* This is my column in BusinessWorld, March 06, 2019.
Many people want
the government to protect the consumer. A much more urgent problem is to
protect the consumer from the government.”
— Milton Friedman (1912-2006), Nobel Prize economist
This paper will briefly cover four topics showing various
degrees of “outlierness” in Philippines economic performance and policy
compared to our neighbors in Asia.
(1) Inflation rate. The Philippines registered a 4.1%
inflation rate average for the first two months of 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, it is the highest. In the ASEAN-6, Malaysia
experienced a deflation, Singapore and Thailand have near-zero inflation while
Indonesia and Vietnam have below 3% (see table).
So we are the inflation outlier in the region. Since
Dutertenomics’ TRAIN law has penalized the consumers with high inflation (1.3%
in 2016, 2.9% in 2017, 5.2% in 2018), the administration should compensate this
year by targeting a 1-2% inflation via tax cut somewhere, or suspension of tax
hikes. Far out. Its mantra is spend-spend-spend, tax-tax-tax,
borrow-borrow-borrow. Let the future taxpayers worry about current high
borrowings.
(2) Interest rate. In particular, Bank lending rates, the
numbers for March 2018 to January 2019, are:
So the Philippines is an outlier again, the only economy
with ever-rising rates and surpassing the 7% mark.
(3) New BSP Governor. The third BSP Governor, Armando
Tetangco, worked at BSP for two decades before he was appointed Governor in
2005. His successor, the late Nesting Espenilla, also worked at BSP for more
than three decades before he was appointed as the fourth Governor. The new and
fifth Governor, Ben Diokno, is somehow an outlier because he has zero BSP work
experience, zero private banking experience. But he is a known economist, was a
two-term DBM Secretary (under former President Erap Estrada, then President
Rodrigo Duterte). Diokno was my teacher twice, in undergrad mid-80s then
graduate studies late 90s in UPSE. I notice that he’s a fiscal hawk, practicing
spend-spend-spend philosophy at DBM. I just hope that he will not be a monetary
hawk, print-print-print money at BSP.
(4) Travel tax. In my work as a free market advocate in
the Philippines, I get to travel abroad about 3x a year mostly in Asia, all
expenses covered by my various sponsor-think tanks and fellow free market
institutes. I see plane fares fluctuate depending on the season but one thing
that does not fluctuate is the Philippines travel tax (P1,620 for economy,
P2,700 first class passengers).
While my sponsors pay for my plane fare including the
travel tax (makes my travel cost go higher), occasionally I would bring my
family when the kids are on school break and plane fare is cheap (KL, HK,
Bangkok) as they can stay in my hotel for free for few days. I have to pay
extra for their travel tax.
The Philippines is an outlier again because we seem to be
the only country in Asia that imposes a travel tax on its citizens. This is on
top of airport terminal fee of P700 and there is not even free drinking
fountain.
Travel tax abolition should be done. Senate Bill 1841 by
Sen. Koko Pimentel aims to do this but it was not even passed at the Committee
level. TIEZA and other bureaucracies that benefit from gouging more taxes from
Filipinos oppose. They should be abolished too someday.
----------------
See also:
BWorld 298, Trump-Kim summit, implications for ASEAN and China, March 04, 2019
BWorld 299, Capitalism and freedom in Asia, March 06, 2019
BWorld 300, IPR, innovation and growth, March 07, 2019
No comments:
Post a Comment