Sunday, April 19, 2015

Blog Stats this Month

Recently, this blog has attracted somehow high page views. From an average of about 370 pageviews a day from January to March 2015, from April 6 until today, the blog has been  getting something like 700 pageviews a day. The biggest view was the other day, 2,300+ views. This screen shot was taken 6:15 am today in Manila.



Below, traffic stats over the past 30 days including half day today. Most of the readers are from the US and Russia, The other day, there was huge traffic coming from Cote d'Voire, 1,600+ in one hour. I do not know what explains for that. What is notable is that this blog is read more by Europeans than by Asians. Maybe they are mostly fellow Filipinos who are working or studying in Europe.





To my readers, thank you. You see my bias of course, towards less government, more individual freedom, more personal and civil society responsibility, and more facts-based public policy advocacy. So long as the facts and hard data support this view, I will stay in this course. Thanks again.

May I add that there are two mirror sites of this blog.
Aside from the original http://funwithgovernment.blogspot.com/,
there are http://funwithgovernment.blogspot.sg/ and http://funwithgovernment.blogspot.ca/.

I don't know why blogger is doing these mirror sites, maybe for blog site protection. Anyway, thank you blogger.com.

Friday, April 17, 2015

Inequality 24: Inheritance, Poverty and Envy

A friend posted this meme from "US Uncut" in my fb wall and asked for my comments.  For me, here are some formula to be poor, 100% assurance.

A. Self-inflicted:

1. Do not work. Or work 1 hour then complain for 2 hours about the work until you get fired or you resign. Let the parents, siblings, other relatives bail you out.

2. Work 5-6 days a week but also drink and party 5-6 nights a week, have zero savings.

3. Work hard, save money, and spend them all in one big party, uutang pa, zero or negative savings.

Not 100% assurance but plays a big role for poverty,
B. Government-inflicted:

1. Work hard, government gets 1/3 of your monthly income, then there are many other taxes applied to the remainder, the take home pay.

2. Work hard as informal, self-employed micro-entrepreneur, then government imposes lots of permits and fees; harassment and extortion because there are not enough permits.

Another "hard work is not the answer to poverty reduction" meme. And it is wrong. The issue in this image is not hard work but coercion and slavery, absence of economic freedom.

Governments say they are the "savior" of the poor. They say, 
"If you are poor, don't worry, we give you free education, free healthcare including free PhilHealth card, free cash transfer, free condoms and pills, free housing relocation, etc.."

About inheritance. It is correct, it is the right thing to do by parents, and governments' inheritance tax or death tax, related taxes, are wrong, they should be abolished. Why?

Having kids and the desire to give them a good future is the main driver, the "demon or devil within" among many parents why they work hard and save a lot. Instead of using the money to buy 2 or 3 other houses or luxury cars, they save the money, invest it, make it grow bigger, and give the money or investments to the kids. And that is how society progress -- continuing savings, investments and innovation. And that is how we have more material wealth, like more condo/buildings and malls, more factories and trains, and so on. 

High income tax rates, having inheritance tax, are all driven by envy. Plus desire by the political and bureaucratic class to wield control over the lives of the hard working, the efficient and ambitious people. Giving money to the poor and pretending-to-be-poor is an endless alibi to confiscate more money and wealth from the hard working and creative people. The BIR or IRS or MOFs of other countries are happily implementing the philosophy and policy of envy. 

Another friend posted this meme earlier. I commented that it is a wrong illustration and that there should be equality in opportunity and there should be inequality in outcomes. The lazy and irresponsible should not have the same outcome as the industrious and ambitious.

The meme shows unequal opportunity for the two boys. A variation of opportunity may help, like instead of climbing walls ala Tarzan or Spiderman, the other boy can perhaps use or borrow movable stairs. Kailangan pa rin ng diskarte sa buhay, and only inequality of outcome will force people to be more creative.

As a former socialist,  I can emphatize with the philosophy. But I do not believe that the solution is to expropriate the capitalists and entrepreneurs. I think the better solution is to allow, even encourage workers to become capitalists and job creators themselves. Do not encourage them to become employees forever if they have the talent and skills at entrepreneurship. How?

Relax the labor laws and business taxes and bureaucracies, do not make them rigid and strict "pro-labor." If a worker is tired of moving from one employer-capitalist to another because his personal standards and wage expectations are higher than what his employers would give, then he should quit being a worker and become a start up entrepreneur. Beyond start up capital, it is human relations that determine who are the successful and failed entrepeneurs. Dapat magaling makitungo sa kapwa -- with suppliers, customers, employees, creditors, technologists, etc.

Inequality is good. It is a form of reward and punishment in society how people use their time, talent, network, ambition in life, etc. The call for forced equality is driven by envy.

Some comments at the US Uncut article:

Gini Klingman. While i do believe 'generally' with is quote, specifically, statistics show only 35% of billionaires inherited either all or some of their wealth while 65% earned it all themselves. So not quite what's represented in this quote. It would be nice for a change for both sides to just give us the facts so the public could form educated opinions for themselves. Alas, this appears to be too much to ask from our leaders.
Amos Schorr This is circle jerk nonsense designed to get Facebook likes. The poor don't deserve to be poor. The poor aren't lazy. But that doesn't mean wealthy people are bad people, or that they don't deserve what they have.

It's this combative nonsense that pits people against each other in this country. Media outlets and politicians appeal to their constituents by making the people hate each other so that THEY can gain.
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See also:

Thursday, April 16, 2015

LTO Bureaucracy 7: Cost of Annual Car Registration

This morning, I registered my car to the Land Transportation Office (LTO) for the mandatory annual vehicle registrations. This is the 3rd straight year I see this in my registration certificate -- "Sticker Not Available".


Direct cost, breakdown:

1. Motor vehicle user charge (MVUC) or vehicle registration tax, P2,000
2. Duplicate plates, P450
3. Computer fee, P169.06
4. Cost of stickers, P50
5. Legal research fund, P10.
Total, P2,679.06.

Ordinary sedans would have lower MVUC while SUVs and luxury cars would have higher MVUC. Mine is a pick up. 

On #1, this is a controversial tax, I think it  is not clear where the money goes, who or what agencies spend how much.  Tens of billions  of pesos yearly is collected from this tax alone.

#s 2 and 4 are missing. I was told to come back after 4-5 months to get them. Continuing LTO inefficiency here. 

#3, ???? There is a cost to the use of LTO computers, passed on to the motorists? But LTO gets its annual budget from our tax money. The MVUC should have covered this and other costs.
Same for #4.

Anyway, one does not go straight to the LTO for the car registration. One must get this emission certificate first.


The cost is P450. Emission test fee P370 + IT/Connectivity fee P80. Am wondering what is this "connectivity fee" and where does the money go.


One must also get a comprehensive third party liability (CTPL) insurance. I paid P600, haggled it down from the original price of P1,200+

So the total cost for a car registration is P2,680 + 450 + 600 = P3,730.
Plus fuel going to the emission test center, LTO, tips to the emission test guy, stencil guy.

In fairness to the LTO, it took me only about 40-45 minutes from the time I entered LTO Makati office to the time I got out. There is faster procedure now, little queuing. Until last year, it took me about 1:20 hour. 

Getting the emission test is longer. I went to the test center around 7:15 am, got a queuing number and was told to come back around 9am because there are many vehicles ahead of me. Them who were not accommodated the previous day, or were there before 7am. I came back 9am, was out after about 40 minutes.

LTO bureaucracy is still bad with those "Sticker not available" and "Plates not available" notes. This should not be happening. You get our money, you should deliver those permits. Plus various mandatory costs like emission tests, computerization fee, etc.

One saving grace for LTO is that it is now much faster, easier, to register our vehicles. Give credit where it is due. Thanks LTO for this improvement. 
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Tuesday, April 14, 2015

ASEAN Politics 4: Institutions and Per Capita Wealth in the Region

During the Philippine Economic Society (PES) Conference last November 2014, among the papers presented was this one.


The paper wanted to ask, why are some countries richer than the others?
Its Objective was "To know whether differences in existing political institutions in the ASEAN member states explain the differences in Per Capita GDP growth of the said member states from period 1993-2012"

Scope covers ASEAN countries excluding Myanmar and Brunei due to insufficient data from 1993-2012. 

The model used by the paper.






Results and Discussion

ü  Variations in Political Institutions explain the variations in per capita GDP among ASEAN member states
ü  The larger the Government Expenditure (per capita), the larger the GDP per Capita Growth
ü  A parliamentary republic form of government has a positive relationship with per Capita GDP Growth
ü  Negative relationship between Years in office and per Capita GDP

ü  Total seats in legislature is positively related with per Capita GDP
ü  The positive relationship between a parliamentary republic form of government and per capita GDP can be observed in Singapore

Conclusion

      Variations in political institutions across ASEAN member states explain the variation in per capita income of the said countries.
      Furthermore, this adds to the existing argument that political institutions do matter for development of countries across the globe.

Limitations of the Study

      Although the study has shown intuitive results, it can still further be improved through adding more variables to represent the political institutions of countries.
      The database used by this study offers a large pool of variables but the study only selected a few range of variables.
      Also, since the available data on GDP per capita (PPP 2011 constant prices) are only from 1993-2012, it limited the author to a 20-year time period which had not fully covered the shifts in the systems of government of the countries included in this study.

      Lastly, although the study aims to speak the results for the whole ASEAN, due to limited data available for Myanmar and Brunei Darussalam, they were not included in the study.
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My Discussions:

1. Aside from having a monarchy, Cambodia and Malaysia are also parliamentary and  it was not pointed out in the paper. The result, "parliamentary has a positive relationship with per Capita GDP Growth" can be suspect. 

2. The model is different compared to the approach used by the Fraser Institute in developing the Economic Freedom of the World (EFW) annual report, or Heritage Foundation's Economic Freedom Index (EFI) annual report, WEF's World Competitiveness Report (WCR) and other annual reports that plot economic and political freedom with economic outcomes like size of GDP, absolute and per capita.

3. For the EFW and EFI annual reports for instance, there are strong values and elaborate discussions given to rule of law -- like independence of the judiciary, protection of private property rights, enforcement of contracts, and so on. Here, there is zero mention of rule of law.

4. Nonetheless, it is a good attempt at exploring other possible explanations why some (ASEAN) countries are richer than others. 
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See also:

Energy 35: Coal Power Plant in Cadiz City, Negros Occidental

The first coal power plant in Negros island (composed of two provinces, Negros Occidental and Oriental),150 MW and costing P15.5 B, has been proposed and construction is projected to start in the 4th quarter of this year. See the interaksyon story last April 06, 2015.

I posted that report in our community fb page (6,100+ members) that same day.

I anticipated negative reactions but not immediate harsh comments. Within minutes, the harsh responses came.  Little on the  issue but pure personal  attacks.


I asked that people should produce numbers, not emotions, in tackling the issue. I showed this table for instance, that it was precisely the coal power plants in the nearby island-province of Cebu that provide additional power and electricity to Cadiz and the rest of the two Negros provinces because the Negros' only big power plant, Palinpinon geothermal (installed capacity 192 MW, dependable capacity is lower as it is an old, 32 years old power plant).


I showed other tables to keep the discussion be focused on  the issue, and yet the personal attacks continued.


Later the moderators removed and deleted the thread. Maybe they saw the ugliness of those ugly comments and instead of reminding those people, or deleting their comments, they opted to delete the whole thread.  It's good that I kept the screen shots of those low life comments.

The other day, another member of the fb group and also a friend many years back, Joe Real, posted this article with his note,
"Imagine if the coal plant begins its operations in Cadiz City. There would be a sudden jump of respiratory diseases and damaged lungs especially of children and people are left on their own to carry the heavy burden of collateral damages."

Two members mentioned me and said that I should read that article. I reminded them that I  already started a discussion on  the issue but the moderators deleted the entire thread; that I am ready for a real debate on the issue, no personal attacks. The two members who mentioned me never replied.

Another member posted images/meme of "Toxic coal pollution", "water contamination", "No clean coal", etc. I reminded him that if people in Cadiz and the rest of Negros have electricity now, they can do fb and enjoy youtube, they should be thankful of coal power plants from Cebu. Then I asked the following questions:

(1) Naga and Toledo, Cebu, host 642 MW of coal power plants (see table above) for many years now. Are these health concerns exhibited or visible in Naga and Toledo, but not exhibited in other municipalities of Cebu away from the coal plants? Or not exhibited in Negros which has zero coal power plant at the moment?

(2) Many provinces in Luzon have coal power plants that are 4x, 8x larger than the proposed coal plant in Cadiz. Are these fear of "toxic coal pollution" and "water contamination" exhibited in the provinces of Pangasinan, Bataan, Zambales, Quezon, Batangas?


(3) Lapaz, Iloilo City, currently has 164 MW coal plant operating for several years now, Are these concerns of "coal toxic pollution" and water contamination exhibited in Iloilo City? 

They are building a 2nd coal plant in Iloilo City now, 150 MW, to be operational by June 2016. Iloilo city alone will have 316 MW of coal next year then. Electric cooperatives from Iloilo, Guimaras and Antique provinces have rushed securing a power supply contract already, rather cheap at only P5/kWh. See story

(4) From this Bloomberg report, April 9, 2015:
"Japan has 43 coal power projects either under construction or planned, representing combined capacity of 21,200 megawatts," 

Are those concerns of "coal toxic pollution" and water contamination not exhibited in Japan that they are building 43 more coal plants? 

No direct answer from the anti-coal camp. Meanwhile, another report from Foreign Policy, April 08, 2015.

"coal will be the only baseload option left to power about 30 percent or more of the Japanese electricity sector, a significant uptick compared with the pre-Fukushima period...

Coal accounted for about one-quarter of Japan’s electricity before the nuclear accident. Since then, Japan has increased the share of coal to about 30 percent..." 

I recognize that there is threat to pubic health, direct or indirect, short- or long-term, from ALL sources of energy, whether they are from fossil fuels like coal or renewables. Like this threat of wind towers.


For some people, they would rather embrace more brownouts, or have more candles (which invite frequent fires and huge threat to lives and properties) or more generators (which also run on fossil fuel, cause noise and air pollution and are expensive) than accept coal power. I asked question #4 above because Japan is the most strict in public health protection in Asia and possibly in the whole planet, yet they are building more coal plants.

People should be careful not to be hoodwinked by the campaigns and blackmails of the climate alarmism camp who silently campaign for global ecological socialism. To fight poverty and create more businesses and  jobs, having cheap and stable energy sources like hydro, coal and natural gas is a must, a necessity.
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See also:
Energy Econ 8: More Intolerance by the Anti-Coal Camp, September 27, 2012 

Monday, April 13, 2015

AEC 8: Trade, Competition and Innovation in the ASEAN

November last year, I attended the Philippine Economic Society (PES) annual conference. Several panel discussions to choose  in the afternoon sessions. I think I missed this STRIDE panel  because I attended the panel on energy policy. Copy-pasting portions of this  presentation by Dr. Rafaelita Aldaba, formerly with PIDS and been Assistant Secretary at the Department of Trade and Industry (DTI).

I think many of the analytical tools and recommendations here can apply to the rest of  ASEAN and other countries.

Some useful data on R&D spending for some ASEAN countries.



Part II. Literature Review

Competition & Innovation

Early endogenous growth & IO literature: competition is detrimental to innovation, rents are major source of innovation

Opposite view: competition fosters innovation , forces firms to innovate to survive, firms escape competition from rivals 

Aghion et al (2001): inverted U-shaped relationship between competition & innovation

* Empirical studies: mixed results with more recent studies pointing to a positive relationship between competition & innovation 

Creusen et al(2006), Hopman & Rojas-Romagosa (2010): positive relationship, no evidence of inverted U 

Gorodnichenco et al (2009): negative relationship especially for firms far from frontier, no evidence of inverted U 

* Trade has a pro-competitive effect, open trade regime is a powerful instrument to discipline firms that have market power

Import discipline hypothesis: competition from imports constrains ability of firms to engage on anti-competitive activities 

Empirical work: strong evidence supporting IDH

Erdem & Tybout (2003), Tybout (2001):mark-ups decline with import competition 

Harrison (1994), Krishna & Mitra (1998), De Melo & Urata (1986), Levinsohn (1993), Warzynski (2002), Warzynski et al (2002) 

Trade & productivity: industries facing greatest tariff reduction & import competition have faster productivity growth 

Pavcnik (2002), Topalova (2003), Muendler (2002), Amite & Konings(2007), Schor (2003), Fernandes (2007), Aldaba (2010) 

* International trade affects innovation through competition 

* Aghion & Burgess (2003): liberalization encourages innovation in industries close to frontier 

* Griffith, Harrison & Simpson (2006): EU SMP product market reforms increased competition which led to an increase in R&D 

* Fernandes (2009): import competition has a positive effect on product quality upgrading 

* Bloom, Draca & V. Reenen (2010):Chinese import competition increases innovation & TFP within surviving European firms, it reduces employment & survival probabilities in low-tech firms & they exit much more rapidly than high-tech firms in response to Chinese competition




Part V. Conclusions & policy Implications

Trade liberalization affects firm innovation through competition 
q  An increase in tariffs will increase profitability & reduce competition likely result in reduced innovation, holding all else equal

* For overall manufacturing, both IV & Tobit results show that with tariff as trade indicator, trade reform has a strong positive effect on competition which leads to a significant positive impact on innovation activity 

Mixed sector, where intense trade takes place, confirms the importance of market competition as channel through which trade liberalization affects innovation

* IV results with tariffs show that tariff & PCM have a highly significant positive relationship while R&D & PCM have a significant negative relationship

      Considering the low level of R&D spending, overall innovation activity in the country, and role of competition in the relationship between international trade & innovation, maintaining effective competition is essential, market contestability important
     Increasing globalization & regional economic integration
      Government should design strategy that would ensure competition, innovation, & productivity growth of firms
      Motivations for new industrial policy
     Inclusive growth, ASEAN Economic Community  
      Transform & upgrade manufacturing – AEC opportunities & create more & better jobs
      Strengthen human capital, infrastructure, institutions
      Innovation Ecosystem to link business & academe

“ Innovations do not fall like manna from heaven. Instead, they are created by human beings……. to profit from opening up new markets….”  -- Aghion and Howitt (1999)
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See also:
AEC 4: Malaysia's MITI Presentation, March 19, 2015 
AEC 5: Aviation, Telecom, Mobile Money and Retail in the ASEAN, March 23, 2015 
AEC 6: The ACSC/ASEAN People's Forum (APF) 2015, April 07, 2015 
AEC 7: AAA Law's Forum on Post-2015 ASEAN Integration, April 09, 2015

Sunday, April 12, 2015

Singapore, LKY and the PH Archipelago

The quick development and modernization of Singapore (expelled from Malaysia August 1965) into an industrialized economy in just about two decades is indeed phenomenal. The role of former PM Lee Kuan Yew (LKY) as Singapore strongman plus the market-oriented economy it adopted were key to this fast development.


Why LKY was able to develop Singapore, compared to Marcos of the PH and Suharto of Indonesia? A friend of a friend has a witty but good explanation: LKY and Singapore (and Korea, Japan, Taiwan, HK, China) are Confucian. Marcos and Suharto were just confused. :-)

A friend posted an  article, "Lee Kuan Yew and Ferdinand Marcos, What a Difference!" (no links or source was given) and on  its opening paragraph declared,
An Australian living in the Philippines published a book titled: “The Unlucky Country. The Republic of the Philippines in the 21st Century.” The author Duncan McKenzie came up with the title as the counterpoint to “The Lucky Country” a book written in the mid-sixties that refers to Australia. In his book McKenzie explains that the Philippines is unlucky because, for starters, it is an archipelago and therefore naturally fragmented. In addition, it is a land plagued by “frequent disasters, both man-made and natural.”

If Marcos and  Suharto were confused, so is the  author of that book. We are not an "unlucky country" because we are an archipelago, prone to natural disasters.

Germany had to wage a big war in WW2, partly to have access to the bigger ocean on the west, not just the cold and smaller north sea. Tourists anywhere in the world flock to islands and countries which have beautiful beaches. In short, being an archipelago is an advantage. But it depends at different individuals. Confused people would say it is a disadvantage.

Disasters like huge or frequent volcanic eruptions, huge and frequent earthquakes, strong storms, they are fine. They are good actually. No volcanoes and earthquakes, no Philippines. The entire archipelago came from under the ocean, thanks to volcanoes and tectonic upward movements. Many decades from now, we will have a new, huge island, about as big as Luzon perhaps, slowly rising from the sea, the Benham Rise or Benham Plateau. From about 5 kms below sea level, it is now around 3 kms below sea level, or has risen by 2 kms. Volcanoes and earthquakes are great. They rock :-)

Back to LKY. It boils down to one thing -- rule of law. When he declared "no stealing", he meant that it applies to his peoples as well as to himself and his family. The law applies equally to the governed and governors, the administered and administrators. In contrast, Marcos, Suharto and other dictators had rule of men. The laws and prohibitions apply to their people but not to them and their friends. Thus, ordinary people should not steal, but they can. 

In other words, dictatorship of the law. Marcos et. al, were just dictators.
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See also: 

OFW Death, PH Embassy in Riyadh and Al Rajhi Bank

Last May 06, 2014 or almost one year ago, my sister in law, Gemma B. Oplas, a nurse at King Fahad Medical City (KFMC) in Riyadh, Kingdom of Saudi Arabia (KSA), died of MERS CoV. I wrote it here,

Two issues followed: (1) repatriation of her body back to our province in Negros Occidental, and (2) getting the benefit package that KFMC gave to  Gemma's family, my younger brother Bonifacio/Bobong and their only child, Lois.

After the mandatory body freezing + several problems with an airline, I wrote it here, Gemma's body was finally repatriated and buried the same day as its arrival in Bacolod City last September 04, 2014 or almost four months after her death.

Issue #1 is done, but issue #2 is not yet resolved until  now. I myself am confused where's the problem here.

In July or early August 2014, KFMC-MOH deposited the benefit package of the hospital for Gemma, equivalent  to three years salary + end of service award, to Al Rajhi Bank in Riyadh. Dr. Fahad Al Ateeg of KFMC wrote to Philippine Ambassador to KSA, H.E. Ezzedin H. Tago about this and the desire of the hospital to help repatriate the body.

At first, my brother sent a Special Power of Attorney (SPA) for Gemma's close friend, fellow Filipino co-worker at the hospital, Magda, to receive the amount and transfer it to the joint account of Bobong and Lois in Land Bank Bacolod branch. The SPA went through various official routes -- DFA, notary public, and KSA Embassy in Manila.

After several weeks, the feedback was that the Saudi bank or court said that they would not honor that SPA because according to KSA customs, recipients should not only be the legal and married family of Gemma but also her original family, meaning signatories should include her parents and siblings.

Several weeks more passed, it was suggested by the PH Embassy (PE) in Riyadh that it would be the recipient of the SPA, and PE will get the amount from Al Rajhi Bank (ARB) and deposit it to Bobong and Loi's joint account.

Several follow up attempts by PE to ARB, by phone calls and personal visits, Mr. Bayani of PE told my brother that ARB would not respond to their letters, they have written the bank twice. He visited the bank  and the bank manager would not even entertain  him to update him about the status of the fund.

So where could the problem rest here?
(1) ARB that refuses to release the fund, or (2) PE-Riyadh that is not insistent enough to pressure ARB to release the fund, or (3) my brother for not going to Riyadh himself to follow up  things?

If it's #3, it is indeed a big problem as it is not cheap to go to Riyadh and stay there for several days or weeks. Besides, he already issued the SPA for the PE-Riyadh.

I would like to think that it is primarily #1, and partly #2 too. But I do not want to pin blame whenever possible. Just release the fund, the family has suffered enough with the death of Gemma + delayed repatriation of her body and now delayed repatriation of her benefit package. That money is from the hospital, not from ARB or PE-Riyadh, so why can't it be released? 

ARB says in  its website that it cares for its customers and give them  instant, not even 15 minutes waiting, but instant personal finance. So why would the benefit package of a dead person take many months not to be released?


My brother is shy to write directly to Amb. Tago because DFA Bacolod that helps him advised him not to do it, they themselves will write to the Ambassador as the proper protocol. 

Aside from PE-Riyadh, who else can pressure ARB to release the fund? KSA's Central Bank or other agencies that regulate banks there?

My brother said that Mr. Duran has taken the place of Mr. Bayani in PE-Riyadh in handling the case of fund repatriation of Gemma. He is still waiting for feedback from Mr. Duran until now. No updates yet.

I should write to some officials about this case...
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See also:
MERS CoV and OFWs (May 08, 2014) -- death of Gemma
MERS-CoV and OFWs, Part 2 (August 26, 2014) -- hassles with airline in body repatriation

MERS-CoV and OFWs, Part 3 (September 04, 2014) -- final repatriation of the body, burial in Bacolod City