Sunday, February 24, 2019

BWorld 295, Growth and electric cooperatives

* This is my column in BusinessWorld last February 19, 2019.

On the Philippines’ GDP growth rates, the good news is that from 2010 to 2018, the Philippines has been growing above 6% yearly except in 2011. High growth was experienced in 2010 with 7.6% (recovery from 2008-2009 global financial turmoil) and 2013 (election year) with 7.1%.

The bad news is that these growth rates are not enough. The Philippines, with 106 million people, has a GDP size in 2017 of only $314 billion while neighbors with their smaller populations had similar or larger GDP sizes: Malaysia (32M) has $312B, Singapore (5.8M) has $324B, Thailand (69M) has $490B. We need to grow 7-10% per year for many years before we can even catch up with Thailand or Malaysia (Source: IMF, World Economic Outlook [WEO] October 2018).

Among the important factors to have high and sustained growth is to have high and rising supply of cheaper and stable electricity. There are numbers that show a correlation between GDP growth and electricity consumption growth especially for developing countries like the Philippines (see Figure 1).

Among the ASEAN 6, a similar pattern can be observed, also with China and Japan. The Philippines’ low GDP size is reflected in its low electricity consumption in tera-watt hours (TWH) (see figure 2).

There are many factors why our electricity supply and consumption is low compared to our neighbors, like the thick, expansive bureaucracies and permits required before one can explore and develop new power plants.

We focus on the role and “mis-role” of electric cooperatives (ECs). Since they are geographical monopolies granted with congressional franchise to distribute electricity, they can help expand or restrict power demand. If an EC for instance is mismanaged and does not pay the power generation company (genco), even if the genco has big plans to expand power capacity, it cannot do so.

The Department of Energy (DoE) has issued two media releases related to problematic ECs dated February 01 and February 06. It noted that many ECs are failures in expanding rural electrification because of “inefficient management, corruption, unnecessary political interference, institutional conflicts.”

So DoE will conduct a performance review of ECs, especially those that burden their communities with persistent and unresolved brownouts, because they have heavy debts and do not pay their power supply. Underperforming ones will be assisted while non-performing ones will be recommended for cancellation of their franchises.

DOE has identified 17 ECs that are chronic failures to provide satisfactory services to their customers as stipulated in their congressional franchise. Seven are from Regions IV-B and V — ALECO (Albay), CASURECO III (Camarines Sur), FICELCO (Catanduanes), MASELCO (Masbate), OMECO (Occidental Mindoro), ORMECO (Oriental Mindoro), and PALECO (Palawan). Other problematic ECs are PELCO (Pampanga), BASELCO (Basilan), LASURECO (Lanao), SULECO (Sulu), ZAMCELCO (Zamboanga), and DANECO (Davao del Norte).

Then certain islands have rising missionary subsidies — which are then passed on to all electricity consumers nationwide via high universal charges.

In three previous articles in this column, “Unstable power supply due to problematic electric cooperatives” (February 08, 2017), “How the bureaucracy works against cheap and stable electricity (March 08, 2017), and “Corporatization of electric cooperatives can reduce system loss” (September 29, 2017), it is argued that ultimately all ECs should be corporatized and depoliticized, be registered as corporations with SEC, and not with NEA.

See also: 
BWorld 294, The freedom to fly, February 23, 2019

Saturday, February 23, 2019

Plunderers are above the law

Senators Jinggoy Estrada, Juan Ponce Enrile, and Ramon "Bong" Revilla Jr. are convicted plunderers in connection with the Napoles pork barrel scam, were put to jail in the previous administration. Enrile was freed "due to health reasons" while Estrada and Revilla were later freed under the present administration. See

Former President and now House Speaker Gloria Arroyo was also a convicted plunderer and was on hospital arrest but was later acquitted by the Supreme Court. See

And former First Lady Imelda Marcos was also convicted of graft and corruption. See

The Ressa arrest is due to a cyber libel filed by businessman Keng. A case between two private individuals. While the Duterte administration may be correct in saying that they just want to follow the rule of law in the Ressa arrest, they cannot say they also followed the rule of law for indirectly sponsoring the release of the convicted Senators.

Energy 121, US oil and natgas production

US crude oil production: 
(1) End of Bush Jr's term 5.0 million barrels per day (mbpd), 
(2) End of Obama 1st term 7.0 mbpd, 
(3) End of Obama 2nd term 8.8 mbpd, 
(4) Trump 2+ years 12.0 mbpd. 
Or an increase of 3.8 mbpd after 8 years of Obama, and increase of 3.2 mbpd after 2 years and 2 months.

Saudi and Russia oil production about 11.5 mbpd each and they are cutting their output to force higher oil prices while US is raising output to lower oil prices.

And US natural gas production. 
(1) End of Bush Jr. 1st term 2004, 1.63 trillion cubic feet (tcf), 
(2) End of Bush Jr. 2nd term 2008, 1.83 tcf, 
(3) End of Obama 1st term 2012, 2.15 tcf, 
(4) End of Obama 2nd term 2016, 2.36 tcf, 
(5) Trump 1 year 11 months, 2.84 tcf. 
Or increase of 0.53 tcf after Obama 8 years, increase of 0.48 tcf after Trump 1 year and 11 months.

Reduce energy prices by expanding production, continuously. Debureaucratize energy exploration,  extraction and transportation.

See also:

BWorld 294, The freedom to fly

* This is my article in BusinessWorld last February 15, 2019. 

“Once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return.”

— Leonardo da Vinci (Italian polymath, 1452 — 1519)

While I have been to many ASEAN countries, it was only recently that I have visited some South Asian countries like India (Mumbai only), Nepal, and Bhutan, all related to attending the Asia Liberty Forum (ALF) or the Economic Freedom Network (EFN) Asia conferences.

The big cities in our ASEAN neighbors are modern and developed, starting from their big and modern international airports. Flying from Manila is also easy because of (a.) the short distance, maximum four hours direct flight; (b.) lower fares due to many competing airlines; and, (c.) visa-free entry for ASEAN visits of less than 30 days.

The South Asians have a different environment. Bhutan and Nepal are very cold as they are up in the high Himalayan mountains — Mt. Everest can be seen from a distance when flying to Paro or Kathmandu. There are also no direct flights from Manila so the cost of travel is high, and there is a visa fee to pay.

All of my past trips to attend ALF and/or EFN conferences were sponsored by EFN Asia and the Friedrich Naumann Foundation for Freedom (FNF), except for the Nepal trip in 2015 where I was sponsored by Media 9 and Business 360 magazine, where I was a contributor for free market topics.
I will attend the ALF 2019 in another South Asian country, Sri Lanka, from Feb. 28 to March 1. One thing that is weird going there is that almost all airlines from East Asia — Malaysia, Singapore, Thailand, Hong Kong, South Korea, etc. — arrive in Colombo airport in the late evening to early morning. Only the Sri Lankan airline flying from these countries arrives in Colombo at day time. For me this is indirect local airline protectionism.

I checked the tourism numbers — South Asia is not exactly a favorite destination for many international visitors, unlike many ASEAN countries. India, with its population of 1.3 billion, attracted only 15.5 million foreign visitors in 2017, nearly comparable with Singapore’s (population 5.7 million) 13.9 million visitors (See Table 1). I did not include in the list countries with very small numbers of foreign visitors in 2017 like Brunei (0.26 M), Bhutan (also 0.26 M) and Nepal (0.94 M).

Next, I wanted to know how many of those international visitors in the Philippines and its neighbors are from the ASEAN. The numbers are a bit surprising — less than half a million of the Philippine’s international visitors are from our neighbors in the ASEAN. We are not attractive to our neighbors, like Myanmar (See Table 2).

Malaysia, Laos, and Cambodia are attractive to their neighbors — partly because one can travel from Singapore to Kuala Lumpur by car or bus in five hours or less, with no need to fly; and partly because Malaysia has huge competing airlines that cater to all visitors, from the rich to poor travellers seeking budget airlines and landing in budget airport terminals.

Thus, the Malaysia experience can be a model for the Philippines in attracting more foreign travelers. Indonesia too — it is expanding its airports to be bigger, more modern. I saw the new Soekarno Hatta Airport last year when I attended ALF 2018 in Jakarta and I was surprised by its modernity. The airport’s passenger traffic rose from 57.8 million in 2012 to 65.7 million in 2018.

More big domestic airlines, more regional airline competition, more budget terminals alongside main terminals to attract more budget airlines local and foreign — we need them. The freedom to fly for more Filipinos and more foreigners seeing the Philippines should increase.

See also: 

Tuesday, February 19, 2019

Trump-Kim 2, the second summit in Vietnam

Vietnam as venue of the second Trump-Kim summit next week is perfect, good model for N.Korea transition: (1) VN is politically socialist but economically capitalist, (2) VN has no nukes yet politically secure, (3) VN was a former US enemy and later embraced the US as economic and military partner, (4) VN is an ASEAN member, the association is 3rd biggest consumer bloc in the world (about 650 M consumers) with many friends all over the world.

Go Mr. Kim, you may remain politically socialist but embrace capitalism and globalization, embrace America and its huge entrepreneurial talent and resources. No more nukes, more billions of $ of commerce instead.

Can North Korea copy Vietnam’s economic miracle?
John Power   Lam Le   Updated: Monday, 18 Feb, 2019 7:31am

North Korea Predicts ‘Major Breakthrough’ at Second Trump-Kim Summit
18 Feb 2019

“Kim will reportedly arrive for the summit early, on February 25, for scheduled talks with Vietnamese officials. Vietnam is a communist country but maintains friendly relations with the United States and has managed to sustain a functional economy, something that has eluded North Korea for decades. Kim’s visit will be the first by a North Korean communist dictator since grandfather Kim Il-song visited in 1964.”

Kim Jong-un expected in Vietnam early ahead of summit with Trump
Nicola Smith, asia correspondent
18 FEBRUARY 2019 • 4:24AM

“But the focus of Kim’s trip would likely be the economy. Vietnam’s reforms, which have propelled it to become of one of the fast-growing economies in the world, have been widely touted as a road map for the impoverished hermit kingdom to follow.”

Second Trump-Kim summit propels Vietnam to geopolitical center stage
The Southeast Asian nation has friendly relations with all the key players.
By Ben GittlesonFeb 13, 2019 2:54 AM ET

"The United States and Vietnam normalized ties in 1995, decades after the end of the Vietnam War. Over the ensuing quarter century, their economic and trade relations have grown stronger. From 1995 to 2016, bilateral trade grew from $451 million to nearly $52 billion, according to the State Department.

President Barack Obama visited Vietnam in 2016 and Trump attended an international summit there in 2017. Vietnam’s Prime Minister Nguyen Xuan Phuc visited the White House in 2017, too."

How Vietnam Went From Cold War Foe to a Host for Trump and Kim’s Summit
By Jihye Lee
February 7, 2019, 6:33 PM GMT+8 Updated on February 9, 2019, 9:29 AM GMT+8

"Both Trump and Kim, whose regime has been locked in hostilities with the U.S. for almost 70 years, have intense security demands. Vietnam has been building military ties with the U.S. to balance a rising China and -- like Singapore, the host of the first Trump-Kim summit in June -- is among four dozen countries with a North Korean embassy. Moreover, Kim, who must rely on Chinese loaner aircraft and aging Russian-built passenger jets, can reach the communist country by flying over friendly territory."

Good outcomes expected for Trump-Kim summit
Update: February, 18/2019 - 21:00
Viet Nam News  By Paul Kennedy

“Nearly 3,000 journalists are expected to descend on Hà Nội next week for the biggest political event of the year…
It’s only the second time the political heavyweights have ever met, but analysts predict this meeting has more significance than last year’s summit in Singapore.”

N. Korea will learn a lot from VN -- from privatization of many state-owned enterprises to large-scale exports to (and imports from) the rest of the world, to being a member of a regional (ASEAN) free trade, zero tariff area. Note also that the two Trump-Kim summit are held in the ASEAN, SG last June and VN this month. So a NKorea-ASEAN FTA will not be far fetched.

This will be a new growth opportunities in East Asia, no doubt. N. Korea has about 26 M people and consumers, and S. Korea (51 M consumers) can then reduce its defense spending and use more public resources for N. Korea industrialization and development.

See also: 

Friday, February 15, 2019

LGU bureaucratism, Guimaras restrictions on mango harvest and selling

An Iloilo-based American friend, Bruce Hall, posted this photo in my fb wall the other day with this note:

"Nonoy, as I departed Guimaras yesterday, I saw this sign at the ferry terminal, very prominently displayed. One cannot harvest one's own mangoes without government approval, even if they are damaged from a typhoon!

Even with government approval, you are forbidden to harvest your mangoes when you want and in the quantity you want. Do you think that you can see 600kgs of pickled mangos? Too bad, the government forbids you!

Were the mangos damaged in some way? Too bad you can only harvest damaged mangos if caused by a typhoon and only with government permission.

Do you think that mango taste better if harvested early? Or do you need money and so need to pick early? Too bad. The government forbids you!

So much for freedom. So much for owning and controlling your own destiny. The government forbids it!"

I thanked Bruce for this info. National government bureaucratism has permeated local governments. This is inviting extortion left and right. The barangay officials can now decide who can harvest, who cannot, from their own mango trees. Lousy. Big government pa more.

Wednesday, February 13, 2019

BWorld 293, Solar para sa pulitika, Rice Tariffication para sa masa

* This is my column in BusinessWorld yesterday, February 12, 2019.

The cronyist “Solar para sa Bayan Corporation” (SPBC) franchise bill (HB 8179) was magically passed by the House of Representatives despite opposition by many groups in the energy sector. Among the oppositors is the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM), the umbrella organization of all RE associations in the Philippines.

As I did in my letter to Sen. Grace Poe, arguing for the junking of HB 8179, DREAM said the bill is unconstitutional and should not be passed. In particular, (1) it violates the equal protection clause under Article III, Section 1 of the 1987 Constitution. The proposed SPBC franchise has no substantial distinction with other generators that will not be granted a similar franchise. (2) It violates the fundamental right to due process of law under the Constitution. And (3) it violates the proscription against unfair competition.

Nonetheless, a Senate Committee Report 659 was passed last week, February 7, 2019, and some outlandish provisions from the original bill have been tamed. Among the changes is that the operational coverage “in any… areas throughout the Philippines” has been limited to only 13 provinces.

Note three things here: (1) SPBC claims it is competitive yet it requires a Congressional franchise and a franchise by nature is a monopoly, (2) EPIRA law of 2001 has unbundled energy components and players are classified as transmission, generation, distribution, supply companies; SPBC is a generation, distribution and supply company rolled into one, and (3) first time that a franchise will have implementing rules and regulations (IRR).

BusinessWorld reported (“Court challenge looms for Solar Para Sa Bayan franchise,” February 08, 2019) that the Coalition for Rural Electrification (CoRE) warned that such a franchise bill may not hold up to a court challenge. Good. It is shameless that this bill was rushed at the House and the Senate where a member is the mother of the company owner as we all know. If it becomes law, the measure should be called as Solar para sa Pulitika Corp.

Meanwhile, on another front, there is a last-minute lobby by various protectionist groups who insist that expensive rice is good for the country and the poor. They oppose SB 1998 or the Rice Tariffication bill, removing quantitative restrictions (QR) and replacing it with a 35% tariff rate on imported rice from ASEAN, and 40% or higher on imported rice outside of ASEAN.

The protectionists’ main argument is that rice liberalization will lead to the demise of the local rice industry as there will be a huge influx of imported rice from our neighbors.

This is outright disinformation, deception and lie. Even if we wanted to import one-half or even one-fourth of our domestic rice consumption, it is not possible, it is not going to happen.

Data from the UN Food and Agriculture Organization (FAO) show that Philippine rice production has been steadily rising and the average productivity per hectare has also been rising, from only 2.2 tons per hectare in 1980 to 4.0 in 2017.

The two big rice exporters in the world, Thailand and Vietnam, have actually experienced a declining or low expansion in rice output. Thailand’s output declined from 35.7 M tons in 2010 to 33.4 M tons in 2017. Over the same period, Vietnam’s output increased a little from 40 to 42.8 M tons.

Myanmar and Cambodia can be the next group of rice exporters but they also have a rising demand and population (see table).

So the Philippines’ rice importation will be limited and restricted even if it wants to import more and there will be no such demise in the local rice industry. Rice trade liberalization should proceed, and NFA’s distortionist monopoly of power to regulate rice imports should be removed.

The 35% tariff is actually high. Why should a P30/kilo potential landed price of rice from ASEAN neighbors be made P40.50/kilo to many poor Philippine households? That 35% should go down through time, down to zero for rice imports from ASEAN.

See also: 

Trump-Russia collusion debunked, next Trump-Timbuktu collusion?

Gullibles (and liars) of the world, unite! You have nothing to lose but your emotionalism :-) Even the Democrats in the Senate Committee concur with the findings. Now we expect another drama and lies? Like Trump-N. Korea collusion, Trump-Venezuela collusion, Trump-Timbuktu collusion?

Among the stories:

1. Senate Russia investigation finds no direct evidence of collusion with Trump as probe nears end
Clark Mindock     12 February 2019

The Senate Intelligence Committee is approaching an end to its two year investigation into meddling in the 2016 election, and Democrats and Republicans on the committee both say they have found no direct evidence to connect the Trump campaign in a conspiracy with Russia.

2. Stocks Surge As Senate Intel Committee Confirms "No Collusion"

3. Senate has uncovered no direct evidence of conspiracy between Trump campaign and Russia
Feb. 12, 2019, 11:21 PM GMT+8   By Ken Dilanian

After two years and 200 interviews, the Senate Intelligence Committee is approaching the end of its investigation into the 2016 election, having uncovered no direct evidence of a conspiracy between the Trump campaign and Russia, according to both Democrats and Republicans on the committee.

4. Senate Intelligence Committee has not found evidence of Trump-Russia collusion, reports say
By: Theresa Seiger, Cox Media Group National Content Desk
Updated: Feb 12, 2019 - 1:38 PM

5. Watch MSNBC Host Squirm During Live Update On "No Collusion" Intel Committee News
by Tyler Durden Tue, 02/12/2019 - 19:25

Tobacco tax hikes and tobacco smuggling

Last week February 06, I posted this note in my fb wall then tag several friends active in the tax hikes campaign:

To the advocates of #Taxtobaccotothemax -- why not advocate ban tobacco, prohibit tobacco? Like current policies of ban/prohibit prostitution, ban/prohibit illegal drugs, ban/prohibit illegal gambling, ban/prohibit smuggling, ban/prohibit corruption and plunder.

You cannot advocate ban tobacco because you want lots of tax money from tobacco? So which is which -- more smoking and more tobacco taxes? Or less/no smoking, less/no tobacco taxes? There should be no conflict in the advocacy. UHC shd not get any money from tobacco taxes so that when there is zero smoking, zero tobacco taxes, UHC will still proceed via tax money from other sources. Thank you.

Doc Tony said that they want total ban for tobacco but there is need to convince the Northern Luzon bloc to stop producing tobacco. I asked, why not say and advocate that? We have laws on ban prostitution, ban illegal drugs, ban illegal gambling, why not call for a law to ban tobacco? They  cannot advocate ban tobacco precisely because they want more tobacco taxes, billions of pesos yearly. There is double talk in the advocacy.

See this report,

Cigarettes top fake-goods seizures amid rising taxes
January 31, 2019 | 10:02 pm  

“(In 2018) The interagency National Committee on Intellectual Property Rights (NCIPR) seized a total of P23.6 billion worth of fake goods, much higher than the 2017 level of P8.2 billion… cigarettes accounted for 85.81% of the value or P20.25 billion… IPOPHL Director General Josephine R. Santiago said that the report shows how illegal traders ‘are apparently shifting to heavily-taxed goods.’”

So at P35/pack tax, the degree of smuggling in 2018 alone was at least P20 B, and that's for the confiscated products alone, excluded are non-confiscated smuggled and fake cigarettes that were successfully sold. If those P20 B smuggled cigarettes were sold at P70/pack, then that means that some P10 B of potential tobacco taxes (half the price at P35/pack tax) for UHC became zero. Smugglers and criminals became richer, UHC became poorer. And that's for the confiscated tobacco alone, the unconfiscated should be several billions more.

I think the "optimal tax" rate for tobacco is not P60/pack, not P90, not P500. Somewhere in the 35-40/pack until the smuggling loopholes are closed. If the loopholes remain huge, then huge smuggling will continue. If legal tobacco becomes P20/stick because of 90/pack tax, then illegal/smuggled tobacco can be sold at P4/stick or less. Cheap tobacco means more smoking will happen, not less.

At P30/pack tax under RA 10351 (sin tax law of 2012), smuggling was high. At P35/pack under RA 10963 (TRAIN law of 2017), smuggling became higher. Now they push P60/pack, P90/pack.

So since higher tobacco taxes lead to more smuggling, then the unintended #1 ally of smugglers, criminals, terrorists who produce and sell smuggled tobacco, plus their friends and protectors in govt and police are -- ironically, the advocates of #Taxtobaccotothemax?

The DOF officials who say that P73/pack is optimal (revenues are maximized while leakage and smuggling are minimized) are exactly the same DOF officials who said that PH inflation in 2018 would be only 2-4% (actual is 5.2%) and GDP growth 2018 would be 7-8% (actual is only 6.2%). Baka gumagamit sila ng bolang kristal in their projections and analysis.

A comment from Yul Dorotheo in my fb post:
"tobacco companies themselves are complicit in illicit trade."

Boom, so why don't they launch that #bantobacco campaign? Get them all, legal and illegal tobacco. But anti-tobacco groups also enjoy somehow from the huge tobacco taxes by the billions? Indirectly like huge consulting contracts with PhilHealth, DOH, WHO?

Other points from another friend:

(1) "high prices will only deter the YOUTH from smoking"
(2) "no direct relation between taxes and smuggling"

On #1, the non-rich youth would smoke illegal/smuggled tobacco because these are cheap. 
On #2, that statement vs this: "IPOPHL Director General Josephine R. Santiago said that... illegal traders ‘are apparently shifting to heavily-taxed goods.’”

So when will the anti-tobacco groups ever launch that #bantobacco campaign, 100 years from now while at the moment, big enjoyment from more tobacco tax money?

Smuggling proliferation is not exactly due to government incompetence but more of deliberate protection and tolerance of smuggling by certain govt agencies and officials in exchange for huge bribes. The bigger the tax, the bigger the corruption, the bigger the funds of criminal gangs, terrorist groups that produce, sell and protect the large scale smuggled tobacco, drugs and related products.

An example perhaps was that P2 B+ tobacco smuggling in Brgy Portic, Bugallon, Pangasinan raided only last November. The 3-term Pangasinan Governor, his son Mayor of Bugallon, they live (or used to live) in that barangay. All these years they didn't know there is a multi-billion smuggled tobacco factory in the barangay?

Again, campaigners should go for #bantobacco so that both legal and illegal tobacco will be confiscated. #Taxtobaccotothemax only taxes legal tobacco, illegal tobacco is happily and plentifully peddled and sold, and smokers happily smoke cheap tobacco.

So long as the #bantobacco is not advanced because activists are begging for "more tobacco taxes please", they become indirect advocates for more smoking of legal tobacco, illegal tobacco does not pay taxes.

Sunday, February 10, 2019

Pol Ideology 75, Green New Deal and ecological socialism

If people have doubts that Ocasio-Cortez and the new group of 'democratic socialists' (an oxymoron) in the US are not gunning for large-scale dictatorship, see their advocacies. The Trump derangement syndrome (TDS) is really dangerous, it can make otherwise rational people to become irrational.

Consider proposals in the Green New Deal (GND) like: 

“Build out highspeed rail at a scale where air travel stops becoming necessary”

Some of the many news stories when GND was publicly unveiled.

Green New Deal: ‘This isn’t just radical socialism, this is madness’
Anthony Watts / February 7, 2019

Who’s Afraid of Socialism?
The new Democratic agenda sure looks like government control over the means of production.
By The Editorial Board  Feb. 6, 2019

‘We have tried their approach for 40 years — to let the private sector take care of it’
Feb 7, 2019   By Tom Elliott

Green Raw Deal: Big Bowl of Crazy – ‘Global warming’ is merely the latest environmental scare with the same solutions of wealth redistribution and central planning
By: Marc Morano - Climate Depot February 7, 2019

Green New Deal Excludes Nuclear And Would Thus Increase Emissions -- Just Like It Did In Vermont
Michael Shellenberger    Feb 7, 2019

Kimberly Strassel reads the Green New Deal: ‘I was laughing so hard I nearly cried’
by Brett T.  February 7, 2019

The 10 Most Insane Requirements Of The Green New Deal
The Green New Deal isn't just un-American, it's also completely bonkers.
By David Harsanyi   FEBRUARY 7, 2019

Here Are The Most Shocking Proposals From Ocasio-Cortez' "Green New Deal"
Fri, 02/08/2019 - 03:27
Authored by Michael Palicz via Americans for Tax Reform

Meet Alexandria Ocasio-Cortez: The Republicans Secret Weapon For 2020
by Tyler Durden  Fri, 02/08/2019

Why the Green New Deal is a Bad Deal for America
Andy May / February 9, 2019

The Green New Deal Is Communist Manifesto, 21st Century
By Jason Pye   February 09, 2019

From Jayant Bhandari:
“The fact that a person like Alexandria Ocasio-Cortez has risen in visibility is all about the increasing influence of stupid voters--the peasants--in US politics. Democracy is slow-motion to communism. Rule of the peasants invariably results in utter degradation of the lives of peasants and annihilation of the Middle Class. At least 94% people should be disenfranchised from voting if the good that Donald J. Trump is doing is to be made sustainable.”

Precisely the goal of ecological socialists -- more, bigger, government; more, higher taxes and regulations.
Mueller and TDS people have not produced any proof of the Russia-Russia drama in the 2016 US elections, only lies and deception. So going socialistic is another route for them to attack Trump and his policies. The Dems have more similarity with Russia and China in policies -- lots of central planning, state-engineered economy. Lousy.

See also:

Friday, February 08, 2019

BWorld 292, Inflation and the Transportation sector

* This is my column today in BusinessWorld.

The Philippines registered a 4.4% inflation rate for January 2019. The good news is that it is a lot lower than the past four months’ average of 6.1%, but the bad news is that compared to our neighbors with January 2019 data, it is the highest. In the ASEAN-6, three have near-zero inflation while Indonesia and Vietnam have below 3% (see Table 1).

Since Dutertenomics has penalized domestic consumers with ever-rising inflation (1.3% in 2016, 2.9% in 2017, 5.2% in 2018), they should give us a respite, have an inflation target of 1-2% in 2019 via significant tax cuts somewhere, or suspension of any tax hikes.

The consumer price index (CPI) which is the basis for computing the inflation rate is composed of 11 items or sectors. Five items with biggest increase in 2018 are enumerated below, plus: Furnishings and household equipment and house maintenance, Clothing and footwear, Communications, Recreation and culture, Education, Restaurant and miscellaneous goods and services.

TRAIN law tax hikes in tobacco, oil, LPG have pushed high prices for those products including transportation. Notice that when world oil prices were very low in 2015-2016, the transport sector experienced deflation of -5.4% and -1.4% respectively, followed by electricity, gas and other fuels (see Table 2).

Aside from oil tax hikes, there are other factors that are largely politics and government-created, that distort prices upwards. I limit the discussion to those pending congressional action.

1. House Bill (HB) 8885 or the “Student Fare Discount Act” has been passed on 3rd reading last Monday, Feb. 4, 2019. It provides that all Filipino students from elementary to tertiary, technical, and vocational be entitled to a 20% mandatory discount for buses, jeepneys, trains, tricycles, airplanes, and boats.

To compensate for big reduction in revenues, public transportation operators will enjoy reduction or exemption from regulatory fees and charges, and can also claim the granted discount as tax deduction.

2. Eight HBs for Committee Report, regulating the transport network companies/transport network vehicle services (TNCs/TNVS), with fees and penalties for violations. A TWG meeting was held at the House on Jan. 22.

3. HB 7436, abolishing the Road Board and management of the Motor Vehicle Users Charge (MVUC), amending RA 8784, was scheduled for a bicameral meeting last Jan. 21. The road users’ tax will go to the National Treasury to be used mainly for road maintenance.

4. Five HBs for Committee Report, allowing and regulating the use of motorcycles as PUVs, amending RA 4136 (Land Transportation and Traffic Code). Meeting held last Jan. 23.

Item #1 is wrong, it is government price control and will lead to higher fares for non-students to compensate for the big discounts. DoF will likely oppose 100% the “discount as tax deduction” scheme. DoF just wants tax-tax-tax and dislikes tax deductions.

Item #2 is important but the provisions will likely result in more restrictions like franchise cap, instead of more liberalization of the modern and technology-based (not bureaucracy-based) ride-sharing scheme. Congress and LTFRB should avoid more restrictions, leading to lower supply of cars and drivers, which will lead to longer waiting periods, passenger inconvenience, and higher fares. Liberalization like higher or no franchise cap will lead to a better outcome: more cars and drivers, shorter waiting period, passenger convenience and lower, competitive fares.

Item #3 is good because it will cut another layer of bureaucracy but road maintenance can be privatized. Noted transport and infrastructure consultant Rene Santiago observed that “Myanmar is ahead of us in privatizing road maintenance. Think of five-year concession with performance metrics, instead of annual bidding (and annual opportunities for extortion).”

Item #4 is good, it will expand the choices for commuters but LTFRB accreditation should be via a corporate setup like the TNCs, not individual units and operators like jeepneys. When motorcycle drivers abuse their passengers, their company should be held accountable, which will put drastic disciplinary measures against erring partner-drivers.

The Philippine transport sector should be unburdened with more oil taxation, more bureaucratic regulations and more price controls or mandatory discounts. The purported goal of lower fares, lower inflation for the public, is almost always defeated as the actual results are higher fares, higher inflation for the public.

See also: 

SOTU 2019 and reaffirmation to defend capitalism

The US President's State of the Union (SOTU) address yesterday was good and for me, the most important part there is the reaffirmation by President Trump,

"Tonight, we renew our resolve that America will never be a socialist country."

Some news reports after the SOTU:

1. WATCH: President Trump Slams Socialism: 'America Was Founded on Liberty And Independence'
Beth Baumann |Posted: Feb 05, 2019 10:38 PM

2. Watch Bernie Sanders’ Red, Frowning Face as Trump Slams Socialism During SOTU
Sanders is an avowed democratic socialist.
Joe Setyon|Feb. 5, 2019 11:00 pm

3. Trump Knocks Socialism And Bernie Sanders Does Not Look Pleased
Networks zoomed in on the Vermont senator after the president’s remarks during the State of the Union.
POLITICS 02/05/2019 11:57 pm ET By Dominique Mosbergen

Good statement, Mr. President. Protect free enterprise, protect private property, protect the price and profit system, protect capitalism.

Meanwhile, a good meme about the young socialist Congresswoman from NY :-) 

Thursday, February 07, 2019

BWorld 291, Mining, tobacco tax hikes, MACR and PSA liberalization

* This is my article in BusinessWorld last Monday, February 4, 2019.

The Senate is once again the battleground of public debates on many issues. This is because it is still deliberating its own versions of House Bills (HBs) passed on third reading, and the official campaign period will already start on February 12 — which means all congressional activities and meetings will cease and resume only after the May elections.

I checked the Senate website, the following are among the hot topic Senate Bills (SBs) scheduled for continuing debates this Monday and the rest of the week.

One, mining tax hike contained in HB 8400 and SBs 225, 927 and 1979, the Fiscal Regime and Revenue Sharing Arrangement for the Mining Industry. HB 8400 proposes a margin-based royalty on income from mining, like 1-10% margin, 1% royalty; 10-20% margin 1.5% royalty,… 60-70% margin, 4% royalty, and above 70% margin, 5% royalty.

Both SBs 225 and 927 set a new tax rate of 10% of gross revenue or 55% of adjusted net mining revenue (ANMR), whichever is higher.

The House version looks more rational because it is based on the net income and margin of the mining firms.

Two, tobacco excise tax hikes under HB 8677 and SBs 1599, 1605 and 2177. HB 8677 will raise the tax to P37.50/pack, then P2.50/year until it reaches P45/pack, then 4% rise annually. SB 1599 wants a hike to P60/pack then rise by 9% annually, SB 1605 wants a tax of P90/pack, also rise by 9% annually.

In a BusinessWorld report, “Cigarettes top fake-goods seizures amid rising taxes” (Feb. 1, 2019), it said,

“(In 2018) The interagency National Committee on Intellectual Property Rights (NCIPR) seized a total of P23.6 billion worth of fake goods, much higher than the 2017 level of P8.2 billion… cigarettes accounted for 85.81% of the value or P20.25 billion… IPOPHL Director General Josephine R. Santiago said that the report shows how illegal traders ‘are apparently shifting to heavily-taxed goods.’”

This is after tobacco tax has been increased from P30/pack under RA 10351 (Sin Tax law of 2012) to P35/pack under RA 10963 (TRAIN law of 2017). That is P20 billion worth of cigarettes paying zero for universal health care (UHC). And in late November 2018, P2.5-billion worth of fake cigarettes were seized in Pangasinan alone.

The “tax tobacco more” groups should be unhappy with this but now they want to further raise the tax to P60 or P90 per pack, and we can expect perhaps P40 billion or more worth of smuggled cigarettes.

Another report in BusinessWorld in May 1, 2018 said, “DoF warns cigarette smuggling may be helping finance terrorism.” So high tobacco taxes result in high tobacco smuggling that pays zero to UHC but gives more money to terrorism and criminal gangs.

Third, lowering the minimum age of criminal responsibility (MACR) from the current 15 years to 12 years old under HB 8858 and SB 1603, SB 2026. All are lousy proposals criminalizing 12 years and below for crime acts instead of parents or guardians.

When a child commits a crime repeatedly, like robbery or acting as drugs courier, and is caught several times, 100% the parents/guardians know and tolerate or encourage it, they must go to jail, the child should go through DSWD or LGUs reformation. There should be more focus on parental/guardians responsibility in rearing children.

And four, plenary deliberations on amending the Public Service Act (PSA) of 1936. HB 5828 and SB 1754 propose that two sectors, telecommunication and transportation, will be removed from public utilities where foreign capital is limited to only 40% maximum.

There seems to be no problem in liberalizing the transportation sector but there is problem in telecoms because of the entry of state-owned China Telecom as partner of Udenna Corp. of Dennis Uy in Mislatel as the third telco. There are fears of threats to Philippine national security if China Telecom will have a majority share over Mislatel.

Compared to our major neighbors in the ASEAN, the Philippines does not have enough infrastructure and investments in land/rail, sea/maritime and air/aviation sub-sectors. International maritime cargo here is expressed in twenty-foot equivalent unit (TEU).

A compromise solution is to drop telecom from the PSA amendment now and proceed with transportation liberalization and allow foreign equity ownership above 40% up to 100%. Then file another bill in the next Congress to lift telecom from PSA’s “public utilities.” By then the public will have some ideas how China Telecom behaves in the country’s telecom sector.

See also: 

NCDs focus, measles outbreak and public health

This is one of the news reports yesterday,

DOH: 55 children dead in Metro Manila measles outbreak

San Lazaro Hospital had admitted over 1,500 patients since start of the year
By: Jovic Yee - Reporter / 05:20 AM February 07, 2019

For many years now, we have been bombarded by the DOH, WHO, many health NGOs and physician groups to be scared of, and pour lots of public and private money on non-communicable diseases (NCDs). Now the real communicable and infectious diseases are with us. The vaccine vs communicable disease dengue has been overly-politicized vs the previous administration.

Meanwhile, an advice from my physician friend, Dr. Jed Inciong: "Please, please have your children vaccinated against preventable diseases!”

Among the reasons for the outbreak is the political drama by the head of the Public Attorney's Office (PAO), Persida Acosta.

My problem with pouring huge public money on NCDs is that these are bottomless spending diseases. Even if we have P1 trillion/year for NCDs (1/3 of total budget) they won't be enough. Treating an advance stage cancer case might require 7 digits per patient. So even a P200/pack tobacco tax, or P200/liter beer tax will not be enough.

A better situation is that public money be focused on controlling communicable diseases like measles, dengue and malaria. Limited and capped amount of public resources be used for NCDs. People should get private health insurance to complement govt health insurance, plus charity, to deal with NCDs.

Monday, February 04, 2019

BWorld 290, Universal charges and Solar sa Bayan franchise bill

* This is my article in BusinessWorld last February 01, 2019. It is a web version only and not published in the print edition due to space constraints that day.

 The Philippines’ expensive electricity is largely caused by 9-10 different charges slapped on our monthly electricity bill. As mentioned in an earlier paper in this column, “Walang forever, universal charge in electricity and PSALM” (January 15, 2019), these are: generation charge, transmission charge, distribution charge, supply charge, metering charge, system loss charge, universal charge, feed in tariff allowance (FIT-All), VAT and other taxes.

The universal charge (UC), currently 37.9 centavos per kWh, is composed of four items – Napocor’s Stranded Contract Cost (UC-SCC) and Stranded Debts (UC-SD), Missionary Electrification (UC-ME) and Environmental Charge (UC-EC). The SCC is now the biggest item of these four but SD will shoot up in the coming years because there is still P466.2 billion of Napocor’s remaining debt.

So the bad news is that UC fund administrator, Power Sector Assets and Liabilities Management Corporation (PSALM), projects that it will collect UC 86.0 centavos per kWh from 2020 – 2026.

But there is good news, a pending legislation, SB 1950 or the “Murang Kuryente” bill by Sen. Sherwin Gatchalian, which proposes to use the net government share from Malampaya royalty to pay the UC-SCC and UC-SD. The Committee Report was passed on 2nd reading in the Senate on Wednesday, January 30.

In a presentation during Stratbase-ADRi’s “Energy Outlook” forum on September 28 last year, Senator Gatchalian showed these numbers if Malampaya fund collection of P204 billion is used to pay the UC-SCC and UC-SD.

Consumer savings of using Malampaya fund for UC, in centavos per kWh

That 84.74 savings would spare a household with average monthly consumption 200 kWh  of P169/month or P2,034/year in savings, equivalent to one sack of rice.

But consumers still have to pay, in centavos/kWh: (a) 1.26 balance for UC-SCC and SD, (b) 15.61 UC-ME, and (c) 0.25 UC-EC, or total 17.12. Over the long term, these should be abolished too. Modern technology will allow isolated islands to have reliable, 24/7 electricity off-grid by tapping various energy sources, both conventional and renewables.

On January 24, the Senate Committee on Public Services conducted a public hearing on various franchise bills that were passed on 3rd reading in the House of Representatives. Among those bills is HB 8179 or the Solar Para sa Bayan Corp. (SPBC) franchise.

I wrote to Senator Grace Poe, Chairperson of the Committee. I pointed out certain sections of the bill that are cronyism-seeking and anti-consumers. I post portions of my letter below:

Section 1, “… franchise to construct, install, establish, operate, and maintain… distributable power technologies (DPTs) and minigrid systems… in any areas to be determined by the DOE, which shall include unserved areas and underserved areas throughout the Philippines… access to any transmission or distribution system… eligible to become a member of the wholesale electricity spot market…”

Why grant a nationwide, unlimited scope, coverage and execution for this special corporation? It can choose any area in the Philippines like a fast-growing tourism and industrial zone and do business there on the pretext that it is an “underserved” area. It can overlap service provision with existing DUs even though such overlap is not allowed that is why they are given a specific, non-infringing area franchise.

Why automatic membership in WESM? Currently, only ERC-authorized players can become WESM members. The bill allows SPBC to ignore ERC requirements for WESM membership.

Section 5. “… The grantee shall charge reasonable and just power rates for its services to all types of consumers…”

Solar + genset power is not cheap, it will be expensive to the public. Solar + battery is also not cheap. Solar does not generate electricity at night, or hardly generates power at daytime when there are thick clouds and heavy rains. The company will be relying on gensets running on non-greenie diesel power.

Section 15. “The grantee shall submit an annual report to the Congress of the Philippines…”

SPBC really intends to go around ERC regulations and go straight to Congress. ERC monitoring is more technical and focused while Congress monitoring is less technical and scattered with so many political concerns.

Overall, HB 8179 is deceptive. SPBC’s marketing and selling point to the public is that it is a greenie solar power-generation company. But its franchise bill says that it is a nationwide, unlimited generation-distribution company.

A good solution for this kind of bill is to junk and reject it. But it is not practical politically because it was passed quickly at the House of Representatives, which indicates the measure’s wide political connection.

A compromise solution is to limit the unlimited scope, denationalize the nationwide coverage which the bill seeks. Put it under the technical monitoring and permitting of the ERC, not under Congress. No automatic membership in WESM so that it must get ERC authorization first, and when it misbehaves after being admitted it can be kicked out of WESM too. 

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