* This is my column in BusinessWorld last January 22, 2018.
“There is no evidence that fuel and electricity subsidies
benefited the poor. There is no evidence that trade protection benefited the
poor. Elimination of subsidies if compensated by reduction of cost doing
business (corruption) will help the poor.”
— Muhamad Chatib Basri,
presentation about Indonesia energy and food subsidies,
EFN Asia conference September 2004, Hong Kong
Those conclusions were made by Dr. Chatib “Dede” Basri in
his presentation, “Can subsidy and protection do any good for the poor?” at the
Economic Freedom Network (EFN) Asia conference in 2004. At that time, he was a
faculty member of the University of Indonesia and individual member of EFN. He
used an econometric model and the Grosman and Helpman (G-H) model (trade
protection is the result of bargaining between government and various lobby
groups). The inevitable conclusion of his paper was that market reforms and the
reduction, if not removal of dependence by the poor on the state will actually
help them and taxpayers over the long term.
Dr. Basri later became Minister of Finance from May 2013
to October 2014 when the administration of Indonesian President Susilo Bambang
Yudhoyono ended. Dr. Basri will be among the keynote speakers in the Asia
Liberty Forum (ALF) this coming Feb. 10-11 at Mandarin Hotel Jakarta,
Indonesia. The event is sponsored by the Atlas Foundation and co-hosted by the
Center for Indonesian Policy Studies (CIPS).
Aside from Dr. Basri, other important speakers in this
year’s conference will be the following:
1. Saidah Sakwan, chairwoman, CIPS; also a commissioner
of the Indonesian Business Competition Commission (KPPU).
2. Brad Lips, CEO of Atlas Network, Washington DC, USA.
3. KH Yahya Cholil Staquf, general secretary of Nahdlatul
Ulama (NU) Supreme Council, world’s largest Muslim organization with 50+
million members.
4. Siegfried Herzog, Regional director for Southeast and
East Asia, Friedrich Naumann Foundation for Freedom (FNF), Thailand.
5. Suraj Vaidya, chairman of SAARC Chamber of Commerce
and also chairman of Samriddhi Foundation, Nepal.
6. Rainer Heufers, executive director of CIPS.
7. Razeen Sally, Prof. at Lee Kuan Yew School of Public
Policy, National University of Singapore.
8. Ronald Meinardus, Regional director, FNF South Asia,
India.
9. Parth Shah, president of the Centre for Civil Society,
India.
10. Lorenzo Montanari, exec. director of Property Rights
Alliance (PRA), Washington DC, USA.
11. Barun Mitra, founder and Director of Liberty
Institute, India.
12. Junjie Ma of Unirule Institute, Beijing, China.
There are many other interesting speakers to talk on many
topics — policy reforms to broaden support for classical liberal principles,
education policy, Ease of Doing Business Index, Protection of private property
rights, Intellectual Property Rights (IPR), micro-enterprises, entrepreneurship
in e-commerce, state-owned enterprises (SOEs).
Are Asian economies getting more market-oriented or
state-distorted? Is there greater rule of law now or greater rule of men? Are
public institutions more protective or more confiscatory of private property
rights?
There are many studies and annual reports that track and
monitor various indicators and parameters to help answer these and related
questions. Among the important annual reports are Fraser Institute’s Economic Freedom
of the World (EFW) reports, Heritage Foundation’s Economic Freedom Index (EFI),
PRA’s International Property Rights Index (IPRI), World Bank’s Doing Business,
and World Economic Forum’s (WEF) Global Competitiveness Index (GCI).
The GCI is composed of 12 pillars and the first pillar
are Institutions. These are composed of 21 sub-pillars like property rights,
IPR protection, diversion of public funds, public trust in politicians,
irregular payments and bribes, judicial independence, favoritism in decisions
of government officials, burden of government regulation, efficiency of legal
framework in settling disputes and challenging regulations, transparency of
government policy making, and reliability of police services.
I checked the latest WEF 2017-2018 report for East Asian
economies and compared with the report two years ago for pillar #1,
Institutions (see table).
So for Institutions, the numbers above show three
important results: One, out of the 144 countries and economies covered, many
East Asian nations land in the first half (i.e., 1st to 72nd), 11 of the 15
economies mentioned above. Singapore and Hong Kong are in the top 10.
Two, the biggest gainers in global ranking are India
(+21!), South Korea, China, and Laos. And three, the biggest loser in ranking
is the Philippines, dropping 17 places or notches.
In the WEF Executive Opinion Survey 2017, the most
problematic factors for doing business in the Philippines were: (1) inefficient
government bureaucracy, (2) inadequate supply of infrastructure, (3)
corruption, (4) tax regulations, and (5) tax rates.
For Asian countries outside the first half like Thailand,
Vietnam, Philippines and Cambodia, there is an immediate need to improve the
rule of law and further debureaucratize, deregulate and depoliticize the
economy.
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See also:
BWorld 179, Federalism dream vs centralized government, January 15, 2018
BWorld 180, Has East Asia liberalized its trade enough? January 19, 2018
BWorld 181, Effects of Supreme Court TRO on RCOA, January 22, 2018
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