BWorld 413, Poverty and Duterte BBB

* My column in BusinessWorld last Thursday, February 20.

On Feb. 5, I attended the lecture by Dr. Dennis S. Mapa, National Statistician and head of the Philippine Statistics Authority (PSA), and Professor at the UP School of Statistics (UPSS). His talk was “Poverty in the Philippines: Evidence from the 2018 Official Poverty Statistics,” sponsored by the Department of Economics of the Ateneo de Manila University. I was invited by Dr. Majah Ravago who used to teach at UP School of Economics (UPSE) and recently migrated to Ateneo.

The 2018 poverty data is significant because the Family Income and Expenditure Survey (FIES) 2018 on which it was based, has a huge sample size — 180,000 households, responding to a questionnaire of 81 pages long (50 on expenditures, 24 on income including entrepreneurial activities, and seven on sociodemographics), and the average interview time is four to six hours — Wow! FIES is done every three years.

To summarize, poverty incidence among families has declined from 18% in 2015 to only 12% in 2018; poverty incidence among individuals declined from 23% in 2015 to 17% in 2018 (see Table 1).

I have observed since many years ago that poverty incidence in the country has been declining and previous poverty data would be exaggerated. Before, the poor would ride bicycles or horses, now they ride motorcycles, e-bikes, second- or third-hand cars. Before, the poor used slow mail to communicate, now they use smart phones and communicate via Facebook, Instagram, e-mail, and SMS. Before, farmers used carabaos or hand tractors to plow their field, now they use or rent rotor tractors and harvester + thresher machines that significantly reduce the time and cost of harvesting their crops.

Credit goes to continuing market competition and technological innovation and modernization in cars and mobility, consumer electronics and agriculture machinery. The pessimists of “the poor getting poorer” just fan emotional slogans that are not based on hard facts on the ground.

After Dennis’ lecture, PSA and Ateneo signed a Memorandum of Agreement (MoA) that will allow the university’s faculty, staff, students, and researchers access to the public use files (or anonymized raw data) of the various census and surveys being undertaken by the PSA. I assume that University of the Philippines School of Economics (UPSE) and other colleges will have a similar privilege soon.

This week I saw the paper by Dr. Epictetus E. Patalinghug, “Too Much and Too Fast? A Look at the Philippines’ Infrastructure Build Up Program,” UP Professor Emeritus Research Paper July 2019. Dr. Patalinghug was my teacher at UPSE in early 1980s before he transferred to teaching at the neighbour building, the UP College of Business Administration. He was also among my wedding godfathers along with another former UPSE, Prof. Ruperto Alonzo (RIP).

Among the data he presented was about these huge build-build-build (BBB) projects of the Duterte administration and the promises of early completion that do not coincide with their delayed construction (see Table 2).

  

The paper is 15 pages long, including four tables and references. The Duterte BBB team of the Department of Public Works and Highways, the Department of Transportation, the Department of Finance, the National Economic and Development Authority, etc. should read it. Dr. Patalinghug concluded his paper with this note:

“… absorptive capacity constraints has created implementation bottlenecks in the BBB program and has reduced the success rate and impact of individual projects… Given the current pace of project implementation, most of the BBB projects will be completed beyond 2022. The next administration will experience several ribbon-cutting ceremonies, as much as the current administration has experienced several ribbon-cutting ceremonies on projects initiated by the previous administration.”

Recall also the paper by another former teacher of mine at UPSE, Dr. Emmanuel de Dios, published on Feb. 10 (see https://www.bworldonline.com/waste-and-means/) where he observed that “investment during the first half of Duterte’s term has been the least efficient in producing growth. The ICOR (incremental capital-output ratio) of 4.7 for 2017-2019 is the highest it has been over the past 15 years.”

A high ICOR means high waste in public investments. Like destroying not-so-ugly roads and building new roads on the same spot and flaunting this as BBB spending.

The administration’s BBB are mostly under “hybrid PPP” schemes and hence, would require lots of tax-tax-tax and borrow-borrow-borrow. Bad policy considering that the original integrated PPP scheme would optimize private investments’ construction plus O&M later, with no need for more taxes and borrowings.

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See also:

BWorld 410, PSA, PCC and competition, February 14, 2020 

BWorld 411, COVID-19, NCDs and ENDS, February 19, 2020 

BWorld 412, Why PSALM and NEA should go, February 20, 2020

Projected electricity demand in March - Oct 2020

The projected weather phenomena starting March to October 2020 is shown below. The estimated temperature anomaly (deviation from the average) are as follows:

March-July 2018:  -0.6 to +0.5 C   (cold to hot)
March-July 2019:  +0.8 to +0.5 C  (generally hot)
March-July 2020:  +0.8 to -0.5 C.  (hot to cold)

https://i1.wp.com/www.bom.gov.au/climate/enso/monitoring/nino3_4.png
https://i1.wp.com/www.cpc.ncep.noaa.gov/products/CFSv2/imagesInd1/nino34Sea.gif

Implications for electricity demand forecasting in the Luzon grid these coming hot months -- we expect cooler weather, rainy months this year and hence, lesser power demand.

BWorld 412, Why PSALM and NEA should go

* My article in BusinessWorld last Tuesday, February 18.

Recently there was a story on the huge debt of the Power Sector Assets and Liabilities Management Corp. (PSALM) because it could not collect P59 billion from independent power producers (IPPs) and electric cooperatives (ECs). That is a big amount and PSALM continues to collect various universal charges (UC) for the various stranded costs and debts of the National Power Corp. (NPC).

The UC and PSALM were created by the EPIRA law of 2001. PSALM has three core functions: (a) privatize NPC generation and Transco transmission assets, (b) manage liabilities of NPC debts, obligations of electric coops to NEA and other agencies, and (c) administer the collection and disbursement of UC funds.

The current UC rate of nearly 38 centavos/kWh is big and UC remittances received by PSALM are big, and it petitions the ERC to avail of huge funds (see Table 1).

The four UCs components are as follows:

1. ME — a subsidy for electricity supply in small island provinces and far-flung areas.

2. SCC — excess of the contracted cost of electricity by NPC over actual selling price.

3. SD — financial obligations of NPC still unliquidated by privatization proceeds of NPC assets.

4. EC — for watershed rehabilitation and management.

PSALM is administering a huge pile of cash from us electricity consumers — P183 billion as of September 2019. Two sore thumbs sticking out here.

One, the ME subsidy for small island provinces and far away areas seem like they will go on forever when they should have been eliminated. Debureaucratize the construction of their own baseload, 24/7 power plants and just augment with big gensets running on diesel during peak hours. Then NPC-SPUG (small power utility group) can be privatized and/or eliminated as well.

Two, those old SCCs and SDs by NPC have been there since the early 1990s, and after nearly three decades they are still there and the UC rates do not seem to decline through time — Wow! PSALM, being a generation player managing and operating unprivatized NPC plants, can “sell low” power at a loss then raid the UC funds to recover its losses and appear to be financially healthy. This is lousy and creates a moral hazards problem. PSALM will have little or no incentive to hasten the privatization of the remaining NPC plants. It can become a forever bureaucracy funded by forever UC subsidies, and it can distort competition in the Philippines electricity market. PSALM should go.

On ECs, they are created by politics via Congressional franchising, monitored and even pampered by politics via the National Electrification Administration (NEA). With such high political backing, many ECs are either mismanaged and/or remain inefficient, with persistent blackouts for their franchise areas. Some also do not pay their gencos. ECs run to the NEA for loans instead of commercial banks. There are huge taxpayers subsidies given to NEA annually, mostly for sitio electrification program (SEP, see Table 2).

Around 2017, the Department of Energy identified 17 ECs that are chronic failures when it comes to providing satisfactory services to their customers — ALECO (Albay), CASURECO III (Camarines Sur), FICELCO (Catanduanes), MASELCO (Masbate), OMECO (Occidental Mindoro), ORMECO (Oriental Mindoro), and PALECO (Palawan). Other problematic ECs are PELCO (Pampanga), BASELCO (Basilan), LASURECO (Lanao), SULECO (Sulu), and ZAMCELCO (Zamboanga), DANECO (Davao del Norte).

All ECs should become corporations and depoliticized, and be registered with the Securities and Exchange Commission and not with NEA. We now have one-person corporations, so how come these big ECs cannot be corporatized? NEA as regulator-bureaucracy should go, at least its monitoring function of ECs.

Last week, I saw one article entitled “MVP’s monopoly of power and water supply.”

Fake news. There is no such thing as a “monopoly of power,” whether by MPIC or San Miguel or Ayala, etc., whether in power generation, in power distribution, or retail supply. See the list of players at the Wholesale Electricity Spot Market (WESM) for the Luzon and Visayas grids only (see Table 3).

Nationwide, including the Mindanao grid, there are a total of 155 electricity distributors: 21 DUs, 11 Ecozones, and 123 ECs. And to say there is a “monopoly of water supply” is also fake news. There are 584 water distributors nationwide.

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See also: 
BWorld 409, Inflation, land transportation, and nCoV, February 12, 2020 

BWorld 410, PSA, PCC and competition, February 14, 2020 

BWorld 411, COVID-19, NCDs and ENDS, February 19, 2020

Dr. Raul Fabella on Pres. Lincoln and Duterte

Here is another great article from Dr. Raul Fabella of UPSE. The meme here I got from the web and not part of the original article. Enjoy.

https://www.bworldonline.com/abraham-lincolns-class-hatred/

Abraham Lincoln’s class hatred

February 16, 2020 | 11:35 pm

Introspective

By Raul V. Fabella

... But not if suddenly ants acquire a class consciousness. What would happen if suddenly the worker class of ants decide that its members too should now exercise their innate but hormonally suppressed capacity to bear offspring of their own and decide to feed on, rather feed, the queen? If suddenly the forager class decides that the soldier class are having too much fun at their expense and sabotage the food train? The colony will soon die out. Not by a physical act of God but by an internal virus of class hatred.

Humans are blessed and cursed with an evolved consciousness. With this come resentment and envy — all the vices and virtues that adorn a human being. Like it or not, we are prone to class envy and even class hatred.

And human societies survive by reining in and harnessing these tendencies towards the production of social reserves. Our dams, our factories, our transport systems, they all embody our reserves. It is the brotherhood of men that rechannel these individual proclivities to productive endeavors. Unhinged, these tendencies result in social chaos and social collapse.

Apropos this rechanneling of proclivities, I am inspired by two quotations which embody my own limited understanding of how economic progress gets engendered or aborted:

“The test of government is not whether we add to the abundance of those who have much; it is whether we provide for those who have little.” — US President Franklin D. Roosevelt

“You cannot strengthen the weak by weakening the strong; you cannot help the poor by discouraging the rich; you cannot help the wage earner by pulling down the wage payer; you cannot further the brotherhood by inciting class hatred among men.” — US President Abraham Lincoln

All leaders subscribe to the equity ethic of President Roosevelt. But only a precious few subscribe to the efficiency ethic of President Lincoln. President Roosevelt’s is a commitment to the final outcome of inclusive abundance; President Lincoln’s is a commitment to an efficient path towards inclusive abundance. Lincoln’s efficient path is to rechannel not suppress the varied capabilities of different social classes towards inclusive abundance.

Class hatred is antithesis to the efficient path. Most class hating popular leaders produce economic disasters by an excess enthusiasm for the first to the exclusion of the second. Deng Xiaoping’s miraculous China attests to the wisdom of these two ethics pursued as one. Mao Zedong’s China and Nicolas Maduro’s Venezuela attest to the utter folly of the pursuit of equity without the tempering wisdom of efficiency.

It may surprise you as it did me that my first encounter with the brilliant juxtaposition of the above two quotations was not in some ponderous treatise on economic progress but in President Rodrigo Duterte’s 2016 Presidential Inaugural Address. He implied, even as he confessed ignorance of the other cannons of Economics, that these two quotations encapsulated his own innermost economic philosophy. Though more in hope than in conviction, we were reassured. Economic wisdom couldn’t be more succinctly put. In the first two years of Duterte’s presidency, he kept his promise to leave economic policy to his economic team and the economy obliged.

The third year of Duterte saw a switch in the mindset: the second ethic lost ground to the first. After the opposition Otso-Diretso was squelched in the May 2019 elections, Philippine society has been subjected to a firestorm blowing from along the Pasig River. The “hated oligarchs” has resurfaced straight from Joma Sison’s playbook. Suddenly contracts that have served the public well for decades became “onerous” and were threatened with nullification. Has Lincoln’s dreaded class hatred made a landfall? If so, the arteries of brotherhood and thus the capacity to grow our reserves now face rupture. Venezuela beckons.

In that same inaugural address, President Duterte even bound himself and his underlings to the strict observance of the rule of law and the sanctity of contracts: “My adherence to due process and the rule of law is uncompromising.”

“I order all department secretaries and heads of agencies to refrain from changing and bending the rules on government contracts, transactions and projects already approved and awaiting implementation. Changing the rules when the game is ongoing is wrong.”

This is talking the talk of the rule of law and the sanctity of contracts. Walking the walk and staying the course is another matter, but we hoped. President Widodo of Indonesia, already in his second term, stayed the course on the rule of law towards jobs creation. In the Philippines of the post May 2019 election landslide victory, the walk, if at all, is just a chicken walk. 2016 seems so long ago and so far away.

BWorld 411, COVID-19, NCDs and ENDS

* My column in BusinessWorld last February 13.

“How to make the fitting adjustment between individual independence and social control is a subject on which nearly everything remains to be done… To an ordinary man, however, his own preference… is not only a perfectly satisfactory reason, but the only one he generally has for any of his notions of morality, taste, or propriety…”

— John Stuart Mill, On Liberty (1859), Ch. 1 Introduction

As of Feb. 11, the novel coronavirus — now called COVID-19 by the World Health Organization (WHO) — has 44,000+ cases and killed 1,100+ people in China alone. The number of infected and dead people is rising every day and there is no existing proven treatment or vaccine. The nearest vaccine/s would be 12 to 18 months away because there are many processes and clinical trials needed before a new medicine or vaccine can be officially declared as safe and effective.

I checked the website of Pharmaceutical Research and Manufacturers of America (PhRMA), the biggest association of innovator pharma and biotech companies and research institutes in the world, for drugs that are undergoing various clinical trials and research, on top of existing proven medicines (see Table 1).

This should be the result of many years of virtue signalling by the WHO and various Ministry or Department of Health of many countries that the main problem in the world now are non-communicable diseases (NCDs), not infectious diseases like COVID-19. Now we see how unprepared these global and national health authorities are when the real killer diseases come.

And still the WHO and country governments continue with more regulations of products and lifestyles to “protect people from themselves,” the evolving role of a nanny state. Target products are alcohol, tobacco, electronic cigarettes, sugar, and salt/sodium. Despite the fact that anywhere in the world, people are living longer and healthier even if they have rising consumption of alcohol, tobacco, sugar/fatty food and drinks.

I checked the narrative that “more alcohol and tobacco = more sickness and deaths,” the numbers show that it does not hold water. For instance, China and Indonesia have higher smoking prevalence (SP) than the Philippines yet they have higher life expectancy than us. The US, UK, and Japan have higher SP than Thailand yet they have longer life expectancy than the latter (see Table 2).

In Congress, I saw a bill on “Non-Combustible Nicotine Delivery Systems Regulation Act of 2019” and I was surprised at the huge number of new regulations, restrictions, and prohibitions for e-cigarettes or electronic nicotine delivery systems (ENDS), electronic non-nicotine (ENNDS), heated tobacco products (HTPs) as if these are the normal tobacco, alcohol, prohibited drugs.

For example there are outright bans and prohibitions for those ENDS/HTPs: banning their sale within 500 meters from any perimeter of a school or playground; banning advertisement, promotion, and sponsorship; banning use in schools/universities, hospitals, government offices and facilities; banning users who are below 21 years old.

Then there are allowed but highly restricted acts: online trade, advertisements in retailer establishments, flavorings, designated vaping areas (DVAs), product requirements, etc.

Just recently, Congress raised the tax on those products along with regular tobacco and alcohol products. Meaning government wants more tax money from them to fund its universal healthcare (UHC) and related programs, yet government wants less use and sale of these products. Which is which?

On raising the minimum age for vaping or smoking to 21, this is more double talk. At the age of 18, the government currently believes that people are mature enough to vote and determine political leadership at local and national levels, they can drive vehicles and are mature enough not to cause injuries or deaths on the road, they can get married, and so on. Then government changes the rules because people below 21 are still immature and need to be protected from themselves.

More bans, restrictions, and taxation only encourage more corruption and smuggling. The result is more drinking, smoking, vaping, and drugs because the smuggled products are cheaper. JS Mill has warned of the dangers of more social control — government must heed this.

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See also:

BWorld 408, Power security and competition, February 11, 2020 

BWorld 409, Inflation, land transportation, and nCoV, February 12, 2020 

BWorld 410, PSA, PCC and competition, February 14, 2020

Dr. Noel de Dios on ICOR under Duterte

Here is a good and factual assessment of the build-build-build and infra spending of the Duterte administration, from Dr. Emmanuel "Noel" de Dios of UPSE. Really cool paper, enjoy.
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https://www.bworldonline.com/waste-and-means/

Waste and means

February 9, 2020 | 9:58 pm

Introspective

By Emmanuel S. de Dios

…To be clear, however, there are two benefits from investment and particularly infrastructure spending: a Keynesian and a Smithian one. Like other forms of spending, government infrastructure investment raises current GDP immediately because it employs people and creates income. But it is not really unique in this function. The economy could just as easily have been stimulated by raising take-home pay or by reducing taxes on households or firms (i.e., by stoking household consumption or private business investment, or both). This spending effect is the reason Keynes sardonically suggested it would be just as effective a stimulus if government buried bank-notes in unused mine shafts, filled these with city garbage, and invited private business to dig them up “on well-tried principles of laissez-faire.” In short, spending to stimulate the economy does not even have to be productive or prudently chosen. The real distinction — recalling Hicks — between investment and other spending stimuli is that the former is undertaken not mainly to create income today but to raise income for the future.

So, just how good has infrastructure spending been in Duterte’s first three years? Was it based on the prudent selection of projects to implement in order to yield maximal social returns in the future? Or was it motivated primarily by a need to goose the economy in the short term by any means?

No final answer can be given at this point but facts and data and casual observation give enough grounds for concern.

First, some facts. Senator Franklin Drilon’s recent exposé revealed — and the government has not really denied — that only nine out of 75 of the administration’s originally planned major projects had even started more than halfway into Duterte’s term. Understandably, though this should have been anticipated, perennial problems such as right-of-way acquisition, the technical deficit in government agencies, political lobbying, and issues in bidding and contracting reared their ugly heads. The government subsequently “improved” its reported progress simply by drawing up a new list of “flagship” projects, dropping slow-moving ones and adding “less ambitious” and “more doable” ones and some already in progress. This effectively changes both numerator and denominator. Thus, rather than resolve to remove structural obstacles to major projects, the government simply changed its priorities to avoid those obstacles. Smart move.

Still, how does this square with the sizeable increase in public infrastructure spending noted earlier? Well, if it was not flagship projects that were moving, it can only mean projects of lesser importance and lower priority were those being implemented. Indeed, in lieu of movement in “game-changing” flagship projects, the government instead touts its spending on bread-and-butter items such as roads, bridges, and irrigation systems constructed or rehabilitated. All this is well and good in creating employment and prodding the economy today, but — remembering what investment is — how much more productive of future output are they?

Some statistics. A crude but readily available measure of the efficiency of investment is the incremental capital-output ratio (ICOR), which is roughly how much of an investment buck is required for a given bang in growth. On this measure, it turns out that investment during the first half of Duterte’s term has been the least efficient in producing growth (see Table). The ICOR of 4.7 for 2017-2019 is the highest it has been over the past 15 years. This strengthens the suspicion that, at least thus far, exigency and the need to shore up short-run growth has been the driving force of infrastructure spending. Keynes not Smith has been the patron saint of Build, Build, Build.

Or then again, take some casual observation. Bonny Serrano Street in Quezon City, runs alongside Camp Aguinaldo. There has since been a lane added to it. It is a fine, concrete addition. The only problem is that no vehicle can use it, since it was simply carved out of the camp grounds and leads nowhere. One must wonder how much extra social output this infrastructure has produced since it was completed. A similar infrastructure project can be seen on the stretch of Katipunan Avenue that runs behind the UP Diliman Campus. Again, an extra southbound lane has been added and cut out from UP land. Unfortunately, except for the odd tricycle and jeepney that makes a right turn on C.P. Garcia, that nice concrete road is largely unused since it ends in an asymmetrical bottleneck on the rest of Katipunan Avenue. Actually, without meaning to sound ungrateful coming from UP, the same question may be asked regarding the whole project of concrete-paving the lightly used internal campus streets. One must ask how urgent a priority that must have been in terms of increasing future output. (I can attest its effect on scholastic performance will not be that great.) Meanwhile, heavily used roads are only periodically, partially (and badly) patched with asphalt. Such examples can be multiplied country-wide. While all these projects undoubtedly raised current income, their impact on future output must be placed in doubt.

In Smith’s words: “In every such project, though the capital is consumed by productive hands only, yet, as by the injudicious manner in which they are employed, they do not reproduce the full value of their consumption, there must always be some diminution in what would otherwise have been the productive funds of the society.”

But don’t take Adam Smith’s word for it. Listen to the opinion of a provincial mayor who at some point also saw the problem for himself when he said, “Sabi ko sa kanila hindi ko kailangan ’yung build, build, build. Do not give me that kind of shit. I want build, use, build, use, build, use.”

(E, alam din pala niya.)

Emmanuel de Dios is professor emeritus at the UP School of Economics.

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See other mentions of Dr. Noel de Dios: 
Some comedies in the recent PH high inflation rate, July 12, 2018 
Exports, FDI, Manufacturing, ICOR under Dutertenomics, October 21, 2019

BWorld 410, PSA, PCC and competition

* My column in BusinessWorld last February 11.

The Philippines continues to be among the laggards in East Asia in attracting more foreign direct investments (FDI). Data from the UN Conference on Trade and Development (UNCTAD) World Investment Report (WIR) show that our FDI inward stock, an indicator of cumulative foreign investments, was still below $90 billion in 2018 and only about 55% of that in Vietnam and Malaysia, 37% of that in Thailand. The only neighbors that we can “beat” as having lower FDI stocks are Myanmar, Cambodia, Laos, and Brunei (see Table). 

Japan is not a major destination of FDI mainly because it is a major source or exporter of investments. And an important reason for the Philippines’ low attractiveness to FDI is the Constitutional restrictions, if not prohibitions, for foreign equity in many sectors and sub-sectors of the economy.

On Jan. 29, the American Chamber of Commerce of the Philippines, Inc. (AmCham) launched the first of Legislation Discussion Series, focus on Public Sector Act (PSA) Amendment, held at its office in Makati City. The speakers were Congresswoman Sharon S. Garin (Party List — AAMBIS-OWA), author and principal sponsor of HB 78, Amending PSA; National Economic and Development Authority Assistant Secretary Carlos Bernardo O. Abad Santos, and FEF Fellow Dr. Joseph Emmanuel Angeles.

The Chairman of the AmCham Legislative Committee, John Forbes, provided a good overview on why this measure is important for the Philippine economy and why the existing law, the PSA — which was enacted in 1936 (it is 84 years old) — is a hurdle to more investment liberalization and job creation.

Ms. Garin’s bill intends to limit the term “public utilities” to only three sectors — electricity transmission, electricity distribution, and water distribution and sewerage system. Thus, two sectors — telecommunications and transportation (sea, land, air) — will be liberalized to allow more participation by foreign equity.

As a regular traveller to Negros Occidental (my home province) and Iloilo (my wife’s province) at least once a year, by plane or driving by land and RORO (roll on roll off boats), I am particularly interested to see more airline competition, at least more flights by each of the three existing airlines flying to these big islands and provinces. I am also interested to see more shipping competition among boats plying the Batangas-Mindoro or Batangas-Aklan, Manila-Iloilo routes. PSA liberalization is among the few good bills in Congress.

That same week, the Philippine Competition Commission (PCC) also organized a “Forum on Competition in Developing Countries” on Jan. 30-31 at Sofitel Philippine Plaza. I attended only Day 2 and there were two key speakers, Senator Sherwin Gatchalian, then Dr. Ioannis Kokkoris, Professor of Competition Law and Economics and Dean for International for the Faculty of Humanities and Social Sciences, Queen Mary University of London, UK.

I have discussed the speech of Mr. Gatchalian in my previous column (see https://www.bworldonline.com/power-security-and-competition/). Dr. Kokkoris’ lecture I found too general and a reiteration of what many people in the audience would probably understand and advocate. Like the advantages of a competitive market over a monopoly/oligopoly market structure.

There were five reactors to his talk and all were highly knowledgeable on competition issues: Department of Trade and Industry Undersecretary for Competitiveness and Innovation Group, Rafaelita Aldaba; World Bank Senior Economist Graciela Miralles Murciego; RCBC Executive Vice-President Lito Villanueva; Indonesia Competition Commission’s Mochammad Hendry Setyawan; and University of Hong Kong’s Professor Thomas Cheng. They all have contributed specific observations on the progress or limitations of competition in their respective areas and economies. Thanks to the PCC for organizing such a big international forum.

Of course the PCC is helpless in implementing competition in sectors where government itself is the creator of monopolies and oligopolies via Congressional franchise, agency franchise, or local government units (LGUs) franchise. For example, the National Grid Corporation of the Philippines (NGCP) is the only national monopoly in the country and it was created by a Congress franchise. Airline routes are given by Civil Aeronautics Board, shipping routes are given by the Maritime Industry Authority (better known as Marina), busline or jeepney routes are given by the Land Transportation Franchising and Regulatory Board, tricycle routes are given by local government units.

A weird thing in the country now is the insistence by the Department of Health (DoH) to impose another round of drug price controls. Price and brand competition is healthy for the companies, patients, hospitals, and physicians. People are given choices whether to buy more expensive but well-known and effective brands or cheaper but lesser well-known brands and generics.

Forcing price controls — removing the higher prices for certain brands — will narrow the choices and competition to medium- to lower-price ranges. Then better-known disease-killer brands will be discouraged from selling while those that are already selling cheap will be forced to sell even cheaper and face possible bankruptcy.

Competition is better done by sellers as they receive price signals from the public, not by government bureaucracies and politicians. What products or brands to patronize are better done by the consumers, patients and their healthcare providers, not by government bureaucracies.

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See also:

BWorld 407, NCoV, IPR and WHO, February 10, 2020 

BWorld 408, Power security and competition, February 11, 2020 

BWorld 409, Inflation, land transportation, and nCoV, February 12, 2020

Welfarism 35, Healthcare is not personal/parental responsibility, only state responsibility

The most socialistic sectors in society, that their services are not individual or parental or civil society responsibility but only state responsibility, are (1) education and (2) healthcare (HC). Free education until college, free HC until surgery and medicines. People can spend on nice gadgets and cool appliances, cars and travels, etc but they should not spend for their children's education and their own family's HC. Education and HC are rights and entitlements, not personal or household responsibility. Now more sectors are added to entitlements like housing, irrigation, etc. Lousy socialistic thinking.

Peter Wallace wrote this last February 6:

"Government health services must be completely free. This can be done if we continue to increase public spending on health. The funds are available, a historic budget of P172 billion this year, and growing from sin taxes."

https://opinion.inquirer.net/127172/getting-uhc-to-work

I wrote to him:

Hi Peter, You have become a health socialist, inconsistent with your advocacy for more market reforms. Health is not just a right. It is a responsibility. Personal, household, civil society responsibility, more than state responsibility. If people have the money to buy alcohol, fatty food, tobacco, lots of food and be sedentary, expensive bicycles for steep downhill rides, etc. -- why can't they also buy private health insurance? Why should healthcare be free for all? Come on. Thank you.

Meanwhile, I like this illustration.

Source: https://www.economicshelp.org/blog/1777/economics/health-care-arguments/

I think a good compromise is that public HC is universal for infectious, contagious and communicable diseases. Like malaria, polio, and now corona virus. For non-infectious, non-communicable diseases (NCDs) like cancer, hypertension, stroke, etc., it should be private health insurance plus support by local governments and private charities. Then people can say that HC is mainly personal and parental responsibility, not just state responsibility and an entitlement.

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See also:
Cicero, welfarism and fiscal irresponsibility, August 11, 2016
Welfarism 32, On forcing restaurants to give their excess food to charities, July 27, 2016 
Welfarism 33, Janitor turned lawyer, self-reliance vs welfare-dependence, May 05, 2017 
Welfarism 34, Larry Reed on poverty and self-reliance, December 07, 2019