Government and Taxes: February 2015

Saturday, February 28, 2015

Agri Econ 17: Why NFA Marketing Function Should be Removed

Last Tuesday, February 24, a friend and National Food Authority (NFA) Administrator Renan B. Dalisay posted in his fb wall with photos,

Early morning market visit today here in Zamboanga City. Mura ng bigas dito relative to other regions. Bakit kaya? Today we will try to figure it out in our Senate hearing here to be conducted by Sen. Villar.

Then same day, Renan's staff at NFA posted this in his wall,

Bureau of Customs Commiss-ioner Sonny Sevilla and NFA Administrator Renan Dalisay inspect the 152,000 sacks of smuggled rice from Vietnam intercepted by Philippine Navy enroute to Patikul, Sulu Sunday night. The unplanned inspection happened after the joint senate inquiry on the "rampant rice smuggling in Zamboanga" this morning.

As reiterated, any rice entering the country without pertinent documents exceeding 500 bags of rice is smuggled and should be seized for proper disposal.

So here is a situation where smuggling of cheap rice from Vietnam results in cheaper rice in Zamboanga and other cities and provinces, which helps the poor. And the PH government -- through the NFA, BoC, Philippine Navy, etc. -- is angry that the poor have access to cheap rice. Because this cheap rice does not have enough permits and signatures from the government.

But cheap rice abroad + government permits and signatures + government taxes = expensive rice. Expensive rice is the goal of the government? Really weird.

With due respect to Administrator Renan whom I personally know in UP as honest, I seriously believe that the NFA is part of the problem, not the solution, to expensive rice. Why? Becaue of its various rice interventionism policies.

(a) rice importation monopoly through its monopoly in issuing import licenses and permits. elegated to licensed and accredited importers,

(b) rice quantitative restrictions (QR) and outright protectionism,

(c) direct rice price subsidies (AR, rural roads, irrigation, credit, seeds, tractors, etc. support to farmers are already subsidies) and

(d) ever-rising NFA debt, P155 B already as of middle of 2014. These are huge problems created by NFA alone.

So it is a case of a straight and honest official implementing wrong and corrupt policies (cheap imported rice for the poor is wrong and should be confiscated). NFA as regulator of rice trading should be fine, but NFA as businessman and trader itself is lousy.

People will be happy if rice prices are lower due to cheaper imports, zero tariff, zero quantitative restrictions (QR) for rice from Thailand, Vietnam, Cambodia, other Asian neighbors.

I was still an undergrad student at UP Diliman in the 80s, I have heard and read this NFA problem. Three decades ago, even longer. And it continues until this day. Regardless of who sits as its Administrator or whoever is the DA Secretary, the NFA problem is never really confronted.

The DBM-DOF-NEDA joint position paper in March or April 2014 mentioned that the NFA should get out of its marketing function and focus on regulatory function. NFA debt in 2013 was already P155 B and it has zero capacity to pay that debt, so sooner or later it will go to DOF and Congress and say, “Please bail us out, pay all those debts, we want to start clean”. Before that debt becomes P200 or P300 B, NFA’s marketing function, including its rice importation monopoly power (assigned to selected “farmers’ coops”) should end soon.

A friend, Samson P. noted last November 2014,

In the 70s or 80s, we cultivated rice, corn, coconut, etc. What I can clearly remember, every time I am supposed to sell our produced to the NFA for a better price, they always say no funds available today, forcing us to sell to the much lower price offered by the private compradors, in my hometown, they are all Chinese - Yong Hat, To Nga, Bia Ka, and Kim Chiu, yes this was the name he he. I found out later on these Chinese businessmen paid the local NFA manager to not buy ours and other farmers' produce so they can corner the market. That is NFA for you.

Conclusion: NFA's marketing and trading function should be removed. No need for government intervention in rice pricing to make it cheap because free trade can do that. NFA's regulatory function like giving accreditation and permits to rice millers, major rice traders, can be retained.

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Friday, February 27, 2015

Inequality 22: Ten Men Eating Equally but Paying Unequally

Should governments tax the rich more?

This photo I got from the web. High inequality, right? This can mean many things, like:

1. The poor living on the left have jobs, direct or indirect, from the people who built and live/work on those beautiful condo buildings on the right.

2. People on the left were not there before. No one lived there. Until constructions on the right started, and people from rural areas or from other communities started moving to the community on the left.

Below is a good parable pf ten men. I got this from a friend, Wan Saiful Wan Jan, IDEAS' CEO.

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Every day, ten men go out for dinner. The bill for all ten comes to $100. If they pay their bill the way we pay our taxes, it would go something like this:

. The first four men (the poorest) would pay nothing.

. The fifth would pay $1.

. The sixth would pay $3.

. The seventh $7.

. The eighth $12.

. The ninth $18.

. The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men ate dinner in the Restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said “I’m going to reduce the cost of your daily meal by $20.”

So, now dinner for ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So, the first four men were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone

would get his “fair share”?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being “PAID” to eat their meal. So, the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

. The fifth man, like the first four now paid nothing (100% savings).

. The sixth now paid $2 instead of $3 (33% savings).

. The seventh now paid $5 instead of $7 (28% savings).

. The eighth now paid $9 instead of $12 (25% savings).

. The ninth now paid $14 instead of $18 (22% savings).

. The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man – “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how progressive tax system works. Tax the rich too much, attack them for being wealthy, and they just may not show up at the table anymore.

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Inequality 19: Notes and Quotes on Globalization and Inequality, July 18, 2014

Inequality 20: The Top 50 Richest Filipinos, September 01, 2014

Inequality 21: Marx, Keynes and Pikkety are ideological soulmates, December 01, 2014

Globalization, Mobility and Inequality, February 18, 2014

Business 360 19: Investments and Inequality in Asia, October 15, 2014

EFN Asia 45: Growth, Inequality and the Philippines, November 14, 2014

Agri Econ 16: Seeds for Mankind

When I attended the "International Training Seminar on Sustainable Agriculture in an Environmental Perspective" in Sweden in 2003 (7 weeks, sponsored by SIDA), we have several reading materials. Among them was "Seeds for Mankind", published by the International Seed Federation (ISF), May 2002. I cannot find its online copy.

(This photo from berea.edu)
The monograph is reader-friendly even for non-scientists. Good economic sense. For instance, its conclusion suggested that the public sector should refrain from being active in the competitive area… Governments should focus on their roles as regulators and developers of infrastructures..

Below was my summary of that good paper.

Seeds for mankind

Modern Plant Breeding

It is a two-step process: (a) creation of genetic variability, (b) selection of cultivars for specific purposes. It use the laws of heredity (discovered by Mendel, 1856) and statistics (developed by Fisher and Pearson, around 1860)

Objectives of Plant Breeding:

1. Productivity: about 30-60% of yield increases is due to genetic improvement Hardiness/Yield

2. Stability: show more adaptability than low-yielding older varieties

3. Diseases and Pest Resistance: by using existing resistance in species, and by genetic engineering

4. Biodiversity, in particular:

(a) Crop genetic diversity – bet. 6,000 to 7,000 new varieties are protected annually in the UPOV member states,

(b) Bio tape protection – preservation of places where species live

5. Product Quality, in particular:

(a) Technical quality processibility of the raw material,

(b) Food quality – ability of food to keep sensory characteristics and physical qualities under given conditions

6. Crop Management: for crop protection and minimizing soil tillage

Regional Adaptation: facilitate the introduction of new promising crops to other regions of the world.

Production and Marketing of High Quality Seed

Too often, new and better varieties released by plant breeders are not produced and commercialized to farmers.
Seed Production: maintain genetic quality, maintain seed viability and health.
Seed Marketing: market research à seed promotion à seed pricing à seed distribution.

Main Actors of the Seed Chain

Basic research: both the public and private sectors
Varietal development: over the long-term, private sector should do this.
Seed production, processing and marketing: private sector; govt. to improve infra, tax incentives, credit
Quality control: private seed companies with govt. supervision

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Tuesday, February 24, 2015

The CPP, China, Joma and Dick Malay

Reposting a brief memoire by a former young Communist Party of the Philippines (CPP) official in the early 70s, Ricardo "Dick" Malay, below.

When I was still among the leftist student activists in UP Diliman in the 80s, I would hear his name a few times. Not that I was a member of the party or its youth arm, KM , but from older Marxist leaders like Profs. Dodong Nemenzo and Randy David.

I met Dick for the first (or second?) time in November or December last year, in one of the gatherings of UP alumni at Taga UP Diliman Ka Kung (TUPDKK). Dick narrated many things when he went to China in 1971. An interview of him and Victor Corpuz by Howie Severino is here. Check at 1:25 minute mark.

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The Left, China and Rizal

By Dick Malay

December 30, 2014

We arrived in China in the summer of 1971 not as refugees of an impending martial law, but armed with an urgent mission for the revolutionary Left. My wife and I had taken a French leave from our work with marching orders to set up a a clandestine outpost in Beijing. It was tasked as a clearing house for China's military assistance to the fledgeling Maoist rebellion versus a dictatorship in the making.

The Communist Party led insurgency felt it needed more than ideological support from the putative center of world revolution. In an era where Mao the Great Helmsman was vowing all-out internationalist assistance to rebellions and uprisings the world over, it was thought that overthrowing the strongman's rule with imported Chinese weapons was in the best interest of the revolution. Together with a CPP politburo member, we landed in Beijing to the welcoming arms of our Chinese comrades.

At the same time, our mission was to forge fraternal ties with Communist governments and revolutionary movements with chanceries in the Chinese capital. With such a global united front standing behind it, the anti- Marcos struggle was assured of victory. But for us, the first order of the day was to negotiate the shipment of armaments and ordnance from our Chinese partners.They granted two CPP proposals over the course of two years for the sea-borne delivery of weapons to the NPA, then steadily gaining in strength against government forces.

The initial shipment in 1972 undertaken by the vessel MV Karagatan ended in a debacle. During a deadly firefight with government troops alerted to the boat's movements, the rebels on the receiving ground abandoned most of the Chinese armaments, including powerful assault rifles, to the enemy. The Karagatan incident was one of the reasons President Marcos cited for declaring martial law.

But the setback did little to dampen the enthusiasm of the Chinese party to continue supporting the insurgency. In 1974, a second transshipment aboard the Dona Andrea met a more grievous fate. Enroute to a Hainan naval base to pick up a large quantity of military hardware, the vessel manned by inexperienced cadres and fighters was shipwrecked in the Pratas Islands.

Although the Chinese authorities rescued the crew and brought them safely to the mainland, we felt the collaboration was nearing the end of its line. With two dismal failures exposing the CPP military ineptitude on one hand and uncovering China's export of revolution on the other, it was time to take a long hard look at the bi-lateral relationship born in the implosions of a perfervid era.

Two developments added to the emerging bleak picture. China and the Philippines were on the road to a cozy friendship after cementing diplomatic ties; and Deng Xiaobing, the pragmatic foe of Mao Tsetung, was back in power. It was Deng who voiced disgust at the price China had to pay for courting the CPP to its side. "The Filipino comrades are very clumsy," he reportedly said after reports of the two disastrous shipments came to his attention.

The events foretold that the times of friendship and solidarity were drawing to a desolate close . We were compelled to shutter our mission and move to a new destination where the Maoist creed was a growing novelty and attracting curious minds. At a farewell banquet given by the Chinese party commissar for our departing group, I raised my glass to toast the CCP and Chairman Mao for the friendship and hospitality we deeply felt during our ten year sojourn in their land.

To which the commissar responded raising his own glass of maotai: "To the health and victories of our Filipinos comrades. Let us not forget also, to the memory of your national hero Dr Jose Rizal whose death is commemorated today. We Chinese people highly respect and revere him as one of our own heroes. Ganbei!"

I had forgotten the day was a December 30. In that instant, i was jolted back to the reality that we were too busy forging on with our revolution that we had become hostage to the dogmas of a parallel world we were unwittingly creating in our quest for a better world to live.

Mabuhay ka at maligayang araw, Gat Jose Rizal!

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Terms from Dick which I heard, referring to his big disappointment of China communism and Joma Sison:

1. "classless society" -- no classes especially in universities in China after the Mao revolution. Professors were either killed or sent to the farms to live like farmers.

2. "A mad dog grrr rero" -- new pronouncement of Joma Sison's alias "Amado Guerrero".

Hahaha, Very witty Dick.

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See also:
China Watch 9: Liu Xiaobo, Human Rights and the NPA, December 10, 2010
Pilipinas Forum 3: Is Marxism Still Relevant?, August 30, 2011
Pilipinas Forum 19: The CPP-NPA, Sison and Maoism, November 09, 2011
Pilipinas Forum 26: On State-Party Relations, February 28, 2012

Monday, February 23, 2015

Business 360-22: Nepal's Tourism Potential

* This is my article for Business 360 magazine published in Kathmandu, Nepal, February 2015 issue.
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Nepal's Tourism Potential

Nepal is a beautiful and unique country with lots of interesting and fantastic places to see and feel, both for those who love indoors and the outdoors. Gifted with eight of the top 10 highest mountains in the planet Nepal has unique natural ornaments and can allure tens of millions of people from abroad.

I went to Nepal for the first time in January, 2015 to attend the third Asia Liberty Forum. During the time I also had an opportunity to have a short trip to Pokhara. The conference attracted many participants from other countries and almost all of us except perhaps those from India were first-timers in Nepal. Many of my friends in the Philippines including the frequent travellers abroad congratulated me for seeing Nepal, a country that they wish to see someday but have a number of reservations and doubts for now.

What could be those things that discourage or prevent people abroad from visiting and seeing Nepal?

Before attempting to answer that question, here are some basic data about foreign visitors and their spending in selected Asian countries.

Source: UNWTO Tourism Highlights 2014

As a first time visitor having been in Nepal for a week, here are some of my observations and modest proposals to address them.

First, electricity supply is poor, up to 18 hours of power outage a day in Kathmandu. Big and medium size companies like malls and hotels must have their own power generator sets running on oil. There is a need therefore to have more power generation plants connected to the national grid and distribution system. Coal and natural gas power plants are not possible in Nepal because the fuel here is transported by huge boats. More oil plants, even small nuclear plants, are possible but the fuel has to be transported from India. More hydro plants, or more efficient engines and turbines in existing hydro plants have to be installed.

Some foreign hydro power companies are very efficient in doing this, at the least cost possible to the consumers.

Second is the issue of roads. Roads are generally narrow and in bad conditions. Private investors can be invited in infrastructure development through toll roads, say in roads going to the airport, roads going to major cities or municipalities outside Kathmandu. Then public funds can focus on improving or expanding existing road network in the city and poorer municipalities.

Third, only few international airlines are serving Nepal and this creates a monopoly or duopoly position on certain routes. There is a need to liberalize the airline industry and allow more foreign players to compete with each other in getting passengers. Air fares will decline and more foreigners can afford to visit Nepal.

Fourth is about the fact of having only one international airport. Other major tourist destinations like Pokhara can be converted into an international airport too, so there is a need to expand and lengthen the runway. Many tourists want direct flight to their destinations, to reduce travel time, reduce danger of flight delays/cancellations, reduce cost of travel.

Fifth is the political instability that affect visitors. When we went to Pokhara for two days, there was a strike, and some passengers were stranded at the airport, no taxi to bring them to their hotels. Luckily, our hotel picked us up at the airport. But then we have to walk for about 45 minutes from our hotel to our destination. When we got back to Kathmandu, there was another strike at the city itself. Again, no taxi, many shops and restaurants are closed. This kind of political instability can discourage some tourists from coming in, or from coming back.

I like Nepal, the people are warm and friendly. I wish to see Nepal to be more prosperous in the near future. I wish to see Nepal to have stable supply of electricity that run 24/7, good infrastructure up to the mountains which can soon, attract investors that will build ski resorts, with hotels and cable cars. This is highly possible, so long as public policies will be more friendly to investors, local and foreign alike. Where there is ice in the mountains that stay for many months, moneyed foreign visitors will always be attracted to it.

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Business 360 19: Investments and Inequality in Asia, October 15, 2015

Business 366 20: Trade and Development in Asia, December 25, 2015

Business 360 21: Cheap Oil and Nepal, February 20, 2015

Two Years Writing for Business 360, January 05, 2015

Sunday, February 22, 2015

AEC 3: PCCI Muntinlupa Forum on ASEAN Integration

As December 31, 2015 comes closer, the implementation date of the ASEAN Economic Community (AEC), more public discussions are being held about the regional integration. Among such discussions was the one organized by the PCCI Muntinlupa chapter, in coordination with the Office of the Mayor of Muntinlupa City, Metro Manila. I was asked by a friend and fellow Rotarian Baby Bunye, who is a member of PCCI, to attend and do the synthesis of the forum.

It was a good and big forum, with speakers not only from Muntinlupa but also from some trade and tourism experts, from foreign chambers.

Before the forum officially started, PCCI invited several groups from the city. (1) Doxology was led by two bright and young singers from STI Alabang, they sang "Our Prayer." Really nice voices. (2) Entrance of colors was done by Lyceum ROTC Cadets. (3) National anthem and Muntinlupa March led and sang by Himig Muntinlupa Choir, and (4) ballet performance, three numbers/dances by Southernside Montessori School. Great performance by these young people, about 20 of them perhaps, I enjoyed it.

Program MCs were Emily de Leon of Filinvest Muntinlupa, and Joseph Chanco of Voice of the South paper. The President of PCCI Muntinlupa gave the opening remarks. Elvie is a fantastic and dynamic lady. Aside from being the President of the local Chamber, she is also a Rotary Club President, General Manager of Vivere Hotel, and several other civic and corporate engagements.

Inspirational message was given by the City Mayor. He was introduced by Roberto Franco, Past President of PCCI Muntinlupa. And I am very impressed by this man. He arrived earlier than the scheduled start of the event (11 am), and he stayed until the end of the panel discussions (about 3:45 pm). Most politicians, local or national, have the habit of speaking only then leave. That old attitude of "you listen to me, I need not listen to you." Mayor Fresnedi is almost the exact opposite. He spoke little and briefly, and stayed and listened attentively, that rare attitude of "you speak, I will listen". Bow.

The "Invest in Muntinlupa" and Center for Competitiveness programs were also launched that day. Key local partners were recognized and given plaque of appreciation.

Then the main event, the forum on ASEAN integration started. Not in the picture below was the forum moderator, Mr. Marvin Tumandao, MOST, PIO. Among the points raised by the speakers were the following.

Tony Abad, TA Associates

· Open up business, remove barriers and legal impediments

· 3 pillars of integration: socio cultural community, security and political stability, and economic community, AFTA in goods

· 99% of all goods intra-traded are at zero percent

· Competition law is needed, protect the consumers

Ruy Moreno, National Competitiveness Council

· PH geographically well-situated

· PH improved rannking WB-IFC, WEF, TI, HF

· Think big, operate small; no more silos, teamwork

· Competition never sleeps, bar always rises, maintain momentum

Cindy Jarabata

· Domestic tourism is real driver, 24-25M in 2013, 12-18% annual growth

· Budget airlines, RORO, contributed to high dom. Tourism

· Integration is harmonization

· Businessmen complaints, hard to do business here

Roger Lamb, British Chamber of Commerce

· Lack of good infrastructures

· Ease of doing business, we are still too low in global rank

· Constitutional issues, banning foreign competition in some industries

· ASEAN integration will not change that, only local consti change

Arlene Dorayu

· Local preparedness, do we have enough infra, low electricity costs

· Education, how responsive is HR development

· Need for continued dialogue of local governments with investors and consumers, constituents

Bodo Goerhlich, German Chamber of Commerce

· Upgrade the skills of local people so EU companies can hire/use them

· Problem how govt treats big companies; paperwork and requirements getting more difficult

· More registrations, permits required

· No direct flight to europe except Manila-London by PAL

The open forum was also fast and dynamic. Then awarding of Certificate of Appreciate to the speakers, closing remarks by Chito Borromeo, another Past President of PCCI Muntinlupa, raffles, and group photos.

I know only some of the people above, like Emily de Leon (left most), Elvie Quiazon and Baby Bunye to my right.

Thanks again for the opportunity to see the event and listen to your great speakers, Elvie, Baby. Two of the photos above are also from Baby's camera.

The full 20-slides synthesis is posted in slideshare.
A good, 40-slides presentation by Wendell Glenn Cagape, ASEAN 2015, Challenges to Regional Integration.
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See also:
Free Trade 4: FTA in APEC, July 09, 2007
Free Trade 18: Regional Trade and East Asian Model, July 31, 2011
Free Trade 33: ASEAN Economic Community 2016, February 16, 2014
Free Trade 34: ASEAN's Bilateral and Regional FTAs, February 27, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014
Free Trade 37: Multiple Concerns and Regulations in the ASEAN, September 11, 2014
Free Trade 42: ASEAN Trade and Unilateral Liberalization Challenge, January 23, 2015

EFN Asia 25: The ASEAN Economic Community in 2015, July 23, 2013
Business 360 16: ASEAN Economic Community 2016, March 21, 2014
ASEAN Tax Reform Initiative, April 10, 2014

Saturday, February 21, 2015

MILF, Fallen 44 and Napenas, Part 5

I am reposting these three short but erudite essays by a friend, Raffy Aquino, in his fb wall.
Meanwhile, my unsolicited advice to the following:

PNP Director Getulio Napenas -- you apologize to the public and the families of the 44 dead cops, or you commit suicide. You bastard liar.

President Aquino -- you also apologize to the public and the families of the 44 dead cops. You tolerated a suspended bureaucrat to run the show for a highly risky but ego-tripping show.

Nonoy Oplas
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Three short essays by Raffy Aquino

TEMPLATE

(February 19, 2015)

The intrusion was a catastrophic failure. The Board of Inquiry convened by government to look into it would conclude that the fiasco was due to the early inability to realize that success was impossible by covert means, insufficient ammunition, and the inadequacy of air cover brought about by attempts at plausible deniability.

An independent audit group within the agency that organised the mission would later report that the following factors significantly contributed to its tragic results: (a) the agency’s own failure to realistically assess risks and to adequately communicate information and decisions internally and with other government principals; (b) poor internal management of communications and staff; and (c) lack of stable policies and/or contingency plans. While the audit findings were contested by the agency’s top management, its head and other key officers were all forced to resign.

As a result of the fiasco, the President was compelled to publicly declare that "victory has a hundred fathers and defeat is an orphan ... Further statements, detailed discussions, are not to conceal responsibility because I'm the responsible officer of the Government ..."

I refer of course to the CIA, JFK, and the Bay of Pigs.

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* This news from PhilStar, February 20, 2015)

Medyo bastos na ang pangangatwiran ng pulis na 'to.

You plan a covert commando-style intrusion into MILF territory premised on your classification of the MILF as "enemy forces" and then conveniently substitute "time on target" for "prior coordination." Then you feign surprise that the MILF fired on the armed intruders you sent into their villages under cover of darkness.

You conveniently substitute "time on target" for "prior coordination" and then expect the army to provide artillery cover at a moment's notice. You had months to plan and train yet were unable to provide information adequate to guide artillery.

You conveniently substitute "time on target" for "prior coordination" and then expect the CCCH and IMT to order the insurgents to cease firing on your men at a moment's notice. "Prior coordination" through the CCCH was agreed upon precisely because it is not possible for it or the IMT to just walk into a firefight that had already started and miraculously stop the firing simply at the wave of a hand. You did not know this?

You blame the army for not mobilising to reinforce your men at a moment's notice but you yourself cannot account for the failure of the 300 plus cops you had in reserve very near the encounter sites to help their besieged comrades, other than saying they had to make way for the CCCH and IMT (who were not moving fast enough according to you) who were trying to diffuse the situation you created.

You stand with pride and accept responsibility yet you refuse to acknowledge the actual, specific mistakes you yourself -- not the MILF, not the AFP, not the CCCH-IMT -- made. You create this horrific mess that kills your people and then blame everyone else except yourself.

Yet you are no naive simpleton and scapegoat manipulated by cleverer and bigger men and then left twisting in the wind. The assumption is that there is a good head to accompany those two stars you have on your shoulders.

Matalino ka pero hindi ka marunong gumalang. Ano ba ang tingin mo sa mga kababayan mo? Tanga? As I said, nakakabastos na ang pulis na 'to.

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DINAGA

(February 21, 2015)

Parang yung mag-oovertake ka sa highway, palapit ng tulay o sa kurbada o sa paahon na hindi mo tanaw yung parating. Dahil nga alanganin, sa kalagitnaan, habang nasa oncoming lane ka na, pinanghinaan ka ng loob. Bigla mong naisip na medyo eng-eng yung desisyon mo. Isip -isip. Preno ka ng kaunti para makabalik sa likuran ng bus na uunahan mo sana. Pero bumagal din yung bus para paraanin ka. Aarangkada ka ngayon pero meron nang parating na nag-fla-flasher na. Papano na ngayon?

Ang patakaran mo, peace process, cease fire, at prior coordination. Official policy mo yan. Tapos dahil sa sulsol ng suspendidong pulls na kaibigan mo o ng Amerikano, tatalikuran mo young sarili mong policy. Magbibilin ka sa kaibigang pulis na siguraduhing matumba yung mga target at bilang afterthought, na siya na ang bahala sa coordinate-coordinate na yan.

Nang magkaipitan, biglang naalala mo yung policy ng gobyerno mo - peace process, cease fire, prior coordination. Shit, sabit. So taktika mo na lang, damage control - awatin na lang ang artillery, lalo na air cover, hinay-hinay na lang sa reinforcements. Pulis naman yang mga yan, handang mamatay para sa bayan. Plausible deniability na lang kahit hindi masyadong plausible.

So, dahil inconsistent ka, napasok ka sa alanganin. Head-on collision. At dahil kinapos ka ng tapang at dangal, deny-deny na lang, fudge-fudge na lang, spin-spin na lang.

Yun na nga - dinaga.

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See also:

MILF, BIFF, PNP and the Fallen 44, February 02, 2015

MILF, BIFF, and the Fallen 44, Part 3, February 03, 2015

MILF, PNP SAF and the Fallen 44, Part 4, February 16, 2015

War War is Stupid, February 16, 2015

Friday, February 20, 2015

Assessing the Performance of an Administration

If one has to assess the performance or non-performance of a government or administration, what is the better parameter, how much it has done, subsidized, regulated, etc. or how little it has done or intervened?

This is corollary to my friend Ethel's question in her fb wall, "Sige. Let's be fair. Give me something Noynoy has done in the past five years that is actually good for the Filipinos."

Some of the "pro" comments:

1. He took out wangwangs on the road. he curbed corruption.

2. He brought peace to Mindanao?

3. The creation of the GOCC Commission tasked to privatize, abolish, merge, the duplicating, non-performing corporations, offices of the huge bureaucracy.

4. Jailing of three senators and former lawmakers.. never done before

5. The PERCEPTION of an honest and transparent government in the international community,

6. Napaalis niya si Corona.

And the “anti” comments:

1. He curbed corruption because he wants all corruption to go straight to the palace. See what happens to LTO plates.

2. He gave each congessman and senator so much in lump sum appropriations under PDAF and DAP

3. He was able to avert an armed confrontation in the West Philippine Sea against an armed invader.

4. He gave the bird to the Catholic Church by getting congress to pass the RH Bill.

5. I see wangwangs everywhere

6. Zero infrastructure in 5 years/ LRT/ MRT in ruins.

Most people would use how much subsidies and welfarism, how much regulation and interventionism, how much taxation of the rich or top 1%, etc as their parameter. So less welfarism and subsidies means bad government.

I take the 2nd parameter. The worst thing that a government or administration can do to its people is that it does and intervenes so much. So a government that does not intervene too much, which "does little" is actually a good thing. When a government requires you need a permit to renovate your CR or change the color of your roof before you move, even if there is zero corruption involved, you will hate that government.

My beef is that PNoy Aquino is not liberal enough, he is not non-interventionist enough. Lots of past interventionism and bureaucratism are not removed yet.

In a free, (classical) liberal society, everything is allowed except for a few prohibitions. LIke no killing/murder, no stealing or destruction of others' property, no abduction/kidnapping, no rape/trafficking, etc. The rest is allowed. Have alcohol and drugs, sex, open shops left and right, etc. so long as no one is hurt or harmed.

In an unfree society, everything is NOT allowed, prohibited, unless one gets a permit from the government. Thus, one cannot drive his own car, cannot open and start a business, cannot repair his house or office, cannot sell something, etc. unless he/she gets a permit.

It is not so much the degree of welfarism and subsidies given away, but the degree of freedom that people enjoy, including the freedom to be hard working and freedom to be lazy, that should be given more weight in assessing a government.

So if one is a lover of huge welfare, beautiful infrastructures, then he/she can love China and its communist government, love PM Xi Jinping. They give lots of free housing, free university education, beautiful roads and airports, etc.

But if one is a lover of freedom, he will hate China and any commie or one-party government. No fb and youtube, no twitter and gmail, etc.

How about Singapore? It allows fb and youtube, twitter and gmail, etc., have lots of beautiful infra like roads and huge airport. Nice, except that you can never ever criticize the government with those social media. Their government gives heaven on earth, it should not be criticized.

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Pol. Ideology 60: Lecture in Nepal on Liberalism, Rule of Law, Civil Society, January 13, 2015
Pol. Ideology 61: Raison d 'Etre of Government, January 30, 2015

Business 360 21: Cheap Oil and Nepal

* This is my article for the monthly magazine published in Kathmandu, Nepal, January 2015 issue.
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Cheap oil: an opportunity to deregulate and demonopolize the oil industry

The continued decline in global oil prices is at least good news for many developing economies who can take advantage to grow faster. After all, most economic activities require oil input – from buses and cars, tractors and fishing boats, airplanes and ships, bulldozers and backhoes, oil power plants and generator sets, and so on.

Current low prices have not been seen since six or more years ago. Below are the charts for the last five years (left) and past month (right) of West Texas Intermediate (WTI) crude prices.

Figure 1. Crude oil price at WTI, last 5 years and last month ending December 26, 2014

Source: http://oil-price.net/dashboard.php?lang=en

While some big oil companies and their allied firms in other industries are not happy with this fall, most

industries and sectors that rely on bought oil products are relieved. People who save on their land travels because of high oil prices can now drive and visit more places as their cost per trip has significantly gone down. Airlines, shipping lines and bus lines should be capable of cutting their fares as their fuel costs have significantly declined. All these help expand the production of goods and services, eventually fuelling economic activates.

But why have world oil prices gone down this much recently? The quick answer could be the expansion in oil supply, much larger than the expansion in demand for oil.

On the supply side, the huge output from US shale oil, plus Canadian oil have swamped many oil importing countries’ inventories, and OPEC member countries did not cut their collective output as they used to do, retained its output at around 30 million barrels a day in order to protect their global market share.

On the demand side, some industrial countries experienced low or flat growth. Japan even went into a recession in 2014. Thus, their oil demand either went flat or negative. Meanwhile cars’ fuel efficiency worldwide is improving, meaning they can run longer stretch of roads with the same amount of oil.

The reduction in global oil prices is also reflected in Nepal’s local oil prices, as shown below.

Figure 2. Diesel prices in Nepal, in US$ per liter, period ending December 22, 2014

Source: http://www.globalpetrolprices.com/Nepal/diesel_prices/

From this writer’s limited readings of the oil sector in Nepal, three interrelated issues stand out.

First, the oil shortage in some areas of Nepal in recent weeks, an ironic situation since the world is awash with an over-supply of cheap oil. The reason given was that the “fuel supplied by Indian Oil Corporation (IOC) is not as per the standard set by Nepal Oil Corporation… officials are undecided on whether to return them to India or supply them in the market.” (source: Nepalupclose.com)

Second reason is state monopolization of oil trading through the Nepal Oil Corporation (NOC). Oil prices are fixed by NOC’s board, which is composed of officials from the Ministry of Commerce and Ministry of Finance, among others.

Third reason could be oil supply monopoly of Indian Oil Corporation Limited (IOCL) to NOC. IOCL is also a state-owned enterprise of India, the biggest corporation there and among the biggest firms in the whole world.

The first problem is temporary and not permanent, but it can occur again in the future because it is an inter-monopoly agreement and consumers normally have zero choice in a game between monopolies.

The second problem is slowly being addressed when NOC introduced partial fuel price deregulation in September 29, 2014, where “NOC… will let oil prices go up or fall by up to two per cent two times a month.” (source: Himalayan Times, October 19, 2014). A better approach is to fully deregulate oil pricing, competing oil companies and gas stations can set their prices based on the extent and degree of competition.

The third pProblem can be addressed when the oil industry is deregulated as competing oil companies can source their oil from other suppliers.

These measures are easier said than done but the public have already seen and experienced how things are working or not working under a state monopolized oil industry.

Meanwhile, many Asian economies have experienced improvement in energy efficiency per unit of economic output. Many of the economies that realized high efficiency gains in the last decade had access to cheap energy.

Figure 3. GDP per unit of energy use, 2000 (blue) and 2011 (red), constant PPP $ per kilogram of oil equivalent (HK’s level is $24)

Source: ADB, Key Indicators of Asia and the Pacific 2014.

This means that in Hong Kong in 2011, for every kilogram of oil equivalent, its GDP rose by $24, an improvement from only $19 in 2000. In the case of Nepal, for every kilogram of oil equivalent used in the economy, domestic output in 2011 rose by almost $6.

Low world oil prices plus rising energy efficiency are good combinations to implement market reforms where competition by different players is the main regulator in protecting the public with more affordable prices of oil and other energy products. Competing players will have wider leeway to adjust not only to each other but also to their customers, big and small groups alike.

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See also:

Electricity and GDP Growth, April 15, 2014

Innovation, Inequality and Inclusive Growth, August 25, 2014

Investments and Inequality in Asia, October 15, 2015

Trade and Development in Asia, December 25, 2015

Two Years Writing for Business 360, January 05, 2015

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