to the minority. Most Filipinos accept the death of innocents & collateral damage as "unavoidable" in the indiscriminate War on Drugs. Some would rationalize the killings along one of these: suspects resisting arrest, drug syndicates silencing their own, unknown assailants so can't say they are linked to War on Drugs. As if it's all a statistical coincidence that bodies are dropping - some with "drug addict" placards for easier identification - at the same time as Duterte's War.

I do not associate myself anymore with most Filipinos. I stand for rule of law, humanity, common sense. But I'm not going away. Or staying quiet."

(4) Men Sta. Ana (BWorld): “In short, total prohibition is not the answer. Decriminalize if not legalize drug use. Look at the issue from a health and welfare perspective, not from the lens of criminality Fight addiction and abuse through benign means like harm reduction. This approach will also stem the violence and the human rights violations.”

(5) Boying Pimentel (Inquirer): "Presidente Duterte already plans to honor a dictator. Last week, he declared he wouldn’t mind being remembered like one.

“I will retire with the reputation of Idi Amin,” he said at the San Beda College of Law. “My paradigm is not like here in Manila … In Mindanao, people resort to killings. Why will I change what I know? It is serving the country well.”

The outrageous statement caused hardly a ripple even though Duterte essentially endorsed a thug who was a hundred times worse that the tyrant he plans to bury at the Libingan ng Mga Bayani." 

(6) Dino Subingsubing: "OK ang SONA (the contents). Sana matupad lahat. The only fly in the ointment: extra-judicial killings. The government must uphold the rule of law. Kahit sino kasi, puwedeng sakyan ang "war on drugs" para gawin ang mga katarantaduhan nila. Sabi nga ni Isaac Asimov, "Violence is the last refuge of the incompetent".

See also: 
Pol. Ideology 36: On Capitalism, Akbayan, Drugs Legalization and Toqueville, October 10, 2012 
The Kill list and drugs war, July 09, 2016

Monday, July 25, 2016

BWorld 72, Economic integration and disruption

* This is my article in BusinessWorld last July 11, 2016.

Three of the five themes of the first ever BusinessWorld Economic Forum on July 12 will be on economic integration, technological disruption, and regulation and incentives. Except for three speakers from the government (VP Leni Robredo, DoF Sec. Carlos Dominguez, NEDA Chief Ernesto Pernia, PCC Chairman Arsenio Balisacan), all the other speakers will be from the private sector.

The speakers on Integration will be Phinma President Ramon del Rosario and Sunlife President Riza Mantaring. Speakers on Disruption will be Solar Philippines’ Leandro Leviste, ABS-CBN’s Donald Patrick Lim, McDonald’s Margot Torres, and Facebook Canada’s Alfredo Tan. Speakers on Regulation and Incentives will be PCC Chairman Balisacan, SEC Chairperson Teresita Herbosa, and McKinsey’s Suraj Moraje.

This paper will track some of those themes and analyze the growth expansion and leadership disruption of leading countries in the world and Asia.

Global economic integration was hastened in 1995 with the creation of the WTO. The “normal” pace of economic expansion of many emerging and developing countries is to double GDP size per decade. So over the past 30 years, the average expansion or multiple should have been six times. But many Asian economies (except Japan) have expanded more than that.

Here are the top 10 largest economies in 2015 based on Purchasing Power Parity (PPP) valuation of GDP, then the big economies of East Asia. Their GDP size at nominal or current prices are also given. Russia has no data for 1989 and earlier years because it was still the USSR and contained countries that emerged and separated in 1990 onwards after the collapse of the Berlin Wall in November 1989 (see table).

From the above numbers, we derive the following lessons and observations.

1. Integration: A decade before the WTO creation in 1995, many Asian economies were small. Three decades after, their economies have expanded big time, thanks to their fast trade liberalization policy and global integration. Based on PPP prices, China expanded 30 times, Vietnam 13 times, India and Singapore more than 12 times, Malaysia and South Korea by 11 times, Thailand, Indonesia, and Taiwan by nearly nine to 10 times. The Philippines, for its part, has only grown more than six times.

Meanwhile, based on GDP expansion by nominal prices, China is still on top with 35 times the multiple in just three decades. It is followed by Singapore, South Korea, and Vietnam that also posted double-digit multiples. The other Asian economies (except Japan) have expanded by 8-10 times.

2. Disruption: The G7 economies used to grow quickly before and after World War II. They have led global growth and commerce for more than a century. They were the 7 biggest economies until the 1980s, as indicated by GDP at current or nominal prices.

By 1990s, G7 leadership was disrupted and by 2015, China and India have displaced Italy and Canada as the top 7 biggest economies in the world at current prices. And at PPP values, only the US, Japan, and Germany have remained in the top 7 biggest economies in 2015; the BRIC (Brazil, Russia, India, China) have displaced the UK, France, Italy and Canada.

3. Sustainability: A big question is whether the developed and emerging Asian economies including the Philippines can sustain their fast growth in the next two decades. The answer seems to be YES for the emerging East Asian economies plus India and Pakistan. And NO for developed East Asian nations except perhaps South Korea. Why?

The quick answer is population and demography. All the 10 ASEAN countries except Singapore and Brunei have big and/or fast-growing populations. More people means more producers and consumers, more entrepreneurs and workers. Raising labor productivity these days is much faster than two or three decades ago because of modern technology. One can get great speakers and trainers from around Asia or the world quick because of dynamic airline competition, or simply via online teleconference training and seminars. The important thing is that there are plenty of trainable people.

Furthermore, based also on the above numbers, these trends are emerging.

1. By PPP values, Malaysia will become a trillion-dollar economy by 2017 or 2018, the Philippines by 2019 or 2020, and Vietnam by 2024 or 2025.

2. Korea will become a $3-trillion economy (PPP values) once the north collapses and merges with the south. The collapse of East Germany and USSR in 1989-1990 was quick and generally peaceful. The same is to be expected in North Korea, perhaps within 6 years.

So long as we keep faith in the market economy and human innovation, global economic integration will result in a more prosperous, less destructive planet. And that means disruption to the old thinking that force and wars can settle disputes. Humanity is more rational than what certain sectors think.

Bienvenido S. Oplas, Jr. is a Fellow of SEANET and Stratbase-ADRi, and head of Minimal Government Thinkers.

See also:

Wednesday, July 13, 2016

Telcos, Pacquiao and China, by Dr. Jop Yap

Another nice commentary from a friend, Dr. Josef "Jop" Yap, former President of  the PH Institute for Development  Studies (PIDS) and now a UPSE faculty member. He gave me permission to post this.

The Wealthy and Popular are Above the Law

by Josef Yap
July 13, 2016

Two noteworthy events made the news today. The first is the decision by PLDT and Globe to sue the Philippine Competition Commission because of its decision to review the deal between the two telecommunication companies and San Miguel Corporation. The second event is the announcement by Bob Arum that Manny Pacquiao is going to return to the ring later this year.

Both these events show how easy it is for the rich and powerful (and popular) to show disdain for the laws of the country.

Rather than wait for the outcome of the review, the two giant telcos decided to question the legitimacy of the PCC’s authority. There is of course the issue of whether PCC’s legal mandate started before or after its Implementing Rules and Regulations were approved and implemented. But given this gray area, the telcos should have granted the institution proper respect by waiting for the results of the review. After all, if they are confident the deal is above board, they have no reason to be concerned. An imprimatur from the PCC would have only provided more credibility to the transaction.

As it stands, the action of the telcos will cast doubt on the validity of the deal. Even if the courts will side with them—and given the reputation of our legal system, it is likely they will— the PCC will still have the authority to evaluate the degree of competition in the market. If it is deemed that the existing structure is detrimental to consumer welfare, the PCC can impose appropriate measures to correct the situation. It is not farfetched that one measure would be to invalidate the deal with San Miguel.

But what the telcos have done is set the stage for transferring authority from the PCC to the courts. If the telcos prevail in this particular issue, the PCC’s authority will likely be dissipated.  This is an acid test for the future of competition in the Philippine economy.

As for Manny Pacquiao, it was bad enough he neglected his duties as Congressman. Taking a leave from the Senate in order to fight again only makes the situation much worse. Many argue that he is entitled to this privilege because he brings honor to the country. This makes one wonder if this is a legitimate reason to commit a crime. “Your honor, Juan de la Cruz, did murder his wife in cold blood but he should be exonerated because he won the Philippines’ first gold medal at the 2016 Rio Olympics.” Can this really be a valid line of defense? But this is not new in our country. The most recent prominent example is granting bail to Juan Ponce Enrile because of humanitarian reasons, which should not even be possible in the country’s legal framework.

We have argued before that it is not corruption that has been the number one malady in the Philippines. It has always been injustice. These two events show unjust our legal system and society has been.

But wait! There is good news! The Philippines just won the arbitration case against China. Justice after all exists in the world. But despite the cause for celebration, a thought keeps nagging at me. The Chinese have a proverb: “We are a peaceful people, but if someone hits us, we will hit back harder.” Could the massive reclamation projects have been triggered by the filing of the arbitration case? If—and this is a big IF—this is the reality, then the victory of the Philippines is a Pyrrhic one.

Energy 74, Mindanao business opportunities via coal plants

* This is my article in SPARK by ADRi last July 4, 2016.

The emergence of a first ever President of the Philippines coming from Mindanao has produced ample business opportunities to that big island and its many provinces in the south. After the elections last month for instance, Davao City in particular experienced huge boost in business and tourism.

Overcoming energy poverty or insufficient supply of power and electricity for the people should be among the priorities of the new government. For instance, our average electricity consumption of 672 kWh per capita in 2012 was lower than that of Indonesia, nearly ½ that of Vietnam, nearly ¼ that of Thailand, nearly 1/7 that of Malaysia and almost 1/12 that of Singapore.

There are no comparative data for 2015 so this paper makes its computation, shown in the last column in this table below.

Table 1. Electric power consumption (kWh per capita)

Sources: Columns 2-5: WB, World Development Indicators,
Columns 6-7: BP, Statistical Review of World Energy, June 2016; 
Column 8: IMF, World Economic Outlook, April 2016; 
Column 9: computation by this paper

Estimating energy poverty in Mindanao

The combined population of regions 9 to 13 plus ARMM in the census August 2015 was 24.136 million (source: Philippine Statistics Authority (PSA)). Gross electricity generation in Mindanao in 2015 was 9,282 GWh (source: DOE)

This means that average electricity consumption in Mindanao last year was only 384.6 kWh per capita. This is less than half that of the national average of 809 kWh per capita, and this may be equivalent to that of Cambodia (207 kWh per capita in 2012).

Existing capacity in Mindanao, 2015

As of 2015, Mindanao grid has a total installed capacity of 2,414 MW. The major energy sources are hydro (44%), oil-based (33%) and coal (16%). Geothermal, biomass and solar constitute the remaining 7%.

In terms of actual power generation in 2015, the 17 generating companies (gencos) and 39 distribution utilities (DUs) in Mindanao has produced and distributed 9,282 GWh of electricity, mainly coming from hydro (39%), oil-based (33%) and coal (20%). Geothermal contributed 8% while biomass and solar contribution was negligible.

Capacity addition in Mindanao, 2016-2019

The biggest addition was Therma South Inc. (TSI) of Aboitiz Power with 300 MW. Unit 1 (150 MW) started operation in September 2015 while Unit 2 (also 150 MW) began operation in January 2016.

Coming this year will be Saranggani (by Alsons), San Miguel Davao (by SMEC) and FDC (by Filinvest), all coal plants. Next year, GN Power will further add a huge coal power plant.

Table 2. Committed Power Projects in Mindanao, 2016-2019, as of May 2016

Source: DOE.

These will result in temporary power oversupply by 2017 and significantly raise the kWh per capita use in Mindanao. But such oversupply will be short-term because demand will simply adjust and rise quickly. Again, note the low per capita electricity consumption in Mindanao compared to the national average, and much lower compared to those in Vietnam, Thailand, Malaysia and other developed Asian economies.

Here are the indicative projects for Mindanao grid. Coal plants will still dominate the field. Once the Wholesale Electricity Spot Market (WESM) operates in Mindanao, it will be a dynamic market for both power producers and consumers.

Table 3. Indicative Power Projects in Mindanao, 2016-2021, as of May 2016

With these initiatives at big power addition in Mindanao, among the policy measures that needed to be put in place are the following.

One, ensure the transmission link between the Mindanao and Visayas grids soon. This will significantly complement WESM operation in Mindanao.

Two, do not reverse many coal capacity additions with anti-coal pronouncements that might possibly come from the DENR and the Climate Change Commission (CCC). Check again table 1 above, the Philippines’ coal consumption even until 2015 is small compared to the coal capacity of our neighbors in the region.

Three, renewable energy development in Mindanao should focus on hydro power, development of new ones and rehabilitation and capacity expansion of existing ones under PSALM, and less on new renewables like wind and solar that require huge FIT allowance and more expensive electricity.

The stance of the new DENR Secretary against mining has an indirect adverse impact against coal power plants. The worst that can happen is a stop in granting DENR’s environmental clearance certificate (ECC) for new coal plants while a mild version is to further bureaucratize and delay for years the granting of ECC and various environmental permits. Both actions will adversely affect power development in the country and prolong energy poverty. This should not happen.

With six years in power of the first Mindanaoan President of the Philippines, the looming finalization of peace agreement with the MILF and even with the CPP-NPA, business expansion under the ASEAN Economic Community (AEC) and the 16-nations Regional Comprehensive Economic Partnership (RCCEP), and continued destabilization in many Muslim countries in the Middle East, many big investments and businesses will be coming to Mindanao. What appears as power oversupply by 2017 can become undersupply the next year when high demand from existing and new consumers – household, commercial and industrial – will kick in.

Bienvenido S. Oplas, Jr. is a Fellow of Stratbase-ADRi, a columnist in BusinessWorld, and President of Minimal Government Thinkers.

See also:

Monday, July 11, 2016

BWorld 71, Free trade and higher income

* This is my article in BusinessWorld last Friday.

Among the benefits of free trade, besides having tariffs as low as possible, if not zero, is higher income for the people. There are several ways by which this takes place.

First, free trade expands the choices and options of the local consumers and producers in the economy, both in prices and product quality. Thus, a rice farmer will have more choices where to get his new farm tractor, harvester, and fertilizer and this greatly expands his productivity while reducing crop wastes and losses. Competing suppliers from different countries will offer as low prices and/or better quality as possible to secure more buyers.
Second, free trade creates high levels of goodwill among other countries. Allowing them to export as much as they can at zero or very low tariff rates makes many of them to open up and liberalize their imports from that country or economy. Only goods that can affect public health and safety will be barred or subjected to heavy regulations. Thus, zero or low tariff for shoes, bags and computers but not for guns, bombs, canned food, or medicines with questionable or tainted quality.

Third, free trade invites more foreign visitors and tourists because some products that are heavily taxed and are expensive in their home countries can be found cheaply or abundantly in their destinations. As a result, airlines, hotels, restaurants, malls in the economy expands significantly. Thus, in the case of Hong Kong and Singapore, they import in thousands of containers and “export” in millions or billions of shopping bags when the tourists fly back home to their country.

Here is a sample of economies which have zero or low tariff at most favored nation (MFN) treatment. We will omit discussion about non-tariff barriers (NTBs) at the moment. Three small but dynamic Asian economies lead the pack and two non-EU members, Switzerland and Norway, have lower tariff than the EU average. The Philippines’s tariff rate would approximate the rate of co-members in the ASEAN except Singapore and Brunei. While ASEAN and EU countries have zero tariffs on their co-members in their economic bloc, they impose certain tariffs for other countries outside the bloc (see Table 1).

Japan and the US have also reduced their overall tariff over the past two decades. The Philippines has joined its neighbors in the ASEAN in unilateral trade liberalization but not towards zero rate. It is a mystery why overall tariff has increased after 2006 (4.49% in 2007, 6.48% in 2008, 5.8% in 2009 and 5.62% in 2010). No data is shown in the WB database after 2010.

We now check the income of the countries listed above and added other ASEAN countries. Economies with zero or near zero tariff also have very high per capita income (See Table 2).

There are many other factors of course that explain for the high per capita income of those countries above, like having a rule of law and smaller population. Small population has forced them to open up to global trade via tariff liberalization, otherwise their small volume of consumers and producers will greatly restrict their capacity to expand their income and economic freedom.

The above are lessons for the Philippines and other countries show why pursuing free trade and unilateral liberalization towards zero tariff make a lot of sense. Expanding the economic freedom of their people to have more choices, more options where to buy and sell their various products and services is actually an end in itself.

Protectionism and nationalism are old philosophies that have served their purpose in the last century but will no longer work in the current century and beyond. Governments should learn to take a step back and ease regulation and taxation of trade.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET, both institutes are members of the Economic Freedom Network (EFN) Asia.

See also:
BWorld 64, The WTO and trade agreements, June 17, 2016 
BWorld 65, PH exports growth from 1960-2014, June 22, 2016