Tuesday, March 20, 2018

China Watch 26, PDP-LABAN loves the China Communist Party

Last February 28, 2018, the ruling party PDP-LABAN celebrated its 36th anniversary -- with the China Ambassador to the PH and other China officials on stage.

Yes, why celebrate with officials of the China Communist Party? Ewww. Officials and leaders of the dictatorial, one-party, authoritarian government? That government cannot even allow facebook, youtube, twitter to its own citizens because communists and dictators are highly insecure. Now the buddy-buddy of PH ruling politicians and would-be communists?

Part of the report says,

"The symposium “aimed to introduce ‘Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’ to the Philippines’ ruling party,”

Introduce Xi Jinping thoughts on socialism and dictatorship to the ruling PH party, wow. Mabuhay komunismo, Mabuhay Xi-Tsino-Dutertismo?

The China Communist Party, is a one-party, zero-opposition, dictatorial, authoritarian party. When the Party Congress voted to remove the term limit of the China President, many of their citizens reacted negatively so state agencies in charge of social media censorship disallowed posts with words or terms like "immortality","1984". 

'Immortality,' 'disagree,' 'emigrate,' and 'personality cult' — here's every word and phrase China censored after criticism of Xi Jinping's potentially unending reign
Tara Francis Chan Mar. 2, 2018, 12:18 AM 

Politicians like House Speaker Alvarez and Senate President Koko Pimentel perhaps wouldn't mind having a dictatorial, authoritarian party as their buddy. Little or zero opposition, in political power forever, sino ayaw na politiko doon?

I just hope that the Liberal Party or any new political party can re-assert the classical liberal philosophy: more individual liberty and economic freedom, less state intervention ala socialist-communist govt. Propagate the thoughts of John Locke, Adam Smith, David Ricardo and John Stuart Mill -- NOT Karl Marx, Lenin, Stalin, Mao Tse Tung, Xi Jinping.

See also:

BWorld 196, Mining tax and TRAIN

* This is my column in BusinessWorld last week, March 15, 2018.

“Government does not tax to get the money it needs; government always finds a need for the money it gets.”
 — Ronald Reagan, former US president

Under the Mining act of 1995 (RA 7942), mining firms pay, among others, an excise tax 2% of sales. For many years and decades, this has been deemed “too low” despite the presence of many other taxes, fees, royalties, mandatory contributions, obligatory community expenditures.

So under the new law Tax Reform for Acceleration and Inclusion (TRAIN), RA 10963, the mining excise tax has been raised from 2% to 4%. And this was a belated insertion because this idea was not present in both House and Senate bills before the Bicameral Committee meetings.

Now there is TRAIN 2 bill in Congress and the Department of Finance (DoF) has voiced out that it wants all tax reforms ratified by December 2018. The DoF wants a “comprehensive mining tax that will give the government a bigger share of miners’ revenues.” Translation: another round of mining tax hikes.

Philippine mining taxation is not exactly modest or low. Globally, it is somehow midway based on taxes, fees and royalties paid to the government, national and local. Or high if mandatory and obligatory expenditures for communities are included, like the Social Development Management Program (SDMP) that amounts to hundreds of million pesos yearly.

One international non-governmental organization, the Natural Resource Governance Institute (NRGI), produces an annual report called the Resource Governance Index (RGI) that measures how good or bad the governance of extractive industries are — oil, gas and mining (metallic and nonmetallic). The index is constructed using a framework of 149 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents. Scores are on a scale of zero to 100 at each level of the index.

The RGI is composed of three components and several sub-components:

1. Value Realization — sub-components are licensing, taxation, local impact, and state-owned enterprises.

2. Revenue Management — national budgeting, subnational resource revenue sharing and sovereign wealth funds.

3. Enabling Environment — open data, political stability, control of corruption, rule of law, regulatory quality, government effectiveness, voice and accountability.

The RGI 2017 report was released last year covering 89 country-level assessments (in eight countries, both oil-gas and mining sectors were assessed). In the table below, I did not include countries in the oil-gas sectors, also low-score African, S. American countries after S. Africa, but I included low-score ASEAN countries to have a regional overview (see table).

So in the overall score, the Philippines ranked 21st out of 89 country-assessments, it belonged to the top, which is good. In the component Value Realization, it scored a midway 55 and in sub-component taxation, it scored high at 60. Which means that the statement “Philippines mining taxation is low” is not correct.

In that report, I was surprised to see that there is a government-owned Philippine Mining Development Corporation (PMDC). It is not involved in actual mining exploration and extraction though, perhaps one of those white elephants among the remaining government-owned and controlled corporations (GOCCs).

Among the big state-owned mining firms in the world are Codelco (Chile, 2016 revenue was $11.69 billion), Erdenes Mongol (Mongolia, $1.25 billion 2016 revenues) and Antam (Indonesia, $680-million revenues).

Aside from TRAIN’s tax-tax-tax in the sector, there are other proposals that seem idiotic and too interventionist. Like a bill in Congress, HB 5674, requiring a legislative franchise as prerequisite to the issuance of a Mineral Agreement or Financial and Technical Assistance Agreement (FTAA) for any mining project in the Philippines. Why bring in the legislators and politicians on top of national and local bureaucracies inspecting and investigating companies even before they can do mining exploration and extraction?

Then there are other bills declaring this and that province to be a “mining free zone and providing penalties therefor.” Example: HB 6727 for Nueva Vizcaya. Not all provinces have big mining potential and even in provinces which have such potential, not the entire province is resource-endowed.

Mining is either good or bad. If it is bad, people should stay away from using materials that use mining products so that they can reduce or avoid creating new demands for mining. Like cars, TV, mobile phones, computers, watches, electrical wires and cables.

If mining is good, then get the good practices in other countries and have them applied here. But blanket prohibitions like “no open-pit mining,” “no mining in this province,” “over-tax mining” should be avoided because they are based on emotions, not reason and economics.

Government should prioritize reason and economics in its legislation and implementation. Create values and consumer products from nature, create lots of jobs for the people, generate taxes for its social-economic programs.

See also: 

Monday, March 19, 2018

Water and sanitation is not a human right, not an entitlement

Last February 04, 2018, Rotary International posted this,

"Clean water and sanitation is a human right. When people, especially children, have access to clean water, sanitation, and hygiene, they lead healthier and more successful lives."  http://on.rotary.org/2DYyVWT
A friend and an active Rotarian (I am an ex-Rotarian) Bruce Hall posted this in his fb wall:

Rotary is wrong. Water and sanitation is not a human right, thought it can be a civil right.

Human rights are those things that we have because we are human, that we are born with, that we have been endowed with by our Creator.

Human beings are born with the ability to communicate, to pray, to move, to think... human beings are born free. Someone must use violence or threaten to use violence (like an army or a police force) to take away those things. Those are human rights. When violence is used to take away those things from us, that is oppression. Our human rights are violated.

We are not born with a lifetime supply of water or sanitation.

We must work hard -- and we must work together -- to provide those things to ourselves and to others. If we don't have water and sanitation, that might be our fault, or the fault of others, or the fault of no one.

The lack of water is NOT ALWAYS the result of oppression. If we die of thirst in the desert or on a lifeboat at sea, who oppressed us?

The lack of human rights is ALWAYs the result of oppression, is always the result of someone's act or threat.

Thirst can be the result of oppression, or someone taking away our life, liberty and pursuit of happiness, but it could also be the result of something else. Therefore water cannot be a human right. 

I agree with Bruce here. People can live on top of high hills and mountains far from natural water sources and government should bring pipe water to them because water is their "human right"? Bad proposition.

Re UN SDGs declaring that water is a human right, almost everything should be a "human right" for the UN actually. Free healthcare, free education until university, free books, free medicines, free condoms, etc. And soon free iPads, free flat tv, free cars for the poor?

Bruce added:

To take away human rights requires an act and therefore an actor. It requires oppression. To have human rights requires no action, no actor. We have human rights BECAUSE WE ARE HUMAN. Nothing more is required. A government isn't required, technically, for us to have our full human rights. However, there will always be people who may try to take away our human rights. Therefore we band together to defend ourselves, and we might call that government. Governments are instituted among men, as the saying goes.

BWorld 195, Health alarmism in TRAIN sin tax hike

* This is my column in BusinessWorld last March 11, 2018.

“When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before.”
— H. L. Mencken, American journalist, satirist

As the public still has to adjust to the inflationary pressures of the new law called Tax Reform for Acceleration and Inclusion — Package 1 (TRAIN 1), TRAIN 2 is already in Congress. Among the targets are further tax hikes in “sin” products, and some NGOs that speak, write, and argue like government have been calling to further raise alcohol and tobacco taxes.
Such calls are based on certain premises and hypothesis like: (1) Philippines tobacco and alcohol consumption per capita is among the highest in Asia and the world; and, (2) the overall health of Filipinos is stagnating if not deteriorating because of high alcohol and tobacco use. Thus, consumption of sin product must be discouraged further via higher taxes plus other measures like graphic warnings.

How true are such premises and hence, how valid is the more-taxes-please measure as the purported solution?

The good news is that some basic data — like smoking incidence — are available and can be found at Our World in Data, a project of the University of Oxford. The bad news is that the data does not seem to support or corroborate those two premises and hypothesis (see table).

The numbers in the table show the following:

1. Philippines tobacco use as of 2012 was not that high and was lower than tobacco use of our richer and healthier neighbors like Japan and South Korea. Alcohol use in 2015 was lower than the global average of 6.3 liters per person per year.

2. Philippines life expectancy keeps rising, not falling or remaining steady, although it is among the lowest in the region.

3. People in countries with a high incidence of smoking also have high life expectancies. Brunei, Taiwan, South Korea, Japan, China, the Philippines, and Singapore have high cigarette use — at least 18 sticks per day per smoker in 2012 — and their life expectancy was at least 76 years in 2015 — except in the Philippines where it was only 68 years.

4. People in countries with low cigarette use (less than 12.5 sticks per smoker per day) also have low life expectancies of only 69 years or less.

These observations tend to contradict the two premises and hypothesis mentioned above. There are many possible explanations for this, two of which would be the following:

1. People in rich countries can afford to buy more tobacco and alcohol products despite the rise in prices due to rising sin taxes; and,

2. People in poorer countries consume “less tobacco” referring to the legal and branded products, but in reality, they consume “more tobacco” from illegal, illicit, and fake/counterfeit products and suppliers. And such consumption is not captured by official government data.

So the statement “more sin taxes = less alcohol and tobacco use” can be wrong.

Another possibility is that higher sin taxes can lead to more smuggling, more illicit trade of counterfeit products that are cheap and more affordable to more people, which can lead to more smoking and drinking.

Even rich and developed Australia, which has more strict regulations against tobacco use, has experienced a rise in cigarettes smuggling. In a KPMG report in March 2017 entitled “Illicit Tobacco in Australia, 2016 Full Year Report,” the estimated share of illicit and smuggled tobacco was 10.8% of total tobacco consumption, average for 2007-2012. This rose to 14% average for 2013-2016.

Instead of calling for higher sin tax rates, the government should focus on significantly controlling smuggled and illicit products that are cheap and readily available. This alone will significantly reduce the incidence of smoking and drinking.

Another compromise would be a rise in sin taxes but income tax rates (personal and corporate) and/or VAT rates should go further down. The people should be spared from government’s policy and mentality of endless tax hikes, regardless of administration.

See also: 

Sunday, March 18, 2018

On expensive China loans/ODA

On February 21, 2018, Philippines Defense Forces Forum posted this photo and brief note:

NEDA secretary Ernesto Pernia admits China's interest rate of 3% is much higher than Japan's 0.25%-0.75%, in talk in front of businessmen and economists this afternoon.

Asked why the government is availing more of China's expensive loans than Japan's cheaper offer Pernia could only reply "Because we need more friends". #IdolNiDuterte #ChinaPuppet

It was Dr. Ciel Habito who asked Pernia that questions. Now notice this statement: 

"Pernia admits China's interest rate of 3% is much higher than Japan's 0.25%-0.75%... because 'we need more friends.'"

Ok, PH taxpayers are "less friends" of the Duterte administration that is why we must pay more taxes via TRAIN and they will give more money to their "more friends" China Communist Party. Magaleeeng.

To the Dutertenomists and TRAIN rah-rah boys and girls -- eto abangan nyo: the main purpose of "more revenues via TRAIN" is not exactly more infra but more payment for China loans. We have NLEX, SCTEX, TPLEX, SLEX, STAR, CAVITEX, NAIAEX, Skyways, etc even without big tax hikes. Lots of "hybrid PPP" were actually integrated PPP before President Duterte came to power.

Integrated PPP means no need for new ODA, new loans from China or elsewhere, no need for tax-tax-tax because the private builders of those big infra have the financial, technical and engineering resources, network to build those behemoth structures at minimal cost to taxpayers (only right of way cost, etc). Hybrid PPP means more loans, especially from the China communist party.

Recall also that when Ernesto Pernia was newly appointed as NEDA chief, he justified the series of drugs murders as "necessary evil." 

Tweets February 21:

@bendeveraINQ (Ben Arnold de Vera)
@SecPernia: First basket of infra projects for Chinese financing includes Kaliwa Dam, Chico River Pump Irrigation, North-South Railway south line between Manila and Bicol.

Replying to @bendeveraINQ @SecPernia @InquirerBiz
Wow, tax-tax-tax de TRAIN so that PH govt can pay these big loans fr China? Horrible. These shd be integrated PPPs and not charged to taxpayers.

Gus Cosio @gus_cosio
Replying to @ClaireJiao @Noysky @cnnphilippines
Japan offers better quality performance at cheaper cost. Why in heaven’s name will you burden us with this preposterous idea?

@SecPernia: But the Japanese had been slow in process of financing projects, while the Chinese has become more aggresive @InquirerBiz

@SecPernia: Chinese loans, at best, slapped 2-3% interest per annum vs. Japan soft loans/ODA at 0.25-0.75%, but we haven’t signed loan agreements with China yet DD-biz-INQUIRES_

Pernia: We don’t want a repeat of our previous experience with China (referring to NBN-ZTE deal), that’s why PH and Chinese govts established vetting process for Chinese firms bidding for PH projects under @NEDAhq ICC @InquirerBiz.

Now see this report,

3 Chinese firms interested in Kaliwa dam
February 16, 2018 | 12:15 am

"Under the previous administration, the P18.72-billion Kaliwa dam had two pre-qualified bidders, which are now out of the picture... It used to be a public-private partnership, with MWSS as implementing agency.

Since the project is funded by ODA from China, Mr. Velasco said there will be no pre-qualification stage since the Chinese embassy identifies the three pre-qualified companies."

Another big China loan, contractors and suppliers identified by China embassy, very likely cronies of the China Communist Party. PH goverment agencies will wait for the terms and say "Yes", and PH taxpayers will pay for the bill, courtesy of TRAIN de tax-tax-tax. 

From sir Doy Segundo E Romero, Feb. 22:

A few weeks ago, an EU ambassador posted in Sri Lanka repeated to me what a Chinese diplomat told him: 'No big deal. The Philippines is not even a real country.' Nasaktan talaga ako."

Last week, Dr. Pernia replied in my fb wall where I tagged him on this subject. He wrote,

"Nonoy Oplas got it all wrong — making a comment without even knowing the context. Rather unscholarly and malicious!"

I replied, "Ok Sir Ernie, what is the non-malicious explanation why (a) PH government should get new foreign loans when many projects were already under integrated PPP (not "hybrid" that require new loans, or new public spending and hence, new taxes), and (b) why China loans considering that China interest rates are high, and China Communist Party is a theft of PH territory?

I will apologize for my statements above if these can be clarified. Thank you."

As I expected, no further reply or clarification.

Climate Tricks 66, Ignoring the implications of worsening cosmic rays situation

For those who keep believing that global warming and climate change is anthropogenic or man-made, who believe that they can "fight" GW and CC via more government, more UN, more carbon taxes, more renewables cronyism, more climate bureaucracies, more global climate meetings, please widen your mind. Natural or nature-made GW and CC is factual than CO2-is-pollutant-evil drama.

More galactic cosmic rays (GCRs), more cloud cover, more cooling of the planet. Conversely, less GCRs, less clouds, more warming of the planet.

More stories here:

The Worsening Cosmic Ray Situation
March 5, 2018: Cosmic rays are bad–and they’re getting worse.

That’s the conclusion of a new paper just published in the research journal Space Weather. The authors, led by Prof. Nathan Schwadron of the University of New Hampshire, show that radiation from deep space is dangerous and intensifying faster than previously expected….

Update on the worsening particle radiation environment observed by CRaTER and implications for future human deep‐space exploration*
N. A. Schwadron  F. Rahmanifard  J. Wilson  A. P. Jordan  H. E. Spence  C. J. Joyce  J. B. Blake A. W. Case  W. de Wet  W. M. Farrell  J. C. Kasper  M. D. Looper  N. Lugaz  L. Mays  ... See all authors
First published: 22 February 2018

Over the last decade, the solar wind has exhibited low densities and magnetic field strengths, representing anomalous states that have never been observed during the space age. As discussed by Schwadron et al. (2014a), the cycle 23–24 solar activity led to the longest solar minimum in more than 80 years and continued into the “mini” solar maximum of cycle 24. During this weak activity, we observed galactic cosmic ray fluxes that exceeded the levels observed throughout the space age, and we observed small solar energetic particle events. Here, we provide an update to the Schwadron et al (2014a) observations from the Cosmic Ray Telescope for the Effects of Radiation (CRaTER) on the Lunar Reconnaissance Orbiter (LRO)….

Bulletin of the Russian Academy of Sciences: Physics
February 2017, Volume 81, Issue 2, pp 252–254 | Cite as
Cosmic rays, solar activity, and changes in the Earth’s climate
Authors: Y. I. StozhkovEmail authorG. A. BazilevskayaV. S. MakhmutovN. S. SvirzhevskyA. K. SvirzhevskayaV. I. LogachevV. P. Okhlopkov
Proceedings of the 34th All-Russian Conference on Cosmic Rays
First Online: 08 March 2017

One of the most important problems facing humanity, global climate change, is discussed. The roles of cosmic ray fluxes and solar activity in this process are analyzed. Although several mechanisms explaining global climate change have been proposed, none of them are firmly grounded. At the United Nations summit in Paris at the end of 2015, it was decided that greenhouse gases are responsible for the global warming of our planet. However, the authors of this work believe the question of what causes global changes in the Earth’s climate remains open, and will obviously be solved once and for all in the next 10–15 years.

MAR 13, 2018 @ 09:11 AM
How Activity On The Sun Could Change The Economy
Simon Constable , CONTRIBUTOR

The question is whether we will enter another grand solar minimum just like the Maunder minimum which if history is a guide would mean a period of much colder weather winters and summers. More than a few experts with whom I speak regularly believe that we shall enter such a grand minimum along with the resulting bone-chilling weather.

If that happens, then there will be profound influences on the economy, including possible crop failures and rising energy use for home and workplace heating. Or in other words, expect bigger bills for food and energy. After a period in which the supply of both has been increasingly abundant then this change will likely come as a shock to many people and likely the broader global economy as well.

See also:
Climate Tricks 63, The search for huge climate money in COP 23, November 26, 2017 

Climate Tricks 64, Bitter cold and snow are caused by AGW, January 06, 2018 

Climate Tricks 65, "Last chance" to save the planet stories, 1992-2018, March 16, 2018

Saturday, March 17, 2018

BWorld 194, How ‘pro-labor’ policies work against labor

* This is my column in BusinessWorld on March 08, 2018.

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”

— American economist, political philosopher, and author Thomas Sowell

There are many legislative and executive proposals now that are meant to protect workers but have the long-term effect of discouraging the hiring of more workers. These five measures seem to stand out.

Currently there are 15 national non-working holidays with pay. Then there are city/municipal non-working holidays proclaimed by local governments. Plus paid leaves provided for by special laws like solo parent leave and maternity leave. Plus work suspension with pay during strong typhoons, floods, and other calamities. Plus work suspensions due to politics like nationwide jeepney strikes.

Now there are legislative proposals to create new holidays with pay. Among these are: the last Monday of January as National Bible Day; and, July 27 as Iglesia ni Cristo anniversary day.

A bill called the “Expanded Maternity Leave Law” proposes to raise the maternity leave period to 120 days or four months. This will cover all female workers regardless of civil status or legitimacy of the child. Solo parents would be granted a total of 150 days maternity leave with pay. Fathers will also enjoy a 30-day leave with pay versus the current seven days of paid leave as provided for under RA 7322. Penalties for violations are high — fines up to P20,000, imprisonment for six to 12 years, or both.

This is removing the employers’ and contractors’ flexibility to hire workers when demand for work is high. Like catering and malls, demand for business and labor is high during November and December due to the Christmas holidays and reunions, then tapers off by January.

Even the unskilled should be paid the mandated minimum wage. The danger of this policy is that the less-skilled or skilled but less industrious workers will not be hired, raising the unemployment situation in the country.

Also known as the “Healthy and Bulilit Act” bill, it seeks to expand the health programs during the child’s first 1,000 days of life. It would also strengthen the implementation of RA 10028 or the “Expanded Breastfeeding Promotion Act of 2009.”

These populist and welfarist proposals are based on the premise that: our employment rate is high and workers can easily find other jobs, and the health of Filipino mothers and workers are deteriorating. Both are wrong. Our unemployment rate is the highest in the ASEAN, and Filipinos’ maternal mortality is decreasing although not as low as that of Singapore and Brunei (see table).

The danger of these proposals is that they make the hiring of workers, especially female workers and managers, become more expensive. If this trend continues, less workers will be hired — only the very talented, very efficient ones will be hired and the rest will be working in the informal, less well-paid sector or will be begging for more subsidies and cash transfers from the government.

And more workers doing repetitive jobs will be replaced by machines, robots, and artificial intelligence (AI). Machines do not ask for holidays with pay or maternity/paternity leaves with pay, and consumers want cheaper goods and services from shops and manufacturing plants.

Employment is not a right or entitlement. It is a privilege for those who have clear ambitions, personal responsibility, and equip themselves with certain skills. Entrepreneurship and being in business is also not a right or entitlement. It is a privilege for those who have deep patience and efficiency to understand both the consumers and suppliers of various production inputs, plus some luck. And the patience to deal with bureaucracies and politicians with very fickle and populist mind-sets.

Employment is a private contract between employers and would-be employees. If the terms are bad for job seekers, they should have more options for other employers. Better yet, employ themselves via micro-entrepreneurship or small start-up businesses.

Government should step back from setting and dictating the terms of employment and focus on enforcement of contracts. Government should also de-bureaucratize business and entrepreneurship so that more workers can migrate to become employers someday more easily.

Duterte's planned disrespect of private property in Boracay

The Duterte government shows once more its penchant to disrespect private property with pronouncements like "Bomb/blow up illegal structures" or "Totally close all Boracay resorts." See these news headlines yesterday and the other day.

“The government would not hesitate to send the Marines and” blow up” illegal structures in the shores of Boracay if resort owners would continue to defy orders to clean up the famous island, a Palace official said.”

Whether Duterte-Roque are serious or palusot "joke only" in making that statement of using the marines, they are idiotic. 

Illegal structures, resorts with no sufficient business permits, improper disposal of solid and liquid wastes -- these are local government and police concerns, not military concerns. West PH Sea/SCS militarization by the China Communist Party is a military and foreign affairs concern.

The military/AFP's main mandate is external defense, not internal police function. Roque-Duterte cannot distinguish between internal vs external concerns for the military.

Now see this from PhilStar:

'Total closure
If she would have her way, Tourism Secretary Wanda Teo would rather go for the full closure of Boracay to speed up the cleaning operations there.
“I think it will depend on Secretary Cimatu (partial or full closure) but, for me, I think it should be total because work will be done faster. If it is partial, it will take time and we only have six months to do (the cleanup),” she told reporters.'

Closure of Boracay businesses, whether partial or total, is against respect of private property. People and business enterprises there have a contract with the state via DOT, SEC, DENR, DTI, BIR, DOLE, DOH, LGUs, etc. Businesses will abide by the corporate, environmental, health and sanitation, labor protection, other regulations by the government and private enterprises have the freedom to do business, to provide various goods and services to the people, local and foreign.

Now there are unconfirmed stories that mainland Chinese businesses and casino operators are rushing to go to Boracay. Worth watching if this is true or fake news.