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

My UP Sapul friends

One of my student organizations in UP Diliman in the 80s was the UP Samahan sa Agham Pampulitika (UP Pol. Science Club). I shifted from BS Statistics to AB Political Science then AB Economics. While majoring in Economics, my minor subjects, about 4 or 5, were Pol. Science.

At a Sapul grand reunion last March hosted by Alex Gaticales. Former UP President Francisco "Dodong" Nemenzo was a Sapul alumni, he came that night, assisted by his wife, Princess Nemenzo. This family is close to me, mainly through Fidel, the oldest of the 3 kids of Princess and Dodong.

Standing from left: me, Frances Aquino, Ochie Tuazon, Marilyn Alberto, Bong Cruz, Rikki Dio, Raffy Aquino. Sitting beside Dodong is Kiko Magno. Frances is a past DAR UnderSecretary during the PNoy Aquino government. Bong is the past head of PH Overseas Labor Office (POLO) in Dubai, he's back at POEA Manila. Kiko is Prof of Pol. Science at DLSU.

Other prominent UP Sapul alumni include CPP founder Joma Sison and MNLF founder Nur Misuari. Am not proud of Joma of course. Nur, hmm, from a great Muslim warrior to a bureaucrat.

More than five years ago, in one Sapul reunion in February 2011, Eddie Vega holding my book that was published the previous month. Ed is former PH Consul in Barcelona, Spain, and now PH Ambassador to Mexico, with concurrent jurisdiction over 9 other Latin American countries -- Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Cuba, Dominican Republic.

Ed posted our photo in his fb wall and wrote this 5+ years ago,

"Fellow Sapulite Nonoy Oplas showing me his book on medical costs in PHL: his conclusion, medicine should not be subsidized by public funds. We are all responsible for our own health. In large part, I like that idea!"

Ed is a very friendly, helpful and cheerful guy. When my sister in law, a former emergency nurse in a Saudi Arabia government hospital died of MERS-CoV, Ed helped a lot, from facilitating the return of her remains from Riyadh to our province in Negros, the release of her benefit package from the hospital, and so on.

Other Sapul friends that night. From left: Ed, me, Jopay P. de Luna, Lalaine S. Stormorken, Ding de Jesus, Jim Asuncion, Ernie Urbano, Kiko Magno, Judy Sia, Gary Auxilian. Judy is a judge in CDO city while Gary is the PH consul in Saipan. Most Sapul guys are in the private sector, usually as lawyers like Jim, Ernie and Raffy.

Another reunion about 3 years ago when Da (2nd from right) came home from the US. From left: Kiko, me, Percy Abesamis, Jopay, Abet Sales, Gary Auxilian, Abet Abesamis, Jim, Da, Ding. The two Abets and Jim are doing private law practices.

Another reunion 4 years ago, I was not there. Nora Angeles (2nd from right, front) came home from Canada, she's a professor at the Univ. of British Columbia. From left, clockwise: Bong Cruz, Jun Rasul, Mel Manalaysay, Ding de Jesus, Raffy Aquino, Frances A, Nora A, Marilyn A. Jun is another POLO now based in Israel.

Society is about network and friends, aside from family and clans. Most of my friends are in the private sector, some are in government, and they have occupied or occupying high positions, like Ambassador Ed, POLOs Bong and Jun, and so on. Bong was also one of the former Commissioners of OWWA. The timely release of my sis in law's OWWA benefits was also facilitated when Bong called up the head of OWWA Bacolod City office. Raffy, Frances and Mel are doing private law practices.

See also Remembering Lean Alejandro, September 20, 2015.

Sunday, July 10, 2016

Climate Tricks 55, Paris Deal vs scientific papers debunking the AGW hypothesis

In a special interview of former COMELEC Commissioner Christian Monsod by Rappler, he will likely say -- along with Climate Change Commission (CCC) officials, Tony la Vina, Sen. Legarda, etc. -- that less rain or no rain or more rain, less flood or no flood or more flood, we should have more climate agencies, more climate meetings, and implicitly say that we should send more money to the UN, CCC, DENR, etc. so they can save the planet. 

The UN, Al Gore, WWF, Greenpeace, etc. claim of "97% scientific concensus on man-made CC" should includes themselves non-scientists (lawyers, politicians, NGO leaders, showbiz like di Caprio, etc.) and are the leading faces to "save the planet." Save from what? From less rain and no rain and more rain? From more flood and less flood and no flood? From less dogs and no dogs and more dogs?

Meanwhile the real scientists? Climatologists, geologists, physicists, meteorologists, chemists, etc.? Many if not the majority say that global warming and climate change are natural and cyclical, nature-made and not man-made. Like this, in the first half  of 2016 alone, 240 peer-reviewed papers argue that man-made or anthropogenic global warming (AGW) is not true. GW is mainly nature-made.

For 2015, 282 peer-reviewed papers say, "No, not man-made CC". 

Around 2006 or 2007, 31,487 American scientists (Yes, from the US alone, not included are scientists from Europe, Canada, Japan,...) signed this petition, including 9,029 with PhDs. Their names, universities or companies, departments, field of science, etc. are all listed there. The petition said,

"There is no convincing scientific evidence that human release of C02 or other GHGs is causing or will, in the foreseeable future, cause catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate."

Last month, I engaged in a friendly debate my physician friend, Doc Tony Leachon. I think they, some groups of physicians, are preparing another legislation to help "save the planet". Save the planet via more environmental and carbon taxes, more carbon regulations, more expensive electricity, etc. from the people?

Also last month, MBC Exec. Director Peter Perfecto tagged me and CCC Commissioner Manny de Guzman about that "97% consensus". While I belied that  claim, he never replied to my questions and comments about the global racket -- more climate junkets, climate bureaucracies, climate loans, climate trillions, etc. Consistent with the sound of silence of many warming leaders, they are not interested in climate debate. They are only interested in climate money and forever climate deception.

I told Ronald Mendoza, the new Dean of the Ateneo School of Government (ASoG) my wish that his school won't be as climate alarmist and anti-mining as it used to be when Tony la Vina was the Dean.

Finally, notice that the leaders of climate alarmism movement are also the likely leaders of anti-mining movement because mining contributes to "man-made" CC daw. 

See also:

Saturday, July 09, 2016

BWorld 70, Wind power firms corner billions of FIT money

* This is my article in BusinessWorld last Wednesday.

From an introductory price hike of 4.06 centavos/kWh of Feed In Tariff Allowance (FiT-All) in 2014, this subsidy scheme of guaranteed price for 20 years became 12.40 centavos/kWh in 2016. As more renewable energy power plants are added to the country, the cost of FiT-All will keep rising and it is safe to assume that this FiT-All might further rise to 20 centavos or more by 2017. And even consumers in Mindanao who are not participants of the Wholesale Electricity Spot Market (WESM) are paying for this.

Such is the abuse received by consumers nationwide via expensive electricity from subsidies to renewable energy (RE) companies. Last month, I wrote to the National Transmission Corporation (TransCo), a government corporation in charge of administering the FiT-All, and asked who among the RE developers received how much.

TransCo sent me a statement of cash flow, Receipts minus Disbursements = Fund Balance, and Fund Payable as of end-2015. I thanked them for the reply but that was not the information that I needed, so I called up the officer and asked why the list of who received how much was not sent. She said that they cannot release it to the public, implying confidentiality of the information. I wish that President Duterte will release that new Executive Order on Freedom of Information (FoI) very soon. The Department of Budget and Management (DBM) releases yearly data on how much government agencies received from taxpayers so why can’t TransCo release data on how much RE developers received from electricity consumers nationwide?

Last month, the Department of Energy (DoE) posted on its Web site the “List of Renewable Energy (RE) Plants with Certificate of Endorsement (CoE) to Energy Regulatory Commission (ERC) for Feed-in Tariff (FiT) Eligibility” as of June 20, 2016. My first question as to which RE companies received FiT has been answered. There are some RE developers who did not receive FiT.

By virtue of their enormity (MW capacity) compared to other RE developers, these companies are the potential main beneficiaries of expensive electricity policy provided by the RE Act of 2008 (RA 9513):

1. Burgos Wind Power Project (Phases 1 and 2) by EDC/Lopez group, 150 MW at P8.53/kWh

2. Caparispisan Wind Power Project by North Luzon RE Corp./Ayala group, 81 MW at P8.53/kWh

3. San Lorenzo Wind Power Project by Trans-Asia RE Corp./PHINMA group, 54 MW at P7.40/kWh

4. Pililla Wind Power Project by Alternergy Wind One Corp./Vince Perez, 54 MW at P7.40/kWh

5. Nabas Wind Power Project by PetroWind Energy, Inc., 36 MW at P7.40/kWh

6. Bangui Bay Wind Power Project Phase 3 by Northwind Power Development Corp./partly Ayala, 19 MW at P8.53/kWh

7. Cavite EcoZone Solar Power Project by Majestics Energy Corp., 41.3 MW at P9.68/kWh.

I only need to find out the answer to my second question: how much did other RE companies receive each? I went to the Energy Regulatory Commission (ERC) Web site and saw ERC Case No. 2015-216RC, the TransCo petition for FiT-All for 2016. The important factors and ingredients were there, so I began making my own estimates.

The FiT rates and installed capacity in MW for all RE developers already given by the DOE, I used the following factors and assumptions to construct a table of estimates.

a. Capacity factor -- derived using TransCo filings with ERC which are per technology basis.

b. Generation (MWh) -- derived from the capacity factor.

c. FiT Revenue -- FiT rate multiplied by the generation.

d. FiT Cost Recovery Revenue (FCRR) -- the amount that the RE firm got from WESM or the distribution utility (DU). This is derived using the average WESM rate per TransCo application to ERC. This amount may not be that accurate since the time of dispatch will not result to the average price.

e. FiT Differential (the basis of FiT-All) = FiT Revenue minus FCRR. For some power sources like wind plants, the calculated FiT Differential here may be under estimated since wind usually blows during off-peak hours period, and WESM prices are then below the average rate (see table).

Now these are just estimates and there could be some corrections or mistakes in the last four columns on the right, even in the capacity factor. The capacity factor is not constant or flat the whole year, some months and days are more windy than others, and some months and days are more cloudy than others and hence, affect the output of solar PV.

I wish to be corrected by TransCo if those numbers are wrong, perhaps they should release the correct numbers. Is it true that the Lopez and Ayala groups cornered nearly P5 billion from FiT in 2015 alone? The other companies like Trans-Asia/PHINMA, Alternergy, Hedcor/Aboitiz, they also enjoyed perks by several hundred millions of pesos each because of the unjust system of high, guaranteed price system under FiT.

On a related note, it is good that Mindanao does not have any of those expensive and pampered solar and wind plants that are primarily responsible for more expensive electricity in the country. Mindanao has more hydro, big hydro with no FiT and run of river hydro with small FiT of P5.90/kWh. Recently, Mindanao added more coal plants, which is the right thing to do. Stable, dispatchable, non-intermittent and cheaper coal power, that is what Mindanao and the rest of the country should have if we are to sustain fast growth. The move by the new DENR Secretary for anti-mining policy will adversely affect coal mining and coal power development in the country. This policy move should be checked and discontinued.

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

See also: 

The Kill list and drugs war

10+ murders a day since President Duterte came to office. Horrible. The dead can not defend themselves anymore if they were indeed drug pushers or addicts or innocent, patay na nga eh. I support Pres. Duterte's admin reforms in many sectors but NOT state-sponsored murders.

July 1, 14 murders; July 2, 12 murders; July 3, 19;... Utak murderers na mga pulis dito. Even if only 1 of those murdered is innocent, that's still 1 state-created injustice and murder. anak ng...

Now many people, including sensible and well-educated people are turning a blind eye or even egging the killers and encouraging them. Sipsipan na. Independent-minded NGOs, media and academics kuno, tapos biglang halleluiah to Pres. Duterte and silent to these murders. It is ok to say halleluiah to some or many of his reforms, I do that too, but NOT state-sponsored or Duterte-inspired murders.

I suspect that these supposedly independent people and are deafeningly silent on those Du30-inspired murders are lining up for some consulting work with the Du30 government, or asking for juicy positions. They cannot afford to invite the ire of the govt who can give them multi-million pesos consulting work.

The PNP, perhaps they are not in the mood or lazy to do hard investigation and gather plenty of evidence to secure conviction, so the remedy is to kill suspects. Kesyo nang-aagaw ng baril, kesyo gusto tumakas.

In the Rule of Law Index 2015 Report by the World Justice Project (WJP), the PH ranked very low in Factor 8, "Criminal Justice" compared to its neighbors in East Asia. In particular, sub-factor on Discrimination in the justice system is very low. Meaning pag may kakilala, lusot. Also low score in sub-factor on criminal investigation. Short cut, kill agad. 

Konti pa siguro mga yan na napatay, but government should not make short cuts on due process. Even assuming that 95% of those outrightly murdered are indeed drug pushers, there is still the 5% or even 1% innocent but already dead -- killed by the state. Ang mahirap dito, utak murder na madaming tao.

In the WJP's rule of law index report, SG, JP, Kor, HK have very high scores in criminal justice and hence, no need for state-sponsored murders and summary execution policy. It is the enforcement of existing laws and near-certainty of conviction and jails that reduce or prevent those criminal behaviors. 

Blackstone's formulation in criminal law is, "it is better that ten guilty persons escapes than that the one innocent suffer."

If that "only one" murdered person is known or dear to the supporters of state-sponsored murders, I don't know how they will react. More civilized Asians like SG, Korea, Japan, etc. have no state-sponsored murders policy. They have death sentence, like SG, but the victim still goes through the process, have the chance to defend himself/herself in court, process has transparency. Here, no due process, no transparency, kill agad. Very uncivilized, little or no investigation, trabahong tamad.

Meanwhile, this:

"That’s why I am not including Abu Sayyaf [activities] in criminality. You’ve never heard me say (they are) criminal(s). It is a different setup there because these are the guys who were driven to desperation... There is no sufficient semblance of governance and that is why they are pushed to the wall,” he said, adding: “Then they became radicalized.”

Anong klaseng justification yan, President Digong? The Abus ARE criminals. They are murderers, kidnappers for ransom, terrorists, killers. Get them, armed murderers, or pa simple lang because they are armed, unlike the suspected, unarmed and helpless poor people suspected of being drug addicts/pushers?

Two Canadians so far been beheaded because the ransom money the Abus demanded could not be met, and they are not criminals? Naunsa naman ni. Double standard palagi. Pag Abus and CPP-NPA, non-criminals; pag ordinary drug suspects, criminals, kill agad.

Friday, July 08, 2016

Lion Rock 20, Hong Kong's labor welfarism and rising unemployment

Another good article from Bill Stacey, former Chairman of the Lion Rock Institute (LRI) in Hong Kong. He observes that labor welfarism policies intended to protect labor actually discourages the hiring of more labor, especially the less skilled and new entrants.

The war against work
Bill Stacey

(Next Magazine, 2016/6/2, A002, Second Opinion,)

When I first arrived in Hong Kong in 1989, I had the impression of an incredibly dynamic work environment. Unemployment was negligible and workers of all kinds were in demand. Employers constantly complained that they could not keep staff as they bounced from opportunity to opportunity. People not earning enough to get by might move to a new job, but might also take on a second job. There were still families that would take on piece work in the home for extra income.

A look at the unemployment chart shows that this was a time when unemployment rates were just 1%.

All this has changed. The unemployment rate is now three times as high, but as this is only a fraction of the disaster caused by the sclerotic labor markets in many other countries, the government complacently pats itself on the back.

In reality, our labor market is increasingly stagnant and struggling to adapt to changes in the way people work and the structure of industry. A “war on work” is underway, which starting with an ideology that does not value work is prosecuted by union and academic foot soldiers who use the heavy artillery of legislative power to destroy jobs.

The first battle was over the Mandatory Provident Fund. Far from being a benefit for employees, the MPF confiscates some of their earnings and creates administrative complexity for employee and employer, leaving many a small business preferring not to take on the responsibility of employing anyone at all. Meanwhile, the MPFA’s empire-building mission has left our workers with little competitive choice to invest their hard earned retirement savings.

Minimum wage was the next attack. It was sold as protection for workers, but has simply served to eliminate jobs for less competitive workers and reduce opportunities for the young to get a step on the ladder of opportunity. It is not so much that opportunities are not available, but that small and entrepreneurial companies that offer more excitement than money can no longer get started. Minimum wage laws mandate unemployment for those whose labor is less productive.

Working hours are the new front. Although the government has dragged the process of review and consultations, we are moving toward legislation that requires overtime payments for work beyond an arbitrary number of hours. There is nothing wrong with contractual overtime payments, which can be a valuable incentive. However, the proposed government rules dramatically reduce flexibility. They require employers to keep detailed records of hours worked and make more difficult arrangements like working from home, where hours cannot be monitored. Standard working hours make life tougher for working mums, people combining work and study, and those who want flexible work arrangements.

These are new rules, but old prohibitions on work are being enforced with typical bureaucratic diligence. Occupational licensing is an old scourge protecting vested interests from competition. Who knew, until this week when we learned that a widow was prohibited from taking up her late husband’s shoe shining license, that you needed a licence to polish shoes? Every rule like this shuts down a job and an opportunity. Too many big companies are content to go along with more stringent workplace rules. If it is more expensive to hire workers and create new businesses, then there is less competition.

It is not just government that is undermining work and opportunity. The blithe indifference of some so-called localists to reducing tourists impacts job opportunities and undermines our community. There are ivory tower academics and dreamy futurists that envision a world without traditional work, where we are all guaranteed a taxpayer-financed “living wage”, and traditional work is all done by robots with artificial intelligence. This is a future without the personal autonomy and freedom that most of us want. It imposes on the working few the burden to pay for an idle many. Yet that is the future our government will create if it does not end its war on work and enterprise.

See also: 
Lion Rock 17: Photos and Discussions in Reading Club Salon 2014, November 25, 2014 

Lion Rock 18, Nick Smith as new Chairman of LRI, April 05, 2016 

Lion Rock 19, Not enough capitalism in Hong Kong, May 12, 2016