Monday, August 31, 2020

Agenda One News, Part 6

Last Friday August 28, I was a guest again of Cito Beltran in his famous program, "Agenda" in One News PH, Cignal TV. I was the third and last guest in his episode that day, the topic was "Keeping the economy afloat."

Again, I pointed at the strict, prolonged, indefinite, no timetable lockdown and restriction on people and goods mobility as the main cause of the economic contraction and business hardships.

I prepared some macroeconomic and public finance data for my notes during the interview. I sent the three slides to Cito too. 

The interview is here, my part starting at 1:08 hour,

Thanks again for the invite, Cito.

See also:
Agenda, One News, Part 3, August 30, 2019 
Agenda, One News, Part 4, February 11, 2020 
Agenda One News, Part 5, July 28, 2020.

Sunday, August 30, 2020

BWorld 450, Tax competition, not exemption

 * My column in BusinessWorld, August 27, 2020.

Governments around the world have to grapple with raising new revenues because their lockdown policies have crippled the businesses and people that pay them regular taxes while they expanded public borrowings. Raising tax rates would appear very insensitive — the likely direction is to cut taxes to help ailing businesses and this might lead to a new round of tax competition among neighboring countries and economies.

The Philippines, through the Department of Finance (DoF) has proposed a drastic reduction in the corporate income tax (CIT) under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill. The current 30% will become 25% in the year of its legislation, then there will be a 1% per year reduction starting 2023 until it reaches 20% in 2027. Very good move by the DoF, among the few instances where I support them.

Five major East Asian economies have CIT of 16.5% to 20% — HK, Singapore, Thailand, Taiwan, and Vietnam. When the Philippines attain the 20% CIT by 2027, these economies may cut their rates further. Indonesia had a CIT of 25% until 2019 and brought it down to 22% this year — the law was made before the pandemic.

The Philippines’ high CIT and withholding tax for dividends, interest, and royalties, are among the disincentives for the entry of foreign direct investments (FDI) which is the lowest among the country’s more mature and developed neighbors. Our FDI inward stock (net of inflows less outflows through the years) was only $88 billion in 2019 (see the table).

The DoF has noted the country’s low tax efficiency. In CIT, our 30% collects only 3.7% of GDP or an efficiency of only 12.3%, vs Thailand’s 20% that collects 5% of GDP or 25.2% efficiency, or Vietnam’s 20% that collects 7.3% of GDP or 36.5% efficiency.

When it comes to VAT efficiency, the country’s 12% collects only 4.3% of GDP or 35.7% efficiency, vs Thailand’s 10% that collects 4.1% of GDP or 59% efficiency, or Vietnam’s 10% that collects 6.1% of GDP or 61% efficiency.

Aside from lower CIT, the CREATE bill has two other important provisions — lengthen the net operating loss carry over (NOLCO) from three to five years, and maintain the 5% gross income earned (GIE) up to nine years with the sunset period changed from two to seven years to four to nine years. Corporate losses this year can be carried up to the next five years under the NOLCO to reduce tax liabilities of companies, assuming they have survived these horrible, strict, indefinite and no timetable lockdowns which have crippled if not killed thousands of SMEs already.

Speaking of discouraging or disallowing tax exemptions, there is one sector that has a horrible lobby, the electric vehicles (EVs, those e-cars, e-UVs, e-bikes, e-trikes…). They want their EVs to have exemptions or reductions on import tariffs, excise tax, and VAT; they also want exemptions on import tariff and VAT for their charging equipment. Plus various non-fiscal incentives.

When the government wants more revenues and you exempt some sectors from tax, this means you will have to hike taxes of other sectors — bad. The TRAIN law imposed higher excise tax rates for petroleum products and the regular cars, UVs, but the EVs want zero tax — how horrible and crony-like could that be?

Meanwhile, the Department of Health — initiated drug price dictatorship policy has wreaked havoc on the financials of innovator pharma — the companies that produce new medicines, new vaccines — while favoring the non-innovator, generic, and local pharma. Criteria #4 of EO 104 imposes price controls on innovator, more effective, more-prescribed medicines hoping that there will be product pull out so that the less effective, less-prescribed medicines by local pharma will be left to make more money.

Some lessons and conclusions that can be derived from the above discussions are the following: One, improve revenue efficiency via lower tax rate with little or few exemptions in CIT, withholding tax, VAT, others. Two, ignore the EVs tax exemption lobby, and slap them with existing import and excise tax rates as regular vehicles. Three, price controls for one group of manufacturers and favoritism for another group is plain cronyism. And, four, have the rule of law always, the law applies equally to unequal people and sectors. Tax hikes or tax cuts or zero taxes on one sector should apply to all other sectors or sub-sectors.

See also:
BWorld 447, Nuclear energy and PSA death statistics, August 08, 2020 
BWorld 448, Growth, mobility and vaccines, August 15, 2020 
BWorld 449, Energy reserves and security, August 25, 2020.

Saturday, August 29, 2020

Weekend 74, CNN as the US' "Baghdad Bob"

 This report few days ago from CNN (aka in 2016 as the Clinton News Network) is funny.

The next two photos from different sources and posted in the American Thinker blog.

CNN has turned itself into America's Baghdad Bob

By Andrea Widburg

Muhammad Saeed al-Sahhafk, AKA Baghdad Bob, was Saddam Hussein's minister of information.  As troops neared and then entered Baghdad, al-Sahhaf gave daily press briefings during which he announced the most outrageous lies about the wars.

For example, Baghdad Bob insisted that American troops were committing suicide "by the hundreds" and that none had entered Baghdad.  Meanwhile, Americans were a few hundred yards away from him, and the audience could hear the sounds of their fighting.  On April 8, four days before Americans captured Baghdad, al-Sahhaf was still insisting that U.S. troops "are going to surrender or be burned in their tanks.  They will surrender.  It is they who will surrender."

This was reposted in

And these two from Babylonbee,

A related fun (but real) story -- that the 2020 US Presidential elections would be the first where there will be no debate between the two opposing candidates. Funny Nancy.

Pelosi: There shouldn’t be any Trump-Biden presidential debates 

See also:
Weekend Fun 71, Father's day, Husband's day, June 21, 2020 
Weekend Fun 72, Airline mergers, July 04, 2020 
Weekend Fun 73, Russia vaccine, ECQ, August 15, 2020.

Friday, August 28, 2020

UPSEAA Lecture 6, Ferdie Constantino and SMC infra

This is a delayed post about the lecture by a fellow UP School of Economics (UPSE) alumni, Mr. Ferdinand "Ferdie" K. Constantino, the Chief Finance Officer and Treasurer of the largest business conglomerate in the Philippines, San Miguel Corp. (SMC). Ferdie gave a talk at the UPSE Alumni Association (UPSEAA) last September 13, 2019 held at the SMC HQ in Ortigas. This photo I grabbed from his fb page when he received the UP Alumni Association (UPAA) distinguished award in 2019.

Unlucky for me, I wasn't able to hear his lecture because it was raining so hard that afternoon till evening, traffic was horrible, I didn't drive and I took the bus. The bus took 1+ hour traversing Ayala Ave alone in Makati to reach Edsa, then another heavy traffic in Edsa. When I arrived at SMC, people were already leaving, Ferdie was still there, we have a short chat, I was served nice dinner, plus San Miguel beer of course.

Ferdie's topic that day was SMC infrastructure. 2019 saw traffic congestion worse than previous years and Ramon S. Ang (RSA), SMC's President and COO already proposed an elevated tollway in Edsa. Really a radical idea considering that Edsa is always full of vehicles and there is an MRT railroad in the middle.

Ferdie said he shared info that they give to their investors, the ppt they cannot send by email to non-investors, ok with me. He sent me the SMC Annual Report 2018. It's old to write now, I checked the Annual Report 2019, it's available,

This somehow summarizes their biggest infra projects. Skyway stage 3 is very important, it will help decongest Edsa and other roads in Metro Manila because vehicles from the south (Calabarzon, etc) going to the north (Central and Northern Luzon) and vice-versa can just travel at SLEX - NLEX direct. 

MRT 7 is also important because it will serve so many passengers from Fairview, QC and bordering municipalities of Bulacan (via Commonwealth Ave., Regalado Ave., etc) down to Manila. Partial operation by 2021. 

The SLEX–TR4 from Sto. Tomas, Batangas to Lucena City in Quezon province.

SMC has other big projects. Foremost is the New Manila International Airport in Bulacan, P740+ billion or 3/4 of a trillion, huuuuuge. The Concession Agreement was signed with government last September 18, 2019.

They are also building a new passenger terminal in Boracay airport. Plus another radical proposal -- build a bridge from Panay mainland, Malay, Aklan to Boracay island. RSA and Ferdie should be sipping something extraordinary which makes their minds think of really radical, game-changing infra projects -- using private money 100%, no cost to taxpayers.

SMC also into power generation, they are in fact the biggest genco in the country, bigger than Aboitiz, FirstGen, Ayalas, Meralgo Gen (MGen), etc. Their new projects are a new unit of Masinloc Power Plant in Zambales, Battery Energy Storage System project. 

Also in water distribution, the Bulacan Bulk Water Supply Project that supplies potable water to 12 out of 24 Bulacan municipalities.

The other day I saw this report, 

SMC investing P121.8 billion in 2 vital infrastructure projects 
Richmond Mercurio (The Philippine Star ) - August 26, 2020 - 12:00am

“The two projects are the South Luzon Expressway Tollroad 5 (SLEX-TR5), a 420-kilometer project from Lucena in Quezon to Matnog in Sorsogon, and the Pasig River Expressway, a 19.40-km road project that will connect Metro Manila’s eastern and western sections.

SLEX-TR5 is a P26.38-billion investment in a build-operate-transfer scheme with a concession period of 30 years, while the Pasig River Expressway will require an investment of P95.4 billion under a 30-year BOT scheme.”

I quickly pm’d Ferdie to express my big surprise and support. SLEX to Matnog, the last town of Luzon island in the south, facing Samar-Leyte islands. Wow as in wow.

But aside from Ferdie the big mind finance guy, Ferdie is also a friend with a big heart. Last January I approached Ferdie to seek donation for our batch '80 40th anniversary, Cadiz City High School, Negros Occidental. We graduated in 1980, 500+ of us from 12 or 13 sections, I was the class Valedictorian, my classmates and batchmates looked up to me to seek some donations from my friends in Manila. Ferdie was #1 in my list and without any fanfare, quickly said Yes. Ferdie sent several dozen cases of beer in cans. Huuuuge celebration and happiness of my batchmates when the beer finally came on our HS reunion day, 2 days of fun and camaraderie. 

Thank again Ferdie, thanks SMC. Mabuhay kayo.

See also:
UPSEAA lecture 3, Tito Ortiz, July 22, 2019 
UPSEAA lecture 4, Johanna Chua, August 4, 2019 
UPSEAA lecture 5, Iggy Sison and Del Monte pineapple farming, March 01, 2020.

Tuesday, August 25, 2020

BWorld 449, Energy reserves and security

 * My article in BusinessWorld, August 19, 2020.

During the media briefing by the Independent Electricity Market Operator Philippines (IEMOP) last week, Aug. 11, data on electricity supply, demand, reserves and prices for the Luzon-Visayas grids from March to early August this year were shown, covering the various  COVID-19 lockdown periods (ECQ, MECQ, GCQ).

I compared the year-on-year (yoy) data and the good news is: One, while average demand in April-June declined by -14.7% (which correlates with the -16.5% GDP in the second quarter), the decline in July was only -3.5%. Two, average prices at the Wholesale Electricity Spot Market (WESM) in April-June declined by -70.8% and continued with a July decline of -58%.

The bad news, however, is that electricity demand in July (10,135 MW) was lower than June (10,174 MW), meaning the month-on-month (mom) economic activities are still flat or negative. The -58% decline in the July price was due to increased power supply compared to both July 2019 and June 2020.

And that is why we should have an ever-rising power supply, to stabilize if not reduce electricity prices, and ensure more power stability and predictability. Not restricting or killing some power supply to promote energy cronyism.

I refer to the endless lobbying to promote the intermittent, unstable, unreliable renewables especially wind and solar. The lobbyists promote more use of batteries to solve intermittency problems — fine, but this will lead to higher prices because those huge batteries are not cheap.

A persistent narrative why countries should go for quick energy transition from fossil fuels and nuclear is the fear of “imported fuel supply insecurity” and hence, the need to rely on domestic, indigenous renewables. For the Philippines in particular, the scare mongering centers on “supply insecurity of imported coal” as we have indigenous natural gas (but this will soon be depleted).

Is imported coal supply insecure and dangerous?

If one uses emotion and climate alarmism, the answer is “yes.” But if one uses reason and hard facts, the answer is “no.”

I checked the proven reserves worldwide for coal, gas and oil, and the computed Reserves-to-Production (R/P) ratio. This ratio shows the number of years that those remaining reserves would last if yearly production were to continue flat. The proven reserves of coal is nearly three times the reserves for gas and oil, and two countries with huge coal reserves are not far from the Philippines — Indonesia and Australia (see the table).

Other major producers are: a.) Natural gas: Qatar with 12.4% share, R/P 139 years; and Turkmenistan, 9.8% share, R/P 308 years; b.) Oil: Iraq with 8.4% share, R/P 83 years; Kuwait, 5.9% share, R/P 93 years. Countries in the table with 500+ R/P ratio means they have very small production and consumption relative to their reserves.

The Philippines in 2019 has a total installed power capacity of 25.5 gigawatts (GW), of which 41% comes from coal, 17% is oil-based, 15% hydro, 13.5% natural gas, 7% geothermal, and 7% variable renewable energy (VREs, solar+wind+biomass).

But in actual electricity generation, out of 106.0 terawatt hours (TWH) in 2019, 55% came from coal, 21% from natural gas, 10% geothermal, 11% from hydro and oil-based, and only 3% from VREs (source: DoE Power Statistics 2019).

So while the pro-VREs and anti-coal lobbyists want to kill coal as soon as possible, they enjoy 24/7 electricity mainly from coal power plants because their beloved wind-solar can contribute only about 2% of total power generation.

The VREs lobby also silently promotes natural gas. They are silent about the fact that global gas reserves and security are much lower than coal reserves as shown in the table above. And while they are loud in opposing carbon emission of coal plants, they are silent about methane emission of gas plants. Both CO2 and CH4 (methane) are greenhouse gases (GHGs) but the latter has a bigger, about 28 times, potential as GHG.

California currently has continuing power instability with actual blackouts. It has the US’s biggest concentration of solar-wind farms, which explains why it has the US’ highest incidence of blackouts. In 2008-2017, California had 4,297, Texas 1,603, New York 1,528, Michigan 1,369…

The Philippines should never follow the example of California. The Philippines should have market- and customers-based power generation mix, not environmentalists- and politics-based power development.

See also:
BWorld 446, More water and investments, less political whims, August 07, 2020 
BWorld 447, Nuclear energy and PSA death statistics, August 08, 2020 
BWorld 448, Growth, mobility and vaccines, August 15, 2020.

Friday, August 21, 2020

Energy 136, California blackouts and wind-solar

Thanks to Benny Peiser and The Global Warming Policy Forum ( for these news clips of what's happening in California energy. I repost the titles and links of 19 reports and stories below. Enjoy.

Green Policies Won’t Keep California Truckin’
The state’s new electrification mandate for trucks will threaten working-class jobs and widen income inequality.
By Joel Kotkin   July 29, 2020

Even as California reduces its reliable sources of power, notably nuclear and national gas, it is mandating a statewide shift to all-electric medium- and heavy-duty trucks starting in 2024, with the goal of reaching 100 percent of all new sales, wherever feasible, by 2045. On top of other electrification mandates for light-duty cars and buildings, the new truck rule will further increase the state’s demand for electricity and raise rates, already among the nation’s highest. Since 2011, electricity prices have increased five times as fast as the national average. In 2017 alone, they increased at three times the national rate.

(1) Recall Deja Vu: CA Rolling Blackouts are Back 
It’s not easy being green
By Katy Grimes, August 15, 2020 10:06 am

So why are California’s utilities cutting power, and imposing rolling blackouts again?
It’s political. And it’s corrupt.
The state is awash in ultra cheap natural gas, yet in California, our corrupt government finds ways to create an energy shortage, and charge rate payers the highest rates in the country.
This is one reason California electricity costs more than twice the national median—thanks to a government-created shortage.

(2) Why California’s Climate Policies Are Causing Electricity Blackouts 
Michael Shellenberger   Aug 15, 2020,05:25pm EDT

But the underlying reasons that California is experiencing rolling black-outs for the second time in less than a year stem from the state’s climate policies, which California policymakers have justified as necessary to prevent deaths from heatwaves….

And yesterday, California had to impose rolling blackouts because it had failed to maintain sufficient reliable power from natural gas and nuclear plants, or pay in advance for enough guaranteed electricity imports from other states.

(3) What Is The Cause Of The Recent Power Blackouts In California? 
August 16, 2020/ Francis Menton

California actually has installed electricity generation capacity of almost 76 GW.  That sounds like wildly more than you would ever need.  But the problem is that of the 76 GW of capacity, some 27 GW is solar, and 6 GW is wind…

As you can see, the solar generation hit zero somewhere between 7 and 7:30 PM.  The wind generation hovered somewhere between 1 and 1.5 GW through the evening hours.  The word “useless” is hardly sufficient to describe the situation….

(4) California’s Blackout Warning 
Anti-fossil fuel mandates are leading to electricity shortages.
By The Editorial Board  Aug. 16, 2020 3:38 pm ET

California last experienced rolling blackouts in 2001 amid energy market manipulation by speculators. This time the cause is energy market manipulation by anti-fossil fuel politicians. Democrats have mandated that renewables account for 60% of state electricity by 2030, which has forced power providers to invest in renewable energy sources now to meet the deadline. The result is something of a Rube Goldberg physics experiment.

(5) California grid operator warned of power shortages as state transitioned to clean energy
Growing shortfall as solar power goes offline in early evenings
By PAUL ROGERS | | Bay Area News Group
PUBLISHED: August 17, 2020 at 6:00 a.m. | UPDATED: August 17, 2020 at 5:28 p.m.

People turn on air conditioning and other devices around 5 p.m. as the heat peaks and they come home from work. Electricity demand surges, just as the sun is setting and solar power is drying up.

Rothleder said that the ISO, which functions as a kind of air traffic controller for the grid, makes up for that lost solar power by importing electricity from dams and power plants in other Western states and also by relying on natural gas-fired power plants still operating in California.

(6) ‘Gaps’ In Renewable Energy Led To Blackouts For Millions Of Californians, Gov Newsom Says 
Governor Gavin Newsom Announces He Will Sign Moratorium On Executions In California
CHRIS WHITE TECH REPORTER   August 17, 2020  8:57 PM ET

Newsom said Monday that the transition from fossil fuels is a “moral and ethical imperative as it relates to the kind of world we’re going to leave, the kind of state and nation we’re going to leave for our kids and grandkids.”

Sierra Club and other activists met informally with Newsom’s administration in 2019 to discuss dramatically slashing the state’s oil production, The Los Angeles Times reported in April of that year.

(7) Democrats Say California Is Model For Climate Action But Its Blackouts Say Otherwise 
Michael Shellenberger Contributor   Aug 17, 2020,01:26pm EDT

The underlying reason blackouts are occurring is because California lacks reliable, in-state supply. And the reason for that is California has been closing both natural gas and nuclear power plants.

"People wonder how we made it through the heat wave of 2006,” said Berberich. “The answer is that there was a lot more generating capacity in 2006 than in 2020.... We had San Onofre [nuclear plant] of 2,200 MW, and a number of other plants, totalling thousands of MW not there today."

(8) Green California has the nation's worst power grid
by Steve Goreham  | August 18, 2020 12:00 AM

As part of global warming efforts, officials want all citizens to switch their natural gas stoves and furnaces to electric models. More than 30 California cities have enacted bans on gas appliances, including the major cities of San Francisco and San Jose. Almost 10% of the state population now lives in an area covered by restrictions against gas appliances in new residential construction.

California also wants residents to transition from gasoline- and diesel-powered cars and trucks to plug-in electric models. So, when those blackouts occur in the future, not only will your lights and air conditioners fail, but you won’t be able to cook your food or drive your car either.

Sunday, August 16, 2020

Interview at Turbo Time by Mike Potenciano and Raymond Tribdino

Last night I was one of two guests of "Turbo Time" in One News PH, Cignal TV, hosted by race car champion Mike Potenciano and Malaya IT Editor Raymond Tribdino.

The interview here,

Since I was asked to discussed the PH economy and transportation lockdown, I prepared three tables as my notes which I shared with Mike before the program started.

Mike and Raymond asked me towards the end what proposal would I make to the government, my usual argument -- open up the economy. Significantly relax the lockdown. 

Thanks again for the invite, Mike.

Btway, I was invited by Mike when our common friend, banker Raoul Abreu, sent him the links to my interview by Cito Beltran late last month and Mike said he wanted to invite me. I also learned later that we have another common friend, Dr. Jed Inciong, who was my former Rotary clubmate and Ninong/Godfather to my second daughter Bien Mary. Mike and Jed were classmates in LSGH, I think also in BS Biology in UP Diliman.

See also:
Interview with ABS-CBN on huge public debt, July 25, 2020 
Agenda One News, Part 5, July 28, 2020 
Interview at BusinessWorld Live, One News, August 07, 2020 
Interview at DZBB and Agila TV, August 15, 2020.

Saturday, August 15, 2020

BWorld 448, Growth, mobility and vaccines

* My column in BusinessWorld, August 13, 2020.

For countries and economies that have GDP data for second quarter (Q2) 2020 so far, the Philippines has had the deepest contraction of -16.5% in Asia. The same virus that affected all countries in the continent has produced very different results in economic performance — Why?

The answer is not the pandemic itself, but in the response and degree of restrictions and lockdowns imposed by country governments.

Google produces the “COVID-19 Community Mobility Reports.” Download the Excel, you will get big data, more than one million rows of data for many countries and states. The reports cover six areas measuring percent changes in mobility of people from the baseline day, the median value from the fiveweek period Jan. 3 – Feb. 6, 2020. These areas are Retail and Recreation (R&R), Grocery and pharmacy, Parks, Transit stations (TS), Workplaces, and Residential. In the table below, I chose only two for brevity purposes: R&R which covers restaurants, malls, libraries, museums, movie theaters; and TS that covers public transportation like buses, trains and taxis.

For Q2 2020 covering the period April 1 to June 30, I chose the midpoint date of May 15 as reference in Google mobility changes. Then I added the latest data for Aug. 7, the degree of restrictions of which will be reflected in Q3 2020 GDP data a few months from now. I also added the latest data for COVID-19 deaths per million population (DPMP).

From the Google data, it seems that the Philippine government has imposed the most draconian, most dictatorial lockdown policies in the whole world, which largely explains for the steep GDP contraction. Despite our DPMP being among the lowest in the world, only 1/5 of the world average of 95 DPMP (see the table).  

Now we suffer from endless, indefinite, no timetable lockdowns and mobility restrictions, until credible and safe vaccines become available.

There are at least two important issues when it comes to COVID-19 vaccines here. One is the seemingly gung-ho preference of President Rodrigo Duterte for vaccines from China, known globally for producing risky counterfeits of successful products and brands; or a vaccine from Russia. And, two, a need for a vaccine insurance system to encourage early entry in the Philippines of COVID-19 vaccines from globally reputable, research-based biotech and pharma companies.

Unlike medicines which are given to sick people, vaccines are given to healthy people to prevent future sickness from particular diseases. Vaccines under development normally take many years to be declared safe and effective. The COVID-19 vaccines are rushed and thus, there is the potential for vaccine-related side effects or adverse events in the future.

In the Dengvaxia case, both the innovator company and the previous administration were demonized and it has become a precedent, a big lesson why other innovator companies will be hesitant if not scared to bring COVID-19 vaccines to the Philippines.

One solution is to create a COVID-19 vaccine insurance fund that will serve as an indemnity fund for people who might suffer from any adverse events in the future. The fund will not come from taxes but from a certain percentage, say 1% to 2%, of the total procurement cost of the Department of Health (DoH) from various vaccine producers and suppliers, and the DoH will hold and keep the fund. In case some people someday claim and prove that they suffered adverse reactions from a vaccine, there is already a fixed amount set aside by the DoH. The amount may or may not be enough, but the patients will get compensation. No more filing of cases in court and things will be simplified.

Market-based vaccine and health insurance, not taxes and politics-based insurance. We need more of this, especially with the ongoing PhilHealth scandals involving billions of pesos of taxpayer money.

See also:
BWorld 445, Virtue signaling in energy, August 02, 2020 
BWorld 446, More water and investments, less political whims, August 07, 2020 
BWorld 447, Nuclear energy and PSA death statistics, August 08, 2020.

Interview at DZBB and Agila TV

These were old interviews this year, about the drug price control/dictatorship under EO 104 (Feb. 2020). At DZBB radio-TV hosted by Joel Zobel and Mr. Salvacion last June 04.

The EO 104 "papaboran nito ang ilang gamot" (it will favor other drugs/manufacturers) refers to less-prescribed, less-dispensed drugs when the more-prescribed, more-dispensed innovator drugs slapped with price control (criteria #4) are pulled out when manufacturers do not want to sell at a loss. Yes, EO 104 wants to make new favoritism and cronyism in drugs manufacturing, the less-known, less-effective, less-prescribed ones often produced by the big local pharma.

Last March, days before the M.Manila lockdown was declared and later became Luzon-wide ECQ. It was the noon time news in radio-TV of Eagle Broadcasting Corp., hosted by Party-list Cong. Angelo Palmones.

I argued similar points in the Agila TV interview.

See also:
Interview with ABS-CBN on huge public debt, July 25, 2020 
Agenda One News, Part 5, July 28, 2020 
Interview at BusinessWorld Live, One News, August 07, 2020.

Weekend Fun 73, Russia vaccine, ECQ

Hello!!! I got a Russian vaccine for COVID and for those of you scared that it wasn't tested, I tried it and am happy to report that there is not any efectoski secundarioski и меня зовут Лопес Обрадор, и я коррумпирован и лжец и почему я даю чистые прямые награды. DAH!!!

Four types of INTELLIGENCE:

1. Intelligence Quotient (IQ)
2. Emotional Quotient (EQ)
3. Social Quotient (SQ)
4. Adversity Quotient (AQ).

IQ - measures comprehension, ability to solve math problems, retain information, recall subject matters.

EQ - measures ability to maintain or be at peace with others; be responsible, honest, humble, genuine, and considerate.

SQ - measures ability to build a network of friends and maintain it over a long period of time.

AQ - measures ability to go through a rough patch in life and come out without losing your mind.

Now there's a 5th - CQ or Colonel Quarantine. CQ have varieties like GCQ or General Colonel Quarantine, MECQ or Major Enlisted Colonel Quarantine,... Hehehe

See also: 
Weekend Fun 70, Virus and alcohol, May 03, 2020 
Weekend Fun 71, Father's day, Husband's day, June 21, 2020 
Weekend Fun 72, Airline mergers, July 04, 2020.

Monday, August 10, 2020

Covid 18, Lockdowns don't work, articles from scientists and medical professionals

A friend, Atty Jemy Gatdula, posted a good list of materials in his fb wall. I checked the links he gave, then I added some materials I recently encountered. Photo of a Covid from WUWT.

A) On why lockdowns don’t work

Q&A: Nobel laureate says COVID-19 curve could be naturally self-flattening 
Chemistry Nobel Laureate Michael Levitt has turned his research attentions to studying COVID-19 outbreaks.
By Kate Selig on May 4, 2020

Letter to the Editor: Why Increasing Number of Cases of COVID-19 is NOT Bad News
JUN 27, 2020 AT 11:22 AM BY PJ

Who Believes the Lockdowns Were About Science? 
Genuine epidemiologists questioned the economic interruptions from the beginning.
May 22, 2020, 12:18 AM 
"John P. A. Ioannidis of Stanford University, Michael T. Osterholm of the University of Minnesota, and Knut M. Wittkowski, formerly of Rockefeller University. All three pointed out flaws in the assumptions upon which officials based their lockdown orders."

The data is in — stop the panic and end the total isolation 

A letter signed by hundreds of doctors warning of adverse health consequences stemming from the coronavirus shutdowns. (10 pages)

Exposure to common cold coronaviruses can teach the immune system to recognize SARS-CoV-2 
Researchers caution: It is too soon to say whether pre-existing immune cell memory affects COVID-19 clinical outcomes

B) On why masks don't work

Masks Don’t Work: A Review of Science Relevant to COVID-19 Social Policy 
By Denis G. Rancourt, PhD
11 Jun 2020

Censored: A Review Of Science Relevant To COVID-19 Social Policy And Why Face Masks Don’t Work 

Universal Masking in Hospitals in the Covid-19 Era 
List of authors.
Michael Klompas, M.D., M.P.H., Charles A. Morris, M.D., M.P.H., Julia Sinclair, M.B.A., Madelyn Pearson, D.N.P., R.N., and Erica S. Shenoy, M.D., Ph.D.

Conclusion Regarding Masks: They Do Not Work (8 pages)
By Dr. Sherri Tenpenny, DO, AOBNMM, ABIHM

Face masks not needed in private life 
National Institute for Public Health and the Environment
Ministry of Health, Welfare and Sport
Modification date 06/09/2020 - 15:50

Europe's Top Health Officials Say Masks Aren't Helpful in Beating COVID-19 
The top medical experts in the world can’t decide if masks are helpful in reducing the spread of COVID-19 or just make things worse… Professor Henning Bundgaard, Tamara van Ark, Anders Tegnell
Thursday, August 6, 2020
Jon Miltimore 

Meanwhile, lots of good materials here,

See also:
Covid 15, False positives and Sweden success in "flattening the curve", July 18, 2020 
Covid 16, Philippines having the strictest lockdown policies in the world, July 28, 2020 
Covid 17, Hard lockdown Europe vs no lockdown Sweden, any difference in death trend? August 04, 2020.

Saturday, August 08, 2020

BWorld 447, Nuclear energy and PSA death statistics

 * My article in BusinessWorld, August 05, 2020.

Despite the incoherent rants against the country’s water, telecom, and electricity companies by President Rodrigo Duterte in his State of the Nation Address (SONA) 2020 last week, one good thing in his speech was the absence of reference to climate alarm and the need for more mandates, more subsidies to renewables which would mean more expensive electricity.

Recently, public attention has temporarily shifted from coal-bashing to entertaining nuclear energy including the possible revival of the Bataan Nuclear Power Plant (BNPP). See these recent stories in BusinessWorld:

1. “Clean-energy bloc faults SONA for failing to address coal reduction, quarantine power bills” (July 29)

2. “Duterte signs EO authorizing nuclear energy study” (July 30)

3. “Renewables industry touts ‘untapped’ potential, superior safety vs nuclear” (July 31)

4. “DoE studying small nuclear plants for remote areas” (Aug. 3)

5. “Nuclear power plants seen unlikely to be operational by end of Duterte’s term” (Aug. 3)

For people who oppose fossil fuels (coal, gas, oil) and yet are scared of intermittent, unstable, weather-dependent solar-wind and other variable renewables, nuclear power would be the compromise for them. Many rich and developed countries in the world continue to use nuclear power. France remains the most nuclear-dependent country in the world with 72% of their total electricity generation in 2019 coming from nuclear, followed by Ukraine (54%) and Belgium (47%). For renewables, the Philippines’ 13.1% share to total is largely from geothermal and hydro as wind-solar combined contribute only about 2.5% of total (see the table).

Energy Secretary Alfonso Cusi’s proposal to have small nuclear plants for remote areas and islands is commendable and wise. Island-provinces like Basilan, Batanes, Camiguin, Catanduanes, Marinduque, Romblon, Siquijor, Sulu, Tawi-tawi, are good candidates to have small, modular nuclear power plants. Even big island-provinces like Palawan, Masbate and Mindoro.

Currently these island-provinces are dependent on big gensets running on diesel (more costly, more polluting) then pass the higher cost via Universal Charge for Missionary Electrification (UC-ME) at P0.156/kWh charged to all electricity customers nationwide. By having small nuclear plants with cheap, stable, 24/7 electricity, these provinces can attract more businesses especially in tourism and agri-business, create more jobs, and that burdensome UC-ME subsidy can finally be abolished and this will help bring down overall electricity cost nationwide.

For the main islands of the country, coal and indigenous gas will remain competitively priced. Global coal prices have been low recently, only about $55/ton from late April to July 2020 versus $70-$110/ton from September 2016 to March 2020. Global gas prices have also been low recently, but liquefied natural gas (LNG) can be costly overall because of the higher cost of storage for liquids (unlike storage for solids like coal) plus the additional cost for re-gasification before the gas power plants can produce electricity.

Meanwhile, the Philippine Statistics Authority (PSA) has updated the death statistics for full year 2019 and preliminary January-June 2020 (

The surprising thing from the numbers is that there are significantly less deaths in 2020 especially in the lockdown months from March to June, compared with similar months in 2016-2019. The average deaths per day for January-June are as follows: 1,560 in 2016; 1,573 in 2017; 1,608 in 2018; 1,717 in 2019; and 1,425 in 2020.

The feared “more deaths in 2020 due to COVID-19” compared to previous years so far is wrong and did not happen. Possible explanations are: 1.) under-reporting of deaths in May-June 2020 which will be reported later; 2.) fewer fatal accidents, especially involving motorcycles, less stabbings/shooting in bars due to the community quarantines and curfew; and, 3.) people are more health conscious now, wash hands more frequently, avoid “unhealthy” food and drinks, and so on.

But reasons Nos. 2 and 3 are not justifications for the continuing, indefinite lockdown. The business shutdowns, millions of job losses, economic contraction, high public borrowings, and high taxes later are dangerous and can lead to more poverty-related illnesses and deaths.

See also:
BWorld 444, Economic hardships worse than virus risks, July 25, 2020 
BWorld 445, Virtue signaling in energy, August 02, 2020 
BWorld 446, More water and investments, less political whims, August 07, 2020.

Drug Price Control 50, Wallace, Clarete and LKI

I discovered just recently some of the articles on drug price dictatorship under Executive Order (EO) 104 signed by President Duterte last February 17, 2020.

In the first three articles by Peter Wallace (Wallace Business Forum) and Dr. Ramon Clarete (my former graduate teacher at UP School of Economics), they write with sense and wisdom. The fourth article shows why Laban Konsyumer Inc. (LKI) is a confused group. Consumers want more choices, more options, not less choices as a result of products pulled out due to state-controlled pricing of certain companies while leaving other companies' pricing untouched.

(Photo from BWorld)

(1) No COVID-19 vaccine 
By: Peter Wallace - 05:04 AM May 28, 2020

… The cure and vaccine for COVID-19 will be an essential drug people must have. But under EO 104, because it is an essential drug, it will fall under price control. If the government excludes these COVID-19 cures and vaccines from the controlled list, what argument will it use? The medicines for diabetes and heart ailments, respiratory illnesses, and cancers are just as essential as COVID-19 cures, even more so as an estimated 300,000 deaths occur in the country per year as a result of these illnesses, versus 904 so far for COVID-19.

Their prices will be reduced by EO 104. So COVID-19 vaccines and cures must be, too. That will result in the suppliers of these COVID-19 drugs, where demand will outstrip supply, prioritizing other markets where they can be sure of recouping the huge cost of research. The Philippines will not get the expected relief from COVID-19.

It’s the case with many of the drugs on the list whose prices will be reduced: Suppliers will rethink delivery to the Philippines. And when other new ones are discovered—for cancer, for instance—EO 104 will result in the Philippines being last on the list to supply, if at all. You’ll have to travel overseas to get the drugs you need. But overseas travel is not a particularly enticing thought at the moment, and will not even be allowed for many months yet.

A disturbing side note on this is that EO 104 introduces price cuts at the wholesale level (MDWP) as well as at retail (MDRP). Why? The only concern of the DOH should be what the patient pays. Even stranger, some wholesale prices are cut, but the retail price isn’t. Wasn’t the whole point of EO 104 to help the patient? Take the price of Fluticasone (an anti-asthma drug) at P85 per pill; under the executive order, the reduced MDWP price will be P59.02, while MDRP will be 85. The net effect is zero reduction in retail price, while pharmacies benefit from a margin of 44 percent, significantly higher than the 10-15 percent they generally enjoy.

This is a very strange regulation that will do more harm than good. It’s a populist stance whose goal (lower prices) could be achieved in better ways. The DOH should meet with the manufacturers for pooled procurement and other ways that are mutually agreeable to achieve the same price reductions, without loss to the companies but with benefit to the patients. But it has declined to do so.

EO 104 should be canceled so we still get the essential drugs sick people need, and be on the list for COVID-19 vaccines and cures.

(2) Unrealistic expectation 
By: Peter Wallace - 05:05 AM June 18, 2020

… But vaccines are unlike cures; a cure is given to one sick person in the hope it will make them well. If there are side effects, they affect only that one person. Vaccines are given to millions of healthy individuals, so if there are side effects they can make many of those healthy people sick. Consequently, testing must be far more rigorous. …

There may be cures found in a relatively short time, and that will certainly help to flatten the curve of deaths, if not of sickness. Eli Lilly & Co. is talking about a drug available this year. Dexamethasone, a commonly available steroid, has also been found to cure some patients. But cures don’t give the protection necessary to get the world back to (a new) normal way of life. And if the price of the drug is halved, will we get the cure or the vaccine?

The Philippines has an ill-considered executive order (EO 104) issued by the Department of Health that halves the price of essential medicines. A COVID-19 cure and vaccine are essential medicines, so their price will have to be drastically cut, too. They can’t be considered any more important than medicines for the heart or diabetes, which have had their prices slashed. So those for COVID-19 must be, too. With that, will the manufacturers put the Philippines high on the list of early recipients?

EO 104 needs to be talked through with the industry because there are other, more acceptable ways to get prices down. Already, we are not getting new drugs because of this.

Maybe the First World will step in to supply the Third World with a vaccine for free, but surely that will be after they’ve supplied their own populace and paid the producers for it. With many countries clamoring for the drug, can we risk being low on the list?

The IATF needs to do three things: 1) Think of ways to be an early recipient of the vaccine. 2) Plan on when to relax controls based on having a cure maybe in a year or so, but not having a vaccine in enough quantity for two or more years. 3) Put EO 104 on hold, or better cancel it as it has no part to play in a free market economy.

If it turns out to be better than this, we’re ahead. But if we plan on a quick vaccine solution, we could be consigning many Filipinos to an early death.

(3) Let’s talk about drugs
July 26, 2020 | 5:58 pm
Introspective    By Ramon Clarete

… Price controls would, however, bring more problems than benefits to patients. Like price controls imposed on other consumer items, which politicians are prone to price cap such as housing and food items, in the long run E.O. 104 would dry up the supply of medicines and drugs, reduce our country’s access to innovative pharmaceutical products, and would ultimately undermine the overall quality and integrity of the local pharmaceutical market…

When supply gets scarce, black markets of medicines start to co-exist with formal markets. Patients start to search for suppliers of the medicines they need. The added search costs effectively raise access costs of patients to medicines and drugs.

Even the rich among us, who could import medicines abroad in desperation would likewise have added access costs. No formal private businesses, Filipino or multi-national, would import drugs and medicines because of price controls. If they cannot pass on to the market the real costs of these products, they would not be supplying these items….

Secondly, price caps would undermine: the quality of the medicines and drugs sold locally. When the local market of price-capped pharmaceutical products gets to co-exist with black markets of badly needed drugs and medicines, the Food and Drug Administration would be unable to guarantee pharmaceutical quality….

Thirdly, all of the innovative medicines are manufactured abroad. Innovators price their medicines and drugs higher because they are recouping their investments in developing these innovative medicines and drugs. International and our national intellectual property laws do allow them to have a monopoly of selling the innovative drugs for about 21 years, for them to recover their R&D costs….

Fourthly, EO 104 may have disastrous effects on the supply chain of drugs and medicines. In the supply chain are giant retailers (or perhaps just one with more than half of the local retail market) of pharmaceutical products. Suppliers know that, and take care they would not incur the ire of these large retailers. With retail prices capped, it is expected that big retailers would just pass on to suppliers the burden of price controls by telling suppliers to price their products at wholesale prices set by the large retailers….

Fifth, delivery delays of medicines would also occur. There are two major supply chain distributors linking the suppliers to the hospitals and other health care institutions, and pharmaceutical retailers. Both are experienced in the distribution of medicines and drugs. Because of them, the private sector led-supply chain is relatively efficient.

Their revenues are proportionate to the wholesale prices of suppliers. With lower wholesale prices, distributors’ revenues fall and with distribution costs remaining the same, their net incomes get squeezed. I talked to the CEO of one of these distributors. In the price cap in 2009, his company lost about P10 billion. The price cap then was less than 10% of the scale of EO 104.

With expected larger losses, these distribution companies would have to re-think their business model. One possibility is they may carve off their businesses to focus on outlets where they can make money — another reason why access to medicines may shrink because of price controls….

Secretary Duque, let’s attend to this now, before these long-term negative effects (effects one through three) and the contemporaneous destructive effects on the supply chain of medicines and drugs in the country (effects four and five) of EO 104 become irreversible.

(4) Consumer group vows to help guard lower medicine prices 
By Kris Crismundo  June 3, 2020, 5:12 pm

Laban Konsyumer Inc. (LKI) has vowed to help the government in monitoring retail prices of drugs and medicines as Executive Order 104 regulating their prices took effect Tuesday….

Dimagiba lauded President Rodrigo Duterte and Health Secretary Francisco Duque III for continuing the implementation of the EO 104 amid calls to withdraw the policy….

See also:
Drug Price Control 47, Article in August 2010, June 01, 2020
Drug Price Control 48, DOH orientation on MWP, MRP, June 30, 2020 
Drug Price Control 49, The FEF statement, July 24, 2020.

Friday, August 07, 2020

Interview at BusinessWorld Live, One News

This morning I was interviewed by Jester de los Santos, host of "BusinessWorld Live TV" in One News, Cignal TV, about the Philippine economy as a result of the deep GDP contraction of -16.5% in the second quarter (Q2) of 2020.

The interview here about 13 minutes, to -15 to -2 minutes mark. Also available in

Some screen shots of the points I made.
The numbers.
More screenshots...

Thanks Jes for the opportunity to discuss these issues in your program.
Thanks also to Madz Lacson of One News for inviting me.

See also: 
Live interviews at ONE News, election day, May 19, 2019 
Interview with ABS-CBN on huge public debt, July 25, 2020 
Agenda One News, Part 5, July 28, 2020.

The PH's Q2 2020 GDP meltdown

The Philippines experienced technically an economic meltdown in the second quarter (Q2) this year with a -16.5% GDP contraction, the lowest since 1981. The country is also in a recession having a two consecutive quarterly contraction -- along with SG, HK, and many EU countries. 

The virus did not cause this. All countries have their own share of virus infections. It was the PH government's hard lockdown policies that started in March 16 up to the present. See 
Covid 16, Philippines having the strictest lockdown policies in the world (July 28, 2020). 

In Europe, notice also that no-lockdown Sweden has (a) escaped contraction in Q1, and (b) lowest contraction in Q2 compared to its hard-lockdown neighbors.

Here's the PH's GDP quarterly performance, data from the PH Statistics Authority (PSA).

The endless, indefinite lockdown should stop. Mr. President, open up the economy.

We can learn from Sweden -- no lockdown, only the oldies and immuno-compromised people were protected and quarantined, the healthy and young can go out anytime. Shops and schools, restaurants and bars, churches are open; trains and buses go. Social distancing is limited to 50 people max in a gathering.