Labor Econ 16: Wages in Asia, Robots and OFWs

International Labor Day tomorow, various labor issues will be highlighted once again. In this chart from a Bloomberg article, China Is Set to Lose Manufacturing Crown, April 29, 2015, the cost of 

labor in Beijing, Shanghai, Guangzhu are twice than those in Cebu and Hanaoi; and 3-4x than those in Yangon and Pnom Penh.

The article noted that  "Manufacturers will be drawn to Southeast Asia's strengths, including the strategic location and cheap labor of Myanmar, Cambodia and Laos... By 2030, more than half of 650 million people in Southeast Asia will be under the age of 30, part of an emerging middle class with high rates of consumption...."

Another set of data, 2 1/2 years ago, from Arangkada Philippines.

I think these numbers represent only the monetary pay. The various mandatory social contributions like SSS + PhilHealth + PagIBIG to PH government corporations, plus HMOs, plus mandatory leaves with pay like paid holidays, are not included yet.

One problem with ever-rising mandatory and legislated minimum wage is that entrepreneurs have the option of hiring as few workers as possible, while giving high pay and  various perks to  those they have hired, to keep their productivity high, people who can do various tasks.

Another option is to use more machines and robots. Here are two news reports, the first from FT, February 10, 2015, and the second is from The Telegraph UK, February 03, 2015.

(1) FT: "Robots will replace a growing number of jobs in industries including automotive and electronics in the next few years, particularly in east Asia, according to new research.

The prices of industrial robots have been falling steadily, dropping about 14 per cent in the past four years to $133,000 for a typical system, while capabilities have been expanding.

Some robots are even cheaper: the Baxter robot from Rethink Robotics has a listed base price of $25,000, making it accessible to smaller companies that might have found it difficult to invest in earlier generations."

(2)  Telegraph: "In a paradigm-shifting development, the hotel in question, the Henn-na Hotel, will be partially staffed by what are termed “actroid" androids – remarkably human-like robots who will be able to greet, carry luggage to rooms, make cups of coffee – and even smile....

Three of the uniformed actroids will serve as reception staff at the Henn-na Hotel, scheduled to open in July. Alongside them will be four service and porter robots, an industrial robot serving as a cloak room attendant and several robots whose primary task will be to clean."

On OFWs 

Related to Mary Jane Veloso's case in  Indonesia, some people blast the PH government's "labor export policy". There is such a policy? I am not aware of that policy.  If so, what law or RA, or Executive Order (EO) or Administrative Order (AO) is it?

Employment is a private contract between the employer and employee, whether the employer is a foreigner or local; whether the employment will be abroad or here. Thus, the decision  to work abroad, or study and live even temporarily abroad, is an individual and/or household decision.

And if people decide to  work abroad, it is important to  obey the rules and regulations of the new destination country. We may disagree with their laws, religious and cultural  practices, but we are guests there, we have to respect and obey their rules. Otherwise we should not entertain  the  idea of setting foot there in  the  first place.

Then some people blast that "employment contract" because it perpetuates inequality in society between the workers and businessmen, employees and employers. Well if people do not want to become employees -- whether by Filipino or foreign employers -- they should employ themselves, become start up entrepreneurs and job creators. It need not be a big or medium size company, it can be a micro project like food stall, or an internet shop, or become free lance writer and consultant, etc.

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See also:

Labor Econ 12: Wallace, Lenin, Stalin, Mao, May 02, 2013 

Labor Econ 13: The Term 'Jobless Growth' is Wrong, April 15, 2014

Labor Econ 14: Labor Day and Government-Mandated Minimum Wages, May 01, 2014 

Labor Econ 15: Europe's High Long-Term Unemployment, August 06, 2015 

Inequality 25: On High CEOs Pay and Legislated Minimum Wages, April 30, 2015

Inequality 25: On High CEOs Pay and Legislated Minimum Wages

What is wrong with  this illustration? ....

Well, if the $10,000 an hour CEO is able to expand the company, retain existing jobs with bonuses at year end, and hiring more, then his rate is justified. In contrast, another CEO gets $1,000 or $400 an hour, and the company goes bankrupt, the workers who get $8 or $10 an hour will soon get $0 an hour. The latter is not exactly a helpful model of a CEO for the rest of society.

An entrepreneur who has empowered some people who used to earn nothing or $5 an hour somewhere and was hired at $8 an hour, will soon become a criminal, a law violator, if he does not give the mandatory, government-dictated minimum of $10 an hour or higher. Mentioning a CEO who earns $10,000 an hour is the trigger to justify and institutionalize a higher and ever-rising mandated minimum wage.

We should respect individual decisions. Many in the haves take the me, me, me only perspective. But even some have-nots also exhibit the same attitude. The time they spend on political lobbying is 5x or 10x larger than the time they spend on getting real work or do micro-entrepreneurship. With political lobbying, via their votes during elections, they can get regular cash allowances, free healthcare, education, tractor, subsidized housing, etc.

If a CEO earns $20,000 an hour and gives away to charity $15,000 an hour equivalent, is it still a problem? 

That Seattle CEO is cool. There are many CEOs who do more than him. Like the CEO of Burger King who has nearly $2 billion in wealth and income but owns no car, no house, no watch, and intends to give away at least half of his money someday to charity.

About Manny Pacquiao's huge pay in his fight against Mayweather this Sunday despite only six months preparation, well, no one can become a Pacquiao within 6 months, or 12 months. Pacquiao reached his current throne after 15 or 20 years or more in the ring. Besides, if one will count the number of people working for him -- head coach, asst coaches, conditioning coach, sports physicians, asst trainers, masseurs, dieticians/cooks, bodyguards, etc. -- the number is big. And all of them are paid not by Bob Arum but by Pacquiao himself.

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See also:

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

Inequality 22: Ten Men Eating Equally but Paying Unequally, February 27, 2015 

Inequality 23: On Poverty, Agriculture and Motorcycles, March 10, 2015 

Inequality 24: Inheritance, Poverty and Envy, April 17, 2015

PH Travell Tax Should be Abolished

The Philippine travel tax is one of those envy-driven taxes. Just get the money by force, no need to explain where it is spent. This applies to Filipinos who travel abroad for pleasure/tourism, business, conference, etc. I took this photo last April 22 on my way to KL, Malaysia.

OFWs are exempted from paying this tax, but they still have to get that certificate, meaning they still pay P200 to the government.  If one pays the full amount of tax, no more processing fee. But if one avails of the reduced rates, say he brings a child who is below 12 years old, he pays the reduced rate + processing fee.

Those who travel in business class also pay twice the rate for regular economy passengers. It is indeed an envy-driven taxation The government is saying, "you can afford to travel abroad for business or conference or tourism, you can afford to pay this tax." 

I said this before, I will say it again -- travel tax should be abolished. But sadly, all administrations from the 80s to the present have been enjoying this tax revenue. So cutting it would be against their personal interests and  political career. 

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See also:
Airport terminal fees, April 05, 2010 
On Airport Terminal Fee, December 09, 2011 
Migration and Freedom 13: Travel Tax Robbery, December 06, 2011
Migration 19: PH Immigration Bureaucracy, September 08, 2012
Plane Delays and NAIA Bureaucracy, February 05, 2014 
Migration 21: Why Do Many Filipinos Work Abroad?, January 14, 2015

Nepal 5: Building Quality, Construction Permits and Earthquake

The strong earthquake that hit Nepal last Saturday has affected so many people. This BBC news today quotes a huge figure from  the UN.

When I was in Nepal  last January, I took some photos of Kathmandu and Pokhara from the plane.

These three shots were taken last January 12 afternoon, The plane was descending. Smog and smoke blurs the view of the mountains. There are very few buildings that are 10 storeys or higher.

Dust and smog blurs the view of the city. Some roads are unpaved and hence, dust rise when vehicles pass by. The roads between rows of houses and structures are generally narrow, they are not visible from this elevation.

The houses are generally bungalow type. I do not know how sturdy were the steel foundations that can protect the structure from strong ground movement. But very likely, their building quality is lower or weaker compared to big and tall buildings that are welded by strong steel bars, which are good protection against strong earthquakes.

 Below, some shots of a deforested hill in Pokhara, converted from forest to non-forest use, mainly for agriculture and human settlements.

Steep hill sides are stabilized by rows of terraces. Columns of trees serve perhaps as boundary markers between and among private lands and farms.

There are many houses in this hill. When there are strong earthquakes, they are prone to dangerous landslides.

Has the Nepal government, national and local, failed to enforce its building code? A bloomberg article today headlines, Nepal Building Code Author Says Disaster Was Waiting toHappen. The report noted,

In Nepal, municipalities are the responsible agencies to issue building permits, but only three out of 58 municipalities have tried to incorporate the national building code into their permit process, Naresh Giri said in a 2013 report for PreventionWeb, an information portal for the disaster reduction community. Even these attempts have been “too limited and lack the necessary verification to ensure compliance,” Giri wrote.  

Land-use plans and building code requirements aren’t applied in the countryside and they’re not enforced in slums and other informal urban settlements, said Charlotte Benson, a senior disaster risk management specialist with the Asian Development Bank in Manila.

From the WB's Doing Business annual reports, the procedures to get a construction permit in Nepal do not look too many. What pulled down  its global rank is the huge amount of fees and taxes that the Nepal government, national and local, impose on its people.

This earthquake should be a lesson for the Nepal government, to avoid high bureaucratism in giving construction permits. The people should use their money in buying more steel, more strong materials for their  houses and buildings, not in paying more fees and taxes, and possibly bribes, to government officials in  charge of granting the construction permits.

Earthquakes (EQs) are part of nature. Along with volcanic activities, they can create new islands, sink old ones, raise an  existing land or mountain, and so on. People and even geologists will never know when and where the next big EQs will happen. People can only prepare by having more sturdy houses and buildings and in the  process, minimize damages and casualties.
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See also:
Earthquake 6: One Year of Japan EQ and Tsunami, March 12, 2012
Nepal 3: Banda/Strike and Forced Closure of Shops, Schools, Transportation, February 07, 2015
Nepal 4: Earthquake and Civil Society Initiatives, April 27, 2015 
Business 360 25: Reducing Construction and Electricity Permits, April 08, 2015

AEC 12: Workshop on Trade Liberalization at the APF 2015, Kuala Lumpur

Last week, April 23, I was one of three speakers in a workshop on trade and investment liberalization in the ASEAN organized by the Institute for Democracy and Economic Affairs (IDEAS) and South East Asia Network for Development (SEANET), during the ASEAN People's Forum (APF) 2015, in Kuala Lumpur, Malaysia.

The two other speakers were Prof. Cris Lingle of the Universidad Francisco Marroquin (Guatemala) and Center for Civil Society (CCS, India), and Datuk Ravindran Palaniappan of Malaysia's Ministry of Trade and Industry (MITI). Photo below from left: Cris, me, Datuk Ravindran, and Wan Saiful Wan Jan, IDEAS CEO, who moderated the event.

A speaker from Thailand failed to come. But Cris is an articulate speaker,also Datuk.

Datuk's speech was covered by the Malaysian Star, in its news report the next day, No discrimination against domestic investors in Asean,says Miti

My presentation was entitled, "Unilateral Trade Liberalization: Benefits to ASEAN People". Unilateralism is defined as

* “Going alone”, no need for reciprocity in reduction of tariff and other trade barriers (Richardson, 2001).

* Two types of unilateralism: (1) sectoral or few products, and (2) multi-products. Examples of (1) was the UK corn laws removal (1846); Ex. of (2) are APEC Individual Action Plans (IAPs).

Famous economist from Columbia U., Jagdish Bhagwati has this beautiful advice: 

“if we refuse to reduce our trade barriers just because others do not reduce theirs, we lose from our trading partners’ failure to reduce their trade barriers and then we lose twice over from our failure to reduce our own.”

Then I showed these 5 cases of unilateralism, starting with HK, the perennial "freest economy in the planet" yearly by the Fraser Institute's Economic Freedom of the World (EFW) and Heritage Foundation's Economic Freedom Index (EFI).

Our neighbor in the ASEAN also took this trade policy since about two decades ago and the results have been good.

Then the cases of NZ and Chile. I wanted to discuss also the case of UAE and Dubai, but I lacked time to do more research that day.

Below, light green line, CLMV means Cambodia, Laos, Myanmar, Vietnam. The red line is for the ASEAN 6, namely Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. The middle, orange line is for the whole ASEAN 10 countries.

Then I discussed the Gravity Model of Trade  in analyzing and quantifying the contribution of unilateralism of four ASEAN countries, Indonesia, Malaysia, Philippines and Thailand, to their export performance and share of GDP. I will discuss and write it in another blog post. Four UPSE students, members of my undergrad organization then, UP ETC, prepared the econometric modelling and regression analysis.

The open forum was fast and dynamic, as there were NGO leaders from Malaysia, PH, Vietnam, etc. who are not comfortable with free trade, much more with unilateralism in trade liberalization. Cris and Datuk were great in answering the questions.

Several points were raised by a participant from the Philippines, Dr. Nymia Pimentel Simbulan of PAHRA and PhilRights. She said that while economic liberalization may be good, the way it is implemented by many governments result in more poverty. Examples are (1) dumping of cheap agricultural products in the Philippines, resulting in the displacement of many Filipino farmers, Another is (2) mining where big foreign minilng companies that occupy huge tracts of land just destroy the land and rivers and they leave later with their huge profits.

I answered that in concern #1, people generally change. So while the grandfather was a rice farmer, the father is also a rice farmer, the son should also be a rice farmer, and so on. One can move from rice farming become a vegetable farmer, chicken and poultry farmer, tilapia farmer, and so on, On #2, it is not true that big mining companies also mine huge areas of the country. I think their total mining concession areas could be no more than 0.01 percent of the country's total land area. Besides, if a company has a 2,000 hectares concession area, it does not mine all of it, normally they would mine only 50 or 100 hectares and when it's mined out, it is covered with new soil and reforested. Then start mining the next area.

There was also a question from the audience about the impact of strict intellectual property rights (IPR) protection in pharmaceutical products under the proposed TPP Agreement where Malaysia will become a member; threats to AIDS and other patients  Wan asked me to answer that question. I said that IPRs like patents apply only to newly-invented medicines. Though patent life is 20 years, the commercial  period is only about 8-10 years as the first 10-12 years would be consumed by the various clinical trials (first with animals, then with moderately sick people, then with seriously ill patients, and so on, involving thousands of people from different countries) and regulatory approval processes.

Besides, in  the  WHO Essential Medicines List (EML), I think about 99 percent of them are off-patent drugs and vaccines, meaning there are no IPR issues and these are useful, disease-killing medicines too, at lower prices. IPR in newly-invented medicines should be respected and protected, otherwise innovator companies will have little incentives to produce and invent new, more revolutionary medicines that can  tackle new and  evolving diseases.

Above group photo from left: Wan, me, Minh Nguyen, Cris, Datuk. Minh is from Hanoi, Vietnam, and he is the editor of doimoi.org, a new think tank and translator-publisher of some important classical liberal books and papers into Vietnamese.

Thanks again to IDEAS and SEANET for that great forum.

Nepal 4: Earthquake and Civil Society Initiatives

Very sad to see the huge destruction in Kathmandu and other places in Nepal after the magnitude 7.8 earthquake yesterday.

Reports as of this writing say that there were 2,500+ deaths and 60,000+ injured people. All of my Nepalese friends there were safe, but they were not exactly fine.  Yesterday they could not go home and have to stay in open areas, in case a round of strong after shocks would shake the ground again. No electricity too, some could not post updates because their phone batteries were fully discharged.

Here are some photos of Durbar Square, Kathmandu. Above, from my camera last January, lower photo from Bigyan Prajapati; not my friend but his photos were shared by some friends in fb. My good friend Charu Chadha of Media 9, which publishes Business 360 and World of Women (WOW) magazines, toured me for half day after I and Media 9 team came back from Pokhara.

Below, same photo sources, respectively.

Some of the things needed urgently in Nepal, posted in twitter, #NepalQuakeRelief.

I read once that earthquakes in Nepal may not be frequent, unlike in the PH, about 5 EQs a day on average, although majority of them are weak, felt only by seismograph machines, or happen under the sea. But Nepal EQs can be strong as the Indian sub-continent continues to collide or move deeper with the Asia mainland sub-continent. Thus, Mt. Everest and the other Himalayan mountains keep rising higher.

There should be hundreds, even thousands, of donation drives ongoing worldwide by now. Many of them should be honest and reliable but a few could be bogus. If you wish to help, I can recommend one or three groups that are honest.

1. Media 9, Kathmandu, headed by its Editor, Charu Chadha.
2. Samriddhi The Prosperity Foundation, headed by Robin Sitoula.
But I don't know if they are launching their own donation drives; will update if they do.
3. Krishna Neupane, a friend who used to head a small think tank, Limited Government Nepal, http://www.gofundme.com/sxmud5h9.
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See also:
Earthquake 6: One Year of Japan EQ and Tsunami, March 12, 2012
Nepal, Maoist Government and Samriddhi, Part 2, April 07, 2014 
Nepal 3: Banda/Strike and Forced Closure of Shops, Schools, Transportation, February 07, 2015

ALF 3: Photos with Friends, Kathmandu Conference, January 20, 2015

Also my travel blog, previous articles about Kathmandu and Nepal in January and February 2015: Kathmandu to Pokhara by plane, Tribhuvan Airport,  Durbar Square, Swayambhu Temple, Kathmandu from the Air.

AEC 11: Trade and Economic Development is Social Development

I arrived yesterday afternoon from Kuala Lumpur, after attending half-day of Day 1 (April 22) and half-day of Day 2 (April 23) where I was one of three speakers in a panel workshop on "Will Greater Economic Liberalisation Actually Help the Poor in ASEAN?", sponsored by IDEAS, SEANET and ACSC/APF 2015.  Have to skip the morning plenary of Day 2 because I was not feeling well and had to stay in my hotel room.

This news from interaksyon, I attended that townhall meeting/plenary in the afternoon  of Day 1 at Wisma CMA in KL. The report says,

"Charles Santiago, opposition member of parliament of Malaysia, cited a survey of the ASEAN Secretariat in 2013 which found that three of four people in the region do not have a real understanding of ASEAN. 

"The impression is ASEAN is an elite project, a business ASEAN. The Senior Officials Meetings promote business. Business is the most pressing motivation. The economic pillar is the most advanced pillar. I’m not saying that there’s anything wrong with that. There’s simply not a fair balance between business ASEAN and social ASEAN,”

Santiago said. U Shwe Maung, an MP in Myanmar representing the Rohingya minotiry, agreed with Santiago and said his constituency does not know about ASEAN. “Their main concern is the open prison where they live. What is important to them is their citizenship rights,” he said.... 

For Charles Chong, Deputy Speaker in Singapore, ASEAN is irrelevant to its people because “many do not really care about ASEAN, as they look to government for economic development....”

Somehow those parliamentarians and legislators are correct. ASEAN, like the UN, OECD, WB, IMF, ADB, ILO, WHO, etc. are organizations or "clubs" of governments, and most ordinary people in any of their member-countries do not find any or all of them that relevant to their daily lives.

But to imply that there were not much gains in the economic situation of the poor in the member-countries as a result of their membership in the ASEAN is wrong. Take this data for instance, which shows how Cambodia, Laos, Myanmar, Vietnam (CLMV) were able to expand their economies by 5-6x in just a span of two decades, largely because they have liberalized their economies to their neighbors in the region, and to other countries.

Another article from interaksyon, today. I think it's the plenary meeting yesterday morning. I was on my way, or I was already at the KL international airport that time. The report says,

"Regional integration has potential for good, but it has to be fair and its benefits must be experienced by the people. A Social ASEAN is one where people matter where the fruits of integration are distributed among the people,” said Charles Santiago of MSN. 

 Santiago, who is also an opposition member of parliament from Malaysia and chairman of the ASEAN Parliamentarians for Human Rights, said the interests of the majority remain neglected in the ASEAN integration process...."

I think many of the NGO activist leaders in the APF did not see this chart from some ASEAN government officials' presentations. While the AEC is the central focus of the association, there are also ASEAN socio-cultural community and ASEAN political community.

Ok, I am not exactly a great fan of the ASEAN and its member-governments. But the efforts of those governments to liberalize trade and  investments among member economies should be recognized too.  Many NGO leaders just specialize on  negativism and insisting that only their version of what is "development" is the correct one.
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See also:
AEC 7: AAA Law's Forum on Post-2015 ASEAN Integration, April 09, 2015 
AEC 8: Trade, Competition and Innovation in the ASEAN, April 13, 2015 
AEC 9: SEANET Forum on Economic Liberalization, Kuala Lumpur, April 23, April 19, 2015 
AEC 10: Indigenous Rights, Labor and Human Rights in the ASEAN, April 21, 2015

BWorld 1, PH Economy and Politics, Is there a Disconnection?

* This is my article today in BusinessWorld Weekender.
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Many people are asking why there seems to be a disconnect between the Philippines’ dynamic economic performance on the one hand, and its unstable or messy politics on the other.

In the words of a friend, Prof. Amado Mendoza, Jr. of the University of the Philippines Political Science Department, who recently explored this theme in an article in Interaksyon: “There seems to be a firewall between the Philippine economy and the political sphere such that the economy can still grow (GNP- and GDP-wise) even if the political situation is messy.” (See Interaksyon OPINION | How did PHL economy grow despite messy political situation?)

There are two ways to tackle this question. One is to assume or accept that the statement is correct, that there is indeed a “disconnect” or “firewall” between the country’s economics and politics. The other way to tackle this question is to prove otherwise, that there is no disconnect between the two, that they are actually interlinked. Let us call them the “disconnect” and “connection” hypotheses.

Among the proof given by the “disconnect” hypothesis are the following: (a) the Philippine stock market rising above 8,100, which is double the 4,000 in September 2010; (b) continued upgrades of the Philippines by the various international ratings agencies to stable grades and high growth projections, and of course, (c) high gross domestic product (GDP) growth performance, the highest in ASEAN and second highest after China in the whole of Asia if not around the world. Here is a list of positive developments in the Philippines as contained in a presentation by Foreign Affairs Assistant Secretary Luis T. Cruz at the Networking Forum on Post-2015 Integration on April 8, 2015.

And yet, on the political front, proof of the “disconnect” are as follows: (a) declining public satisfaction with the President’s performance -- from a net satisfaction of 39% in December 2014 to only 11% in March 2015 -- as per the Social Weather Stations; (b) calls for the President’s resignation from various sectors after the Mamasapano incident; (c) dissatisfaction with government inefficiencies, such as the Bureau of Internal Revenue’s (BIR) anti-business rules, and the Land Transportation Office’s (LTO) “no plate no travel” policy despite its failure to provide the plates.

The “connection” hypothesis recognizes all the above proof but it offers a different interpretation: people want economic optimism to be extended to political optimism. They want the bullish economy to have continuum in the government and political field. With a good, if not high economic performance, people expect good performance by the political leadership through more transparency and less red tape.

More people want to put up businesses, and yet government agencies -- local and national -- put up many requirements, permits, taxes and mandatory contributions. More people buy new cars and motorcycles, but the LTO imposes a “no plate, no travel” policy with hefty fines even if it has a backlog in the issuance of license plates and stickers. More people buy smartphones and laptops, yet internet speed is slow and expensive compared to many of our East Asian neighbors.

The International Monetary Fund (IMF) released its World Economic Outlook (WEO) 2015 Report last April 14. WEO’s online database is a useful source of information for various annual macroeconomic indicators dating back to 1980. Here are some data that can help contribute to the above discussion. Purchasing Power Parity (PPP) is used in national accounting to remove high valuation in mostly rich countries of similar goods and services as those in other countries. Thus, GDP valuation is more or less equivalent.

The above numbers show the following:

One, the Philippines’ economic expansion over the last two decades of 3.7 times was modest, compared with Indonesia, Malaysia and Singapore, but higher than those of Thailand and Brunei.

Two, socialist or monarchy governments of Cambodia, Laos, Myanmar and Vietnam (CLMV), which began to liberalize their economies only about a decade or two ago, experienced fast expansion. Their low economic base in the 1990s partly explains this.

Three, there is need to accelerate economic liberalization of the Philippines in trade (goods and services) and investments, allow foreign businessmen to invest with majority stakes in heavily protected if not pariah sectors like telecom, power generation and distribution, airlines and shipping, hospitals and healthcare, etc. The quick economic expansion of CLMV countries is a guide for the Philippines.

So, is this a case of “disconnect” or “connection” between Philippine economics and politics? It appears to be the latter. The people want their economic freedom to expand in the sphere of politics and government. Ramblings in the political sphere are expressions of this desire for more personal and enterprise freedom. The people want the government to give them more leeway, to have less bureaucracy, so they can reach out to more sectors and sub-sectors of the economy, and create more jobs.

A graduate of development economics from the University of the Philippines School of Economics, Bienvenido “Nonoy” Oplas is president of Minimal Government Thinkers, a Philippine-based think tank that propagates free market economics.

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(See also, Ipagbawal ang GDP Growth, Part 3, April 06, 2015)

AEC 10: Indigenous Rights, Labor and Human Rights in the ASEAN

Tomorrow, the ASEAN People's Forum (APF) will start in Kuala Lumpur, Malaysia. It is a gathering of largely anti-liberalization, anti-privatization and deregulation groups and NGOs. The 3-days event (April 22-24) is held before the annual ASEAN Summit will officially start, April 25-27, also in KL.

The APF Secretariat is sending teasers to registered participants about selected panels by email. Here are four of those teasers.

(1) On indigenous lands. This panel is an attack on state and corporations "collusion". The term "non-state" should actually and technically include not  only private corporations but also NGOs, people's organizations (POs), church groups, rebel groups and other CSOs as they are all "non-government" entities.

Land grabbing and stealing is a crime, and it does not matter if the land grabber is a local or foreign corporation or individuals, rich or poor. The main function of the state is to enforce the rule  of law, especially the law against stealing and disrespect of private property rights, and the law against aggression against individuals. This concern can be tackled anytime anywhere and not an ASEAN-specific issue.

(2) Forum on "right to work" and "rights of workers". These are fine. But it seems that the advocacy has stopped there. What about the "right not to hire", "right to fire" of lazy or dishonest or inefficient job applicants and/or workers? What about the "rights of entrepreneurs"?

Technically, "right to work" is an individual  decision. There are many individuals who do not want to work even if a job opening is available to them; or do not want to stay to jobs they already hold. The same way, a "right to entrepreneurship" or "right to create jobs for others" is also an individual  decision. Entrepreneurs can choose to hire only two workers instead of five or 10, and give those hired high pay, lots of gadgets and machines, training and seminars, to improve their productivity so they can do the work of 5 or 10 people.

(3) 'Extraterritorial obligations in the context of cross-border investment in ASEAN: the role of human rights institutions'

Date: Friday, 24 April 2015, 1.30 - 3.30pm

"The ASEAN Economic Community is likely to produce an escalation in cross-border investments within ASEAN, which brings with it significant human rights and environmental challenges. The workshop will examine recent transboundary human rights complaints to the Thai and Malaysian National Human Rights Institutions regarding cross-border investment by Thai and Malaysian companies in Laos, Cambodia and Myanmar. The discussion will highlight the role of national and regional human rights institutions in holding states and companies accountable for the results of their investments. It will also address the accountability and rule of law challenges that enable such human rights violations to occur and experience to date in investigating and remediating human rights complaints."

Speakers

       - Dr. Nirun Phitakwatchara, Commissioner,

          National Human Rights Commission of Thailand (NHRCT)

     - Professor Dato' Dr. Aishah Bidin, Commissioner,

          National Human Rights Commission of Malaysia (SUHAKAM)

       - Dr. Seree Nonthasoot, Representative of Thailand to

           the ASEAN Intergovernmental Commission on Human Rights (AICHR)

       - Mr. Eang Vuthy, Executive Director,

          Equitable Cambodia (Cambodia)

      - Mr. Ye Lin Myint,

           Dawei Development Association (Myanmar)

      - Ms. Sor. Rattanamanee Polkla, Coordinator,

           Community Resource Centre, (Thailand)

Facilitators: Earth Rights International (ERI) and Towards Ecological Recovery and Regional Alliance (TERRA)

Organised by:

Community Resource Centre (Thailand), Suaram (Malaysia), 

Equitable Cambodia (Cambodia), Towards Ecological Recovery and Regional Alliance (TERRA)

I cannot attend this forum because I  will be flying back to Manila morning of that day. But similar to my comments in #1 above, human rights (HR) is a fundamental issue as it affects the right to life, right to private property ownership of the people. It does not matter if the HR violator is a local or foreign company or individual.

Now if the organizers and speakers of that panel would argue that AEC and intra-ASEAN investment liberalization is to blame, they are mistaken. With or without the AEC, or any other regional or multilateral economic agreements, the people's basic HRs should be promulgated and violators, local or foreign, government or private personnel, should be made accountable.

The AEC is about greater economic integration of the 10 member-states of the association. It is both integration and competition at the same time, the same way that neighboring cities in the same country can be competing in attracting investors and visitors. And  it is a good thing because it encourages, even forces people and officials, to become more efficient, more industrious and ambitious, more transparent and accountable, to their stakeholders and customers.

It is unfortunate that a number of NGOs and CSOs fall for the populist belief that accelerated economic liberalization, greater economic integration and competition within the ASEAN, can be a bad thing.

The new regional center and think tank South East Asia Network for Development (SEANET) would endeavor to help clarify these issues through more public education, citizens and civil society engagement. More choices and options, more freedom whom to buy from and sell to, ultimately redounds to economic empowerment and hence, poverty alleviation in the ASEAN countries and the rest of the world.
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See also:
Free Trade 37: Multiple Concerns and Regulations in the ASEAN, September 11, 2014
AEC 6: The ACSC/ASEAN People's Forum (APF) 2015, April 07, 2015 
AEC 7: AAA Law's Forum on Post-2015 ASEAN Integration, April 09, 2015 
AEC 8: Trade, Competition and Innovation in the ASEAN, April 13, 2015 
AEC 9: SEANET Forum on Economic Liberalization, Kuala Lumpur, April 23, April 19, 2015

Competition Policy 5: Government as Creator of Monopolies and Oligopolies

A Philippine Competition Law is coming soon, around July this year, according to Sen. Bam Aquino in a forum that I  attended yesterday in Makati. The main speaker was a friend and  former teacher in Math Econ in  PDE in the late 90s, Dr. Joy Abrenica.

It was a well-attended forum. Mr. Jaime Zobel de Ayala was among the high corporate officials who attended  the forum from beginning to end.

Sen. Bam Aquino himself stayed all throughout too, even if  he was not the main speaker. During the open forum, he discussed many things, like the degree of lobbying from different sectors in his office and that of  other Senators. This is understandable as people express some apprehensions if their companies or sectors might be adversely affected by some provisions.

He said that they expect the Competition bill to become a law before the President delivers his 6th and  last State of the Nation Address (SONA) in late July 2015.

Here are some of the slides discussed by Joy yesterday. I will just show them while discussing other points made by the other discussants.

She went back to history (US, Europe, etc.) in analyzing the philosophy of competition legislation.

I have not read the Senate and House bills on competition policy, one reason why I attended that forum. And it was difficult for me to follow some of Joy's discussion precisely because I have not read the bills.

Tony Abad, one of the three discussants and an expert on competition law of other countries and the congressional bills in  the  PH, emphasized that we need a competition law. Not only for the existing companies, local and foreign, but also because having that law is a requirement for the PH government if it wants to join some existing and emerging trade alliances like the US-led Trans Pacific Partnership (TPP).

I can understand that those economic alliances would require such a law before applicant governments of other countries can be accepted because  they want to see how their companies will be treated here in case they get into legal troubles on "anti-competition" charges someday.

Simon Paterno said that government itself is a big monopoly. State corporations like the National Food Authority (NFA), rice importation certification monopolist; PAGCOR, casino and gaming certification monopolist and a player at the same time; Philippine Ports Authority (PPA) and Manila International Airport Authority (MIAA), monopolists in operating seaports and airports, respectively.

That's a good point. And I will add that ALL monopolies and oligopolies are created by the government via various agencies, local and national.

Tricycle route monopolies are created by the municipal and city governments. Jeepney route monopolies, sometimes bus route monopolies, are created by the Land Transport Franchising Regulatory Board (LTFRB), which is under the DOTC.

Inter-island shipping route monopolies or duopolies are created by the Maritime Industry Authority (MARINA), local airline route monopolies or duopolies are created by the Civil Aeronautics Board (CAB).

Electricity distributors and cooperatives, telecom companies, water utilities, cable TVs, etc. area or geographical  monopolies are all created by Congress via legislative franchising.

See, government is the creator of monopolies and oligopolies. So it is ironic that government is creating a new law supposedly to regulate anti-competition, monopolistic and oligopolistic practices. But then again, government is expected to produce this legislation, so we should have a new law on this soon as this has been filed in previous Congresses some two decades ago.

Personally, I would wish to see a competition law where a new  office or bureaucracy, the Competition Commission or Fair Trade Commission, will have power to clamp on other government agencies (LGUs, LTFRB, CAB, MARINA, PAGCOR, NFA, PPA, etc.) that disallow fair competition because they themselves are the monopolists, or choose special corporate interests as the government-blessed monopolists and duopolists.

But those agencies will fight tooth and nail, horns and claws, to prevent that bill to become a law. And so we will have no competition law this year or the next 10 years or more. And the PH government will be embarrassed in the international community why it has no competition law until this decade or  next decade.

And that means we will have to accept this new law, imperfect of course, even "ugly" for some sectors. We can settle with that as a compromise, then work for its amendment in  the coming years and decades.
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See also:
Competition and Prosperity, KL Conference, October 12, 2011

Fierce Competition is Fair Competition, January 22, 2013 

Competition Policy 3: Jemy Gatdula's Article, September 16, 2013 

Competition Policy 4: Paradox of Anti-Trust and Fair Competition Legislation, October 05, 2014

AEC 9: SEANET Forum on Economic Liberalization, Kuala Lumpur, April 23

Next week, April 23, SEANET, IDEAS and APF/ACSC will jointly sponsor this forum in Kuala Lumpur. I will be there to  attend and hear this forum as well  as other panel discussions of APF/ACSC.

If I am asked that question, my answer is a quick Yes. Why?

Economic liberalisation (or liberalization) means giving the people more economic freedom to pursue various endeavors.. To produce various goods and services, to have more choices and options as consumers of final products (like food and shoes) or buyers of capital goods (like machines and trucks), raw materials and intermediate products that are used to improve their own production  of various goods and services (like laboratory/diagnostic instruments for healthcare).

From a HSBC study in 2012, four ASEAN countries would be in the top 25 largest economies in the world by 2050 -- PH, IN, MY and TH. Economic liberalization in these 4 countries plus their rising and young population are the main factors for this good outlook.

Trade and economic liberalization has been very beneficial to developing countries of Asia. Their GDP sizes have been doubling every decade on average.

More liberalization means more access to more products from neighbors and other countries -- better products and/or cheaper prices. More laptops and computers, more mobile phones and tablets, more internet service providers, more telecom companies (except in some countries), competing for more subscribers.

source: http://www.slideshare.net/devkambhampati/dr-dev-kambhampati-asean-economic-community-chartbook-2013?qid=18440cec-07c6-4174-9a73-99836723c0ae&v=qf1&b=&from_search=46

More liberalization  means more choices, more freedom.
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See also:
AEC 5: Aviation, Telecom, Mobile Money and Retail in the ASEAN, March 23, 2015 
AEC 6: The ACSC/ASEAN People's Forum (APF) 2015, April 07, 2015 
AEC 7: AAA Law's Forum on Post-2015 ASEAN Integration, April 09, 2015 
AEC 8: Trade, Competition and Innovation in the ASEAN, April 13, 2015