Saturday, December 31, 2022

BWorld 575, The Top 10 fiscal and monetary news stories of 2022

* My column in BusinessWorld last Dec. 26.

Here is this column’s assessment of important macroeconomic events this year especially in the fiscal and monetary sectors, five global and five national. Covered are the major economies in the world arranged by region, and biggest GDP size per region.

1. G7, China, and Russian growth declined significantly.

The Group of Seven (G7) industrialized countries — the United States of America (US), Canada, Japan, Germany, the United Kingdom (UK), France, Italy — renewed their growth slowdown this year after a modest recovery last year. And for the first time since 1991 or three decades ago, China this year will grow below 6%, aside from 2020’s global contraction. Russia will have another contraction as a result of the various sanctions against it after its invasion of Ukraine. But most ASEAN (Association of South East Asian Nations) countries will have faster growth this year than last year.

2. G7 countries have hit 37 to 70 years inflation rate highs.

This year, Germany has experienced the worst inflation rate since 1952. The US, UK, and Japan have hit their highest inflation rates in 41 years, while Canada, France, and Italy have had 37-to-40-year highs. Their economic sanctions against Russia and their impact on global energy prices, oil-gas-based fertilizers and industrial goods, have backfired against the G7 while Russia, the target of heavy sanctions, experienced only a 20 year high.

Asians (except Japan and South Korea) experienced inflation rates of at most 14-year highs, including the Philippines (see Table 1).

3. Public debt-to-GDP ratio remained high.

Public debt exploded in many countries in 2020-2021, and are projected to remain high in 2022. In the G7, only Germany and the UK will have a debt-to-GDP ratio of below 100%. Russia surprisingly has only 16%. Three Asians are doing well in their fiscal restraint — Taiwan, Indonesia, and Vietnam. Their debt-to-GDP ratios are below 41%.

4. Government bond rates are double or triple the 2021 levels.

This is true especially for G7 and other rich countries. I list in Table 2 the peak interest rates for 10-year bonds from 2020-2022. For Asians with already high rates in 2021 (at least 3%), the increase in 2022 is not significant.

5. There have been huge interest rate hikes by central banks to control inflation, currency depreciation worldwide.

In the US for instance, interest was only 0.5% last April, and is now 4.5%. This led to huge currency depreciation in many countries around the world as many dollar investments abroad flowed back to the US. To control further hemorrhage, other countries also raised their interest rates. Canada went from 1% last April to 4.25%, and Euro area like Germany, from zero to 2.5%. At least three Asian nations — the Philippines, Indonesia and Vietnam — have high rates at 5.5-6% (See Table 2).

6. The Philippines in the top five fastest growing economies among the world’s top 50 largest economies.

It seems that of the world’s largest economies, the fastest growing in 2022 will be Malaysia and Vietnam, to be followed by India, Bangladesh, and the Philippines. I see three factors for why this happened.

One, President Ferdinand Marcos, Jr.’s lifting of all forms of COVID-19 lockdown in the country. Two, the formation of a competent, experienced economic team led by Finance Secretary Benjamin Diokno, Bangko Sentral Governor Felipe Medalla, Economic Planning Secretary Arsenio Balisacan, and Budget Secretary Amenah Pangandaman. Three, the series of Philippine Economic Briefing investment roadshows held here and abroad — Singapore, Jakarta, New York City, and Washington DC — where the economic team explained and highlighted recent major economic reforms like the liberalization in the Public Service Act, Foreign Investment Act, and Retail Trade, and assured businesses that no major tax hikes will happen.

7. The Philippines experienced its highest inflation rate in 14 years — 8%.

Despite the series of interest rate hikes by the central bank, the inflation rate has continued its upward trend. The huge depreciation of the peso in recent months and the continued high global energy prices contributed to this. But average inflation for 2022 will only be around 5.8%.

8. The budget deficit remains above P1 trillion, while financing/borrowings will remain at P2 trillion/year.

This is the big fiscal burden created by the Duterte administration’s irrational and prolonged pandemic lockdown which led to business closures from 2020 to early 2022, its huge vaccine procurement spending and the seemingly timetable-less giving of ayuda or subsidies, plus the irrational pension program for military and uniformed personnel (MUP). The MUP, because they do not contribute to their pensions, keep all their salaries and allowances, and their bloated retirement pensions are shouldered by taxpayers once more.

9. Public debt has reached P14 trillion.

The interest payments to service this huge government debt reached P429 billion in 2021, P433 billion as of October 2022, and will likely be P520 billion by end-December (See Table 3). It is never rational and desirable for taxpayers to keep sending money to the government to sustain huge interest payment alone, endless or no timetable ayuda and welfare programs, bloated public personnel lists that need a bureaucracy rightsizing program, and the bloated MUP benefits that need drastic pension reforms.

10. The creation of a sovereign wealth fund (SWF).

The proposed Maharlika Investment Fund (MIF), a SWF act has already passed its third reading in Congress. The idea of creating a SWF is good because it forces a country/the government to find a fiscal surplus somewhere. Funding for the MIF’s capitalization should primarily come from fossil fuel and mining development like the Malampaya gas royalties (about P22 billion/year from 2019-2022), coal royalties and mining taxes, and the privatization of some government corporations like the Philippine Amusement and Gaming Corporation, better known as Pagcor. It is estimated that the privatization of Pagcor will bring the government about P350 billion — right now its annual remittance to the government is only about P15 billion a year.

See also:
BWorld 572, State assets should finance Philippine sovereign wealth fund, December 10, 2022
BWorld 573, Ten economic issues to watch, December 27, 2022
BWorld 574, Top 10 energy stories/ideas 2022, December 28, 2022.

Goodbye 2022, hoping for a more free 2023

In a few hours, we will leave year 2022 and welcome the year 2023, nice.

Two years of lockdown 2020-2021, then remnants of restrictions and mandatory-mandatory this 2022 -- mandatory facemasks in MRT/LRT, airport, etc. Even mandatory vax card in some big hotels. 

Then mandatory big public spending, bigger public debt, to procure huge Covid vaccination and boosters by the DOH. So among my New Year wishes is that Acting DOH Secretary Vergeiri and her team of medical tyrants be replaced and their endless, no time table health emergency be discontinued.

Wala ng trangkaso/flu, lahat Covid na. Wala nang natural immunity, puro vax and booster immunity na. DOH WHO and their cabals hate cheap, old, proven off-patent treatment, they only want expensive, publicly-procured, emergency-use vax and medicines. 

We are still far from having fiscal discipline and public health honesty because the public health sector is part of the spend-spend-spend, tax-tax-tax, borrow-borrow-borrow mentality and policy.

We have experienced virus lockdown. Mandatory shutdown of many businesses, public transportation, forced stay home orders. Such degree of unfreedom and state coercion has no precedent.

Now that such lockdown has a precedent, we might experience soon climate lockdown, forcing ordinary people to limit their mobility and flying to "save the planet" while the architects of such lockdown are criss-crossing across countries and continents. One rule for ordinary mortals, another rule and exemption for such architects and authoritarians. 

Governments and multilaterals will not reform themselves, they can only deteriorate and become more dictatorial. The people themselves must assert their freedom -- freedom of mobility, to do business and trade, to travel and enjoy with family and friends, to have cheap and stable energy sources, etc.

Wednesday, December 28, 2022

BWorld 574, Top 10 energy stories/ideas 2022

* My article in BusinessWorld last Dec. 19.

Here is my list of big energy stories and some of my ideas of 2022, five of which are global and five national.

1. Big jump in energy prices due to economic sanctions vs. Russia’s invasion of Ukraine.

Germany, the UK, France, Italy, etc. are not parties to the Russia-Ukraine war, they have no territorial dispute with Russia unlike Ukraine whose Crimea and Donbas regions are being claimed by both countries. But these European countries opted to cut their importation of cheap gas, oil, and coal from Russia and bought them elsewhere where prices are high, and transportation takes longer and is more costly. The European Union/Title Transfer Facility (EU/TTF) gas jumped from below €20/megawatt-hour (MWh) in 2019-2020 to nearly €340/MWh as the peak price this year. France, which had an average price of about €50/MWh in 2019-2020, experienced a spike to €1,130/MWh this year (See Table 1).

The economic sanctions have penalized the Europeans more than the Russians. Urals crude or Russian oil even experienced big jump in price in March, then again in June this year.

2. Wind and solar energy index continued decline.

In 2021, there were already spikes in energy prices in Europe as it was a less-windy, less-sunny, more-cloudy year, so their wind and solar farms produced little energy and the countries had to buy more gas and coal to avoid blackouts. The peak wind and solar energy price index occurred in January 2021, since then their glow and bubble started falling.

3. Prices of fertilizer and some industrial commodities made from fossil fuel jumped.

Fertilizers like ammonium nitrate, urea, and di-ammonium phosphate have as their main raw materials natural gas and oil. Bitumen, asphalt, and paints’ main raw material is crude oil. So high prices of gas and oil means high prices of fertilizer and some industrial products, which, in turn, leads to high agricultural and food prices.

As more countries push electric vehicles (EVs) and plan to phase out gasoline and diesel engines in the future, the price of lithium, the main component for EV batteries, started rising much much faster than prices of oil (See Table 1).

4. Rich countries’ fossil fuel consumption and electricity generation continue decline.

The BP Statistical Review of World Energy (SRWE) 2022 was released last July. I computed the combined consumption of oil, natural gas, and coal in Petajoules (PJ) by country and derived the PJ per million population, then the kilowatt-hours (kWh) per capita. All the G7 countries and other rich countries in Europe have been cutting their fossil fuel consumption and power generation.

5. Asians (except Japan) continue increasing their fossil fuel use and power generation.

And they have significantly increased their GDP per capita. Singapore, which has very high fossil fuel use (three times that of the US, almost six times that of Germany and Japan) also has very high per capita income. Vietnam, which has twice the fossil fuel use than the Philippines, has also overtaken us in per capita income (See Table 2).

6. The Philippines’ need for more fossil fuel to address frequent low reserves.

See these reports in BusinessWorld this December: “Luzon grid placed on yellow alert” (Dec. 1), and “Red, yellow alerts raised over Visayas grid” (Dec. 5). Thirty years since the frequent and long blackouts of 1991-1992, the country still experiences frequent yellow-red alerts due to low and thin reserves. Which leads to high power prices. As shown in Table 2, the Philippines’ fossil fuel use in 2021 was only one-half of Vietnam and Indonesia’s, one-fourth of Thailand’s, one-tenth of Malaysia’s, and 1/40 of Singapore’s. The share of wind and solar in the generation mix remains practically insignificant — only 3.3% of total in October-November this year, 14 years after the Renewable Energy law of 2008 (RA 9513) was enacted (See Table 3).

7. Need to abolish electricity price control is highlighted.

Price control in the form of primary and secondary price caps (SPC) is at only around P6.25/kWh. From the Independent Electricity Market Operator of the Philippines (IEMOP) data, until Dec. 11, SPCs were imposed 83% and 78% of the time in the Luzon and Visayas grids. This means that reserves are so low that power distributors and retailers were willing to pay high prices just to avoid blackouts. Since price controls were frequently imposed, then no new big peaking plants will come in. Very soon the public will get cheap electricity but it will not be available — blackouts.

8. ERC’s denial of SMC Global Power’s petition for a rate hike.

In 2019, SMC’s two power plants won the competitive selection process (or price bidding) to supply Meralco with 1,000 MW, their prices were low and fixed so other bidders were quickly defeated. SMC experienced high revenues. Then the Russia-Ukraine war and sanctions happened, the prices of coal, gas, and oil increased, and SMC said they were losing money so they wanted a rate hike. The Energy Regulatory Commission (ERC) said “No.”

See some reports this December alone in BusinessWorld: “Higher power rates seen on ceased 670-MW supply” (Dec. 8), “Meralco tells SPPC: Pay added cost of market-priced power” (Dec. 13), and “Meralco secures needed power from Aboitiz firm” (Dec. 16).

I am curious about two things. One, the prevailing spot prices are P9/kilowatt-hour (kWh) yet Aboitiz Power will supply Meralco with 670 megawatts (MW) in coal power at P5.96/kWh — this is price demotion and yet they still expect to earn a profit? Two, SMC’s winning bid was P4.30/kWh, and they said they lost P10 billion in 2021 and P5 billion in January-May 2022. I checked coal prices — from June to December 2021, the average prices were only about $180/ton and SMC said they lost big money, while coal prices from Dec. 1-16 this year are at around $400/ton and yet Aboitiz thinks they can make a profit? SMC seems to be bluffing the public — good that ERC said “No” to their bluff.

9. The need for privatization of PSALM plants and corporatization of electric cooperatives.

The Marcos Jr. administration is gung-ho in legislating the Maharlika Wealth Fund (MWF) and they need huge capitalization without huge public opposition. One potential big source is the privatization of many government-owned hydro power plants in Mindanao which are currently under the Power Sector Assets and Liabilities Management Corp. (PSALM).

Many of the electric cooperatives are charging high prices and penalizing power consumers in the provinces. When they lose big money, they run to the National Electrification Administration (NEA) which sends them millions, if not billions, in taxpayer money. Now the same electric cooperatives want tax exemptions. These cooperatives should become private corporations and NEA should be abolished — end political protectionism for these cooperatives.

10. Nuclear power gets traction in the country.

These two recent reports in BusinessWorld are great and brilliant: “Meralco eyes US grant to look into small nuclear reactors” (Dec. 9), and “AboitizPower eyes nuclear project” (Dec. 19). Government has killed the construction of new coal plants, imported LNG prices remain high, and solar-wind remain insignificant contributors to the country’s energy demand. Nuclear power is a very good long-term solution.

See also:
BWorld 571, Economic projections for 2023 and beyond, December 9, 2022
BWorld 572, State assets should finance Philippine sovereign wealth fund, December 10, 2022
BWorld 573, Ten economic issues to watch, December 27, 2022.

Covid 77, Twitter censorship and Elon Musk's TW Files

One of the great, positive things that happened when Elon Musk bought Twitter was the discovery and unravelling of the horrible censorship that the previous officers of TW did. Take the censorship of data, observations, ideas from people who questioned the lockdown, vax-vax-vax narratives.


Some good articles:

Do vaccines cause autism? It sure looks like it to me.
I was watching a Susan Oliver video claiming it's just coincidence. So I decided to take a look for myself. It seems clear from the source data that she's giving you false information.
by Steve Kirsch, 28 December 2022

The immunological mechanism of action for lost immunity, a shift to tolerance and autoimmunity from the shots
Have we unleashed a plague of IgG4-related disease on a subpopulation of humans?
by Jessica Rose. Dec 27 2022

German Survey Results Show One In Three 18-29 Year-Olds Have Seen “Severe Vaccine Side Effects”
By P Gosselin on 24. December 2022

Huge Rubbery Blood Clots In An Unvaccinated Individual - From Shedding? What Are They Made Of? A Call For Help To Analyze
Ana Maria Mihalcea, MD, PhD. Dec 22, 2022

BREAKING: Data of 72 Million Insured Shows “Sudden, Unexpected Deaths Exploded” in Germany Since 2021!
By P Gosselin on 12. December 2022

See also:
Covid 74, Vax spending in the Philippines, September 03, 2022
Covid 75, Vax effects -- myocarditis, thrombosis, pericarditis... September 05, 2022
Covid 76, Covid vax effects on fertility, September 08, 2022.

Tuesday, December 27, 2022

BWorld 573, Ten economic issues to watch

* My column in BusinessWorld last December 12.

This column continues to monitor many economic issues and developments. There are 10 topics tackled here.

1. Public debt has reached P14 trillion

Last week, the Bureau of the Treasury released fiscal data for October 2022. The budget deficit has reached P1.1 trillion, interest payment alone is P43.3 billion/month average and likely to reach P520 billion by end of this year. Total outstanding public debt has reached P14 trillion, actual plus guaranteed. The public debt has been rising by P2 trillion/year from 2020 to 2022 or three years straight, not a good fiscal condition. The debt should significantly decline starting next year. Control should be on the spending side by the national government.

2. Inflation has reached 8%, a 14-year high

Also last week, the Philippine Statistics Authority (PSA) reported that November inflation was 8%, a 14-year high. This is indeed high, but taking the average for 2022, we have a 5.6% inflation rate so far, lower than Thailand and Singapore which experienced deflation in 2020, slight inflation in 2021, and now are at 6% (see Table 1).

3. The Maharlika Wealth Fund (MWF) bill amendment

After a strong public outcry, the authors of the MWF bill in Congress have removed the inclusion of SSS (Social Security System) and GSIS (Government Service Insurance System) funds for the initial capitalization. Good. As argued in this column last week, “State assets should finance the Philippine sovereign wealth fund” — use of Malampaya gas royalties is a good source. If Malampaya funds are used, then no new tax or mandatory contributions would need to be slapped on the people. And the amount generated by Malampaya is huge: P26.57 billion in 2019, P19.08 billion in 2020, P19.79 billion in 2021, and P21.44 billion in January-October 2022 alone.

4. Tobacco smuggling as economic sabotage

Last week, Congress passed on second reading House Bill (HB) 3917 which seeks to amend Republic Act (RA) 10845 or the Anti-Agricultural Smuggling Act of 2016. It will include the smuggling of tobacco products, manufactured or raw, as economic sabotage and a non-bailable offense. The original law includes only the smuggling of rice, sugar, corn, pork, poultry, fish, garlic, onion, carrots, and some other vegetables as economic sabotage.

Party-list Congresswoman Margarita Nograles, as co-author of the bill, cited Euromonitor’s estimate that 16.7% of all cigarettes sold in the Philippines are from illicit trade and the projected revenue losses to government is P26.2 billion in 2022 alone. Notice also in Table 1 that excise tax collections, which include tobacco tax revenues, in 2022 remain low. As tax rates increase, illicit trade and tax evasion also increase.

5. MUP pension reform

The military and uniformed personnel (MUP) pension is among Philippine taxpayers’ burdens. The good news is that there are attempts to address this, like HB 2556, or the “MUP Insurance Fund Act,” filed by Deputy Speaker Ralph Recto. For 2022 alone, the government has obligated P153.1 billion, equivalent to 89% of MUP base pay for the same year. The bill proposes to establish a government-guaranteed insurance fund to cover new entrants to be managed by the GSIS, and agency contributions equivalent to 21% of the total monthly base pay of MUP.

6. A projected power rate hike

Consider these recent reports in BusinessWorld related to the Energy Regulatory Commission (ERC) ruling against the two San Miguel Corp. (SMC) power companies’ petition for a generation rate hike: “SMC Global Power appeals rate hike denial — ERC” (Nov. 25); “SMC Global Power points to ERC for looming rate hike” (Nov. 29); “SMC Global Power offers Ilijan capacity to Meralco” (Dec. 4); “Meralco gets CSP exemption for power supply deal” (Dec. 7); “Higher power rates seen on ceased 670-MW supply” (Dec. 8); “Malampaya consortium denies SMC Global Power’s claim on banked gas delivery” (Dec. 12); and, “Meralco hopes to secure power deal within the week” (Dec. 12).

SMC Global Power and its allies in media continue to demonize the ERC and the agency’s chairperson, Monalisa Dimalanta. There seems to be no acknowledgment by SMC that they made a big mistake in offering a low fixed-price power supply to Meralco which quickly defeated the bid prices of other power companies sometime in 2019 or 2020. Now SMC is turning its blame game on the Malampaya consortium — Prime Energy (the Razon group), UC38 (the Udenna/Dennis Uy group), and the Philippine National Oil Co. (PNOC, government) — for why it cannot get banked gas for its Ilijan gas plant in Batangas.

7. Continuing power deficiency, yellow alerts

Here are related recent reports, also in BusinessWorld: “Investigation looms after six power plants declare outages” (Nov. 28); “PHL energy security to hinge on emerging tech” (Nov. 30); “Luzon grid placed on yellow alert once more after five power plants report forced outages” (Dec. 1); “Red, yellow alerts raised over Visayas grid after four power plant outages” (Dec. 5); “DoE says working to make supply of power more reliable next year” (Dec. 6); and, “Meralco eyes US grant to look into small nuclear reactors” (Dec. 9).

Those yellow alerts can scare potential investors from coming in. Consider also the numbers in Table 2. The main reason why the Philippines’ power prices are high compared to many of its neighbors in East Asia is because it has very low power generation, with low supply relative to demand. And that also explains why many existing power plants tend to conk out more often – they are old and ageing, especially coal, gas, and big hydro plants — but they cannot be retired because new big power plants are few.

Aside from new coal and LNG (liquefied natural gas) plants that are coming soon, we need nuclear power — at least small modular reactors (SMRs) — especially for island provinces like Mindoro, Palawan, Masbate, etc. It is good that Meralco is pioneering this move.

I think the Philippines is wrong to focus on forcible low prices at the generation sector via a mandatory Competitive Selection Process. The country should focus on expanding its power supply and address the problems in the transmission sector like the absence of a firm contract for ancillary services by the transmission operator. If it does, prices will stabilize or decline on their own. From around 6 terawatt-hour (TWH)/year annual increase until 2021, we should have at least 9 to 10 TWH/year increase starting 2023.

8. Deaths increase but births decrease

Last week, the PSA also reported the country’s vital statistics. The worrying trend continues of “missing babies.” Among the possible reasons are couples’ continuing economic uncertainties after two years of lockdown, and possible adverse effects of mass vaccination on people’s fertility.

On causes of deaths, notice that deaths from heart diseases such as myocarditis, pericarditis, and related heart problems increased in 2021 and on until today, coinciding with mass vaccination. And there is a big decline in regular pneumonia deaths, from 10% of the total in 2019 to only 4.2% in 2021 and 4.5% in 2022. This implies that many pneumonia deaths are possibly tagged as COVID-19 deaths (see Table 3).

9. The Ruperto P. Alonzo lecture series

The UP School of Economics (UPSE) Program in Development Economics (PDE) Alumni Association has been revived. Elected as its new president is Senen Bacani, a former Education Undersecretary. Starting 2023, the association will organize a quarterly Ruperto P. Alonzo (RPA) lecture series, in honor of the long-time PDE Director, beloved by so many alumni, who passed away five years ago. Topics and speakers have been identified already for quarters 1 to 4 with a PDE alumni homecoming to be held in the second quarter.

10. The PPP Act

The first talk in the RPA lecture series will be held on Feb. 8, 2023 at the UPSE auditorium. It will be about Public-Private Partnership (PPP) and big infrastructure projects. The speaker will be Cynthia Hernandez, Executive Director of the PPP Center.

On this subject, Congress passed on second reading the bill on the “PPP Act.” I saw HB 2557 authored by Mr. Recto, and the provisions are good: automatic endorsement by the Regional Development Council for PPP projects which have complied with the requirements to avoid arbitrary delays, and the classification of infrastructure projects as “Projects of National Significance,” among others. And check again Table 1, local government units’ budgets will be rising — they should undertake more provincial PPP projects, and spare the National Government of more spending and borrowing.

See also:
BWorld 570, On government debt, WESM prices, and the UP presidency, November 30, 2022
BWorld 571, Economic projections for 2023 and beyond, December 9, 2022
BWorld 572, State assets should finance Philippine sovereign wealth fund, December 10, 2022.

Grover Norquist, ATR, and Leave Us Alone campaign

There's one American libertarian whom I admire to be a consistent free marketer,  Grover Norquist, founder of the Americans for Tax Reforms (ATR), formed in 1985 during US President Ronald Reagan time. Mr. Reagan instituted big tax cuts and he wanted an independent think tank that will help him preserve such gains, regularly remind Republican legislators to never reverse such tax cuts, champion other tax reforms in the US.

Grover has written many newspaper articles and several books. This one he published in 2008, he gave me about 4 copies during the 2nd Pacific Rim Policy Exchange (PRPX) in 2008 (Hong Kong) or 3rd PRPX 2009 (Singapore). I gave two copies to some selected friends in Manila, I still keep the two copies.

I like his chapter on Two Competing Coalitions -- the Leave Us Alone Coalition, and the Takings Coalition. The opening page under the former.

The Leave Us Alone Coalition -- don't want government to give them something, or take something from others, just government to leave them alone. Among the sectors or groups here are: Taxpayers, businessmen and women, Second amendment voters (gun owners, hunters), home schoolers, property rights advocates and homeowners, faith communities and parents' rights, the ownership society, police and military.

The Takings Coalition -- want government to take things from one group and give to someone else including themselves. Government taking money, property, power and control. Among the sectors and groups here: Government workers, modern mamelukes, labor unions, big blue states, the non-profit sector, universities, trial lawyers, coercive utopians.

First time I met Grover was in 2004 in the ATR office in Washington DC. I was an international fellow of the Atlas Network that time. He struck me as a straight, frank, explicitly libertarian leader, admired him right there and then.

Second time I met Grover was in 2007 during the first PRPX in Hawaii where ATR was a major sponsor. I was happy and honored to be invited and granted a travel grant by them.

Photos below: (a) with Bjorn Tarras-Wahlberg, then President of the World Taxpayers Association (WTA) and Grover, in 3rd PRPX in 2009 in Singapore.

(b) 4th PRPX in Sydney, Australia in 2010. With Peter Wong of Lion Rock Institute (LRI, HK), Grover and Jim Lakely of Heartland Institute.

(c) 7th ALS Friedman Conf + 17th WTA Conf in Sydney, May 2019. From left: me, Michiel R, Grover, and Dan Mitchell.

Grover's trusted senior staff Chris Butler and Lorenzo Montanari, they are also my friends. When I was in Washington DC in July 2019 for the Heartland conference, I visited them in the ATR office, they treated me to a nice lunch. Last September during the Asia Liberty Forum in Manila, ATR staff Philip Thompson came and we have dinner the night before the conference. 

Thanks for the things you keep doing Grover, Chris, Lorenzo, Philip, ATR team.

See also:
Friendship with ATR and Grover Norquist, June 13, 2019
The 7th ALS Friedman Liberty and WTA Conferences, May 22, 2019
More photos, 1st PRPX Hawaii, May 2007, January 28, 2019.

Saturday, December 10, 2022

BWorld 572, State assets should finance Philippine sovereign wealth fund

* My column in BusinessWorld last December 5.

At the BusinessWorld Economic Forum on Nov. 29 at the Grand Hyatt Manila in Bonifacio Global City in Taguig, Finance Secretary Benjamin Diokno outlined in his keynote speech an optimistic growth trajectory for the Philippines, the overall fiscal resources and debt reduction needed, and investment liberalization policies that have been institutionalized. He also briefly mentioned the establishment of a state-owned sovereign wealth fund (SWF).


The MIF, the Philippines’ SWF as proposed by the House leadership under House Bill 6398, ‘has attracted mostly negative reactions from researchers and corporate players in the country. See for instance these reports and columns in BusinessWorld:

“Medalla voices caution over plans to create $4.9B sovereign fund” (Dec. 2),

“PHL not ready for sovereign wealth fund — analysts” (Dec. 5),

“The Maharlika Wealth Fund,” Yellow Pad by Filomeno S. Sta. Ana III (Dec. 4),

“Some leadership gaps and uncertainties,” Introspective by Romeo L. Bernardo (Dec. 4).

What makes the proposed MIF controversial is that it will get funds from these four government agencies: the Government Service Insurance System (GSIS), P125 billion; the Social Security System (SSS), P50 billion; Land Bank of the Philippines (LBP), P50 billion; and Development Bank of the Philippines (DBP), P25 billion. The initial investment totals P250 billion.

Then it will get P25 billion from the National Government, plus foreign currency reserves from the Bangko Sentral ng Pilipinas (BSP) equivalent to 10% of OFW remittances and 10% of contributions from the Business Processing Outsourcing (BPO) sector.

These are indeed objectionable because GSIS and SSS funds are not tax money but private contributions by members and their employers meant for emergency and retirement needs of those members. The BSP also needs to keep a high level of gross international reserves (GIR) so that anytime external financial shocks occur, it will have sufficient foreign currency for companies to buy important imported commodities for several months.

To address these objectionable provisions, SWF should be sourced from government assets. In particular (a) Malampaya royalties, currently around P16 billion/year, (b) privatization of some wide government lands, and (c) privatization of many government-owned and -controlled corporations (GOCCs).

I propose five GOCCs and their assets as priorities for quick privatization, and about 20 others for long-term privatization (Table 1).

To avoid further public suspicion, this should not be rushed. Have the Malampaya royalties remain intact for at least 2023–2024, hasten the privatization of hydro power plants in Mindanao managed by PSALM, and fast track the privatization of PAGCOR and PCSO.

It is possible that by 2024–2025, the P275 billion initial investment target can be raised without compromising private funds like SSS and GSIS, taxes from the public, and GIR of the BSP.

This column has advocated large-scale privatization of GOCCs and other government assets mainly to pay and reduce public debt, not earmarked for whatever programs or agencies. And spare the taxpayers of higher and/or new taxes. Now should be the time to have wider public discussion on this subject.


On Dec. 9, the University of the Philippines (UP) Board of Regents (BoR), the university’s policy-making body, will elect the next UP President.

Last week, 58 National Artists, National Scientists, and Emeritus Professors of UP — high caliber and well-respected minds — signed a joint statement outlining important characteristics of the next UP President.

One, he must be an exemplary scholar with a lengthy teaching experience, a deep-thinking intellectual, a competent administrator and committed public servant. Two, he must have an unblemished track record and proven experience in running a university and a full understanding of the needs of the UP community. Three, he must appreciate and treasure the intellectual and sociopolitical responsibilities of defending UP’s singular status as a safe haven and secure refuge for the pursuit of nurturing of critical thinking. Four, he must have access to an extensive regional and global network as a means for UP to collaborate with its counterparts in Asia and the world. And five, he must have an intricate grasp of data and analytics overlayed with the ability to link and apply these to the hard sciences, the social sciences, humanities, and others.

With these five clear, categorical characteristics of a university leader, the 58 academics and scientists have endorsed the current UP Diliman Chancellor Fidel Nemenzo, a noted mathematician who has done research and taught in universities outside UP, including educational institutions in Singapore, Phnom Penh, Tokyo, Amsterdam, and Munich.

I congratulate these brilliant minds for the clarity of their criteria and choice of a leader. Six of them were my former teachers at the UP School of Economics (undergrad and graduate): Drs. Raul Fabella, Florian Alburo, Dante Canlas, Epictetus Patalinghug, Gerardo Sicat, and Rolando Danao.

Esteemed BoR members should heed the advice of these brilliant minds and elect Dr. Fidel Nemenzo as the next UP President.


Related to the issue of UP Presidency is the rising budget of state universities from P66.9 billion in 2019, P77.4 billion in 2020, P81.4 billion in 2021, P108.4 billion in 2022, to P97.7 billion in 2023.

Below are the biggest state universities in the country. I chose only those whose budget has touched at least P1 billion in 2022 or 2023. UP has the biggest budget partly because funding for the Philippine General Hospital is shouldered entirely by UP (Table 2).

Many of these state universities have wide lands, the use of which should be optimized through long-term leases that will reduce their dependence on taxpayers. This is not happening except maybe with the UP–Ayala Land TechnoHub long-term lease. The establishment of MIF perhaps will force some state universities to sell part of their wide lands, proceeds to go to MIF.

Finally, as public debt continues to rise in the Philippines and many countries around the world, people should go back to assuming more personal responsibility in running their own lives. To say that their children’s healthcare and education from elementary to university is not personal and parental responsibility, only state responsibility, is wrong. This is a formula for endless state dependence instead of self-reliance — a formula for endless tax-gouging instead of tax cuts and more individual freedom.

See also:
BWorld 569, Growth, power transmission, and Poland, November 25, 2022
BWorld 570, On government debt, WESM prices, and the UP presidency, November 30, 2022
BWorld 571, Economic projections for 2023 and beyond, December 9, 2022.

Deindustrialization 9, Net Zero and Degrowth, Oct-Nov. reports

See more reports here.

1. Net Zero Bombshell: The World Does Not Have Enough Lithium and Cobalt to Replace All Batteries Every 10 Years – Finnish Government Report

2. Eco-extremists are leading the world towards despair, poverty, and starvation
Utopian solutions for saving the planet are doomed to failure - and worse. We must wake up before it is too late
JORDAN PETERSON 28 October 2022

3. The Deadly ‘De-Growth’ Craze
Stagnant societies eventually slide into oppression, chaos, anarchy and ruin.
Andy Kessler hedcutBy Andy Kessler Oct. 30, 2022

4. Britons hit by the ‘world’s third highest’ electricity price increase
Since 2016, there has been a 35% increase in the average unit price of electricity in the UK, according to a report
Dimitris Mavrokefalidis  November 1, 2022.

5. It’s sinister and anti-human to stop growth
Shrinking the global economy to consume fewer resources is the green lobby’s latest bad idea
Melanie Philips November 1, 2022

6. The energy crisis gives the US a chance to woo big European companies
November 2, 2022

7. A Windfall Profits Tax: Energy Policy for Dummies
Biden contradicts his stated desire for more oil production.
By The Editorial Board, Nov. 2, 2022

8. Energy cost curbs are impeding Europe’s renewables rollout, Vestas warns
November 2, 2022

9. Greta Thunberg: It's time to transform the West's oppressive and racist capitalist system
The activist claims that the world’s current 'normal' - dictated by the people in power - has caused the climate breakdown
India McTaggart.  2 November 2022

10. We Told Big Oil Not to Invest. Don’t Complain Now
The invisible hand of the free market is not working like it used to in balancing oil supply and demand.
Javier Blas. November 2, 2022

11. Energy crisis chips away at Europe's industrial might
Clara Denina and Sarah Mcfarlane. November 3, 2022

12. Analysis: Energy market turmoil shakes Europe's green power plan
Susanna Twidale, Isla Binnie and Kate Abnett. November 3, 2022

13. Energy crisis: EU heads to COP27 as countries switch from gas to coal
Jorge Liboreiro  •  Updated: 03/11/2022

14. Europe Risks Huge Gas Shortfall Next Summer, IEA Warns
Paris-based agency says Europe’s energy security remains in a perilous position
Western leaders are preparing for the possibility that Russian natural gas flows through the key Nord Stream pipeline may never return to full levels. WSJ’s Shelby Holliday explains what an energy crisis could look like in Europe, and how it might ripple through the world.
Will Horner Nov. 3, 2022

15. Rex Murphy: Energy crisis the inconvenient consequence of demonizing the oil and gas industry
What did Joe Biden and others like him — including in Canada — expect to happen?
Rex Murphy  Nov 03, 2022

16. Coal Was Meant to Be History. Instead, Its Use Is Soaring
The demise of the dirtiest fossil fuel has been delayed as power shortages and the war in Ukraine drive consumption, while China and India construct new plants.
Dan Murtaugh and David Stringer.  November 4, 2022

17. The big green question: can we risk growth?
Dominic Lawson November 6, 2022

18. Climate change reparations are a toxic distraction
Blaming all the planet’s problems on Britain’s Industrial Revolution is irrational buck-passing
ROBERT TOMBS.  7 November 2022

19. Renewable Power’s Big Mistake Was a Promise to Always Get Cheaper
Vestas CEO says industry went too far with cheap-energy pledge
Producers are losing money even as clean-power demand grows
Will Mathis. November 7, 2022

20. Energy crisis? What energy crisis?
Politicians need to come clean about the high price we have paid for embracing ‘green energy’.
Andy Shaw. 8th November 2022

21. Exclusive: Industry body slams UK-US LNG deal following fracking snub

22. Sweden to lay bare new government’s emission-increasing plans at COP27
Charles Szumski | Nov 8, 2022

23. Rolls-Royce seeks to open mini-nuclear reactors across Wales, the North and West Midlands by 2030
Engineering giant aims to build 30 reactors to kick-start nuclear revolution
Howard Mustoe 9 November 2022

24. EU gas stocks could fall short next year, Commission president warns
Gabriela Baczynska. November 10, 2022

25. Opinion: The energy transition is transitioning — to energy security
The current supply crisis has revealed surprising global demand for hydrocarbons
Henry Geraedts,  Nov 10, 2022

26. The banking approach to net zero is just claptrap
November 12, 2022

27. Barcelona students to take mandatory climate crisis module from 2024
Course thought to be world first agreed after university bowed to pressure from seven-day End Fossil protest
Stephen Burgen in Barcelona. Sat 12 Nov 2022

28. This is war: Renewables vs the West
Alexandra Marshall  14 November 2022

29. EU’s energy crisis deepening amid fresh supply disruptions in Eastern Europe
Disruptions deepen further after oil flow on Druzhba pipeline temporarily halts due to voltage drop
Sibel Morrow and Firdevs Yuksel   17.11.2022

30. As Green Policies Cause Energy Prices To Explode, Deforestation In Europe Accelerates
P Gosselin on 18. November 2022

See also:
Deindustrialization 6, UK, Sept. 2022 reports, October 20, 2022
Deindustrialization 7, Other Europe, Sept-Oct News, November 08, 2022
Deindustrialization 8, Germany, Oct-Nov reports, November 30, 2022.

Friday, December 09, 2022

BWorld 571, Economic projections for 2023 and beyond

* My article in BusinessWorld last Nov. 28.

The BusinessWorld Economic Forum (BWEF) 2022 today, Nov. 29, has as its theme, “Forecast 2023: Opportunity in Uncertainty.” I want to contribute to the discussion on economic forecast and projections in relation to the recently concluded big annual conference, the UN Framework Convention on Climate Change (UNFCCC) 2022 or 27th Conference of Parties of UNFCCC (COP 27) in Egypt that ended on Nov. 19.


The Philippines had the deepest economic contraction in Asia in 2020 at -9.5%, followed by a mild recovery of 5.7% in 2021. This year, it is on the way to having the fourth fastest growth in East and South Asia at around 7.8%.

The multilaterals, especially the ADB through its Asian Development Outlook (ADO) September 2022 Update, and the IMF World Economic Outlook (WEO) October 2022 Update, have bad and low projections of only 6.5% Philippines growth this year, even if they knew that growth in quarters 1 and 2 (Q1, Q2) was already at 7.7%. When Q3 growth came out at 7.6%, it showed their projections as having archaic and ugly assumptions because they will now assume that Q4 growth will only be 2.9% — bad and unrealistic. My own projection for Q3, which I wrote in this column on Aug. 15, was 7-7.5% growth, and for Q4 is 7.5-8% growth.

This year will further cement the new trend that South East Asia and South Asia are the fastest growing regions in the world. Malaysia, the Philippines, Vietnam, and India will be the head of the pack (Table 1).

Finance Secretary Benjamin Diokno, as head of the economic team, is doing a good job in assuring the public and investors that important market-oriented reforms like the Public Service Act amendment, and the Foreign Investment and Retail Trade Liberalization Acts are in place, and no tax hikes will be done in major sectors like individual and corporate income, VAT, excise on energy products, even in so-called “sin products.”

These are good moves by Secretary Diokno. With the Philippine inflation rate already at 5.1% from January-October 2022 vs. 2% in 2020, and 3.9% in 2021, any tax hike on major sectors will have inflationary effects, especially if the tax hike is on energy products.

Last week, rumors about Secretary Diokno were published in at least two publications: “Biz Buzz: Cabinet member on way out?” (Philippine Daily Inquirer, Nov. 21) and “Mar, Gibo in play too? Salceda is top pick for DoF as Marcos grows weary of Diokno’s incompetence” (, Nov. 21). A good quote from the President came out in the story “Marcos dismisses as ‘fake news’ report Diokno on way out at DoF” (BusinessWorld, Nov. 22), referring to BizBuzz and Bilyonaryo as dishonest and indulging in irresponsible reporting. The public should mark these two outlets.


There is a trend that high and rising consumption of fossil fuels (FF) — oil, natural gas, and coal — leads to high and sustained growth. And declining consumption of FF leads to low and declining growth.

In two tables accompanying this piece, I chose the biggest economies and arranged them in group A for North and South America, group B for Europe, group C for Northeast and South Asia, and group D for the ASEAN-6.

Energy consumption is expressed in Petajoules (PJ). One PJ is equivalent to 23,885 tons of oil equivalent, or equivalent to 277.78 megawatt-hours (MWH) of electricity.

The G7 countries — the US, Canada, Germany, the UK, France, Italy, and Japan — have had high FF consumption historically, which partly explains their high GDP per capita. Russia and Asian countries like South Korea, Taiwan, and Singapore, also have high FF consumption both in total and PJ per million population (Tables 2 and 3).

From 2020 to 2021, there was big decline in FF consumption by G7 countries except Canada and this contributed to their low average growth of 1.7% or lower over the last decade. In contrast, the rest of Asia — especially China, India, and ASEAN-6 — have had rising FF use and this contributed to their high average growth of 2.4-7.4% in the last decade. Their per capita GDP has also expanded significantly.

The long-term economic projections would be a continuation of this trend: low, anemic growth of below 1.7% for G7 and other rich countries, and 2.5% and higher growth for developing countries in Asia.


The Philippines and the rest of developing world should continue their sustained FF use if they wish to have cheap and reliable energy 24/7 that will power their growth and industrialization. The Philippines, in particular, had the lowest FF use in the ASEAN-6 in 2021, only half of Vietnam’s, one-fourth of Thailand’s, one-eighth of Malaysia’s, 1/13th of Taiwan’s and South Korea’s, and 1/40th of Singapore’s.

In the power sector, the Philippines should focus on more FF plants, with 24/7 reliable and dispatchable on-demand power. Big reforms are needed in the distribution sector too as many electric cooperatives in the provinces are so inefficient and wasteful — they charge high prices with frequent power fluctuations and brownouts, and they are protected by politics via the National Electrification Administration (NEA). If they cannot be efficient, their monopoly franchise areas should shrink and efficient corporate distribution utilities like Meralco should take over.

On energy bureaucracy, UP College of Business Administration Professor Emeritus Epictetus Patalinghug, made this observation and I say Amen to it:

“The EPIRA*-led restructuring of the energy sector created a more efficient private run generation sector, but slowly enlarged the energy sector bureaucracy: DoE, Napocor, PSALM, NEA, ERC, WESM, Transco**. The octopus has multiplied post-EPIRA with no evident reduction in the cost of electricity per kilowatt hour. System losses and management inefficiency among electric coops have not disappeared.”

* Electric Power Industry Reform Act

** Department of Energy, National Power Corp., Power Sector Assets and Liabilities Management Corp., National Electrification Administration, Energy Regulatory Commission, Wholesale Electricity Spot Market, National Transmission Corp.

See also:
BWorld 568, Inflation and illicit trade, November 9, 2022
BWorld 569, Growth, power transmission, and Poland, November 25, 2022
BWorld 570, On government debt, WESM prices, and the UP presidency, November 30, 2022.

MWF 1, Maharlika Investment Fund as SWF

The world's largest sovereign wealth fund (SWF).


2020 data. Source: 

Me thinks having a SWF, aim for a fiscally-surplus economy is good for developing countries like the PH. Be wealthy today and tomorrow is good. The big question mark is funding -- where to get the initial funding?

The Maharlika Investment Fund (MIF) an SWF as filed in the House of Representatives is still problematic even if they removed SSS and GSIS funding because it will get funding from govt banks LBP and DBP, plus profit by the BSP.

The big elephant in the room for possible funding is privatization of some large govt corporations and assets. Like PAGCOR and PSALM. And more.

Govt should leave those gambling-casino and power generation sectors, get the money and use it to retire the public debt, or create an SWF. Just leave.

I posted this in Sept. 2013, nine years ago, using the Malampaya royalties as SWF. It should remain feasible until now,

Former Senate President Edgardo Angara wrote in Feb 2018 about a "Legacy Fund", SWF, from Philippine Rise or Benham Rise,

Somehow PH has good potential for high energy reserves. Malampaya gas has been flowing since about 2003. Semirara coal has been producing since 2-3 decades ago. Mindanao has potentials for oil gas both onshore and offshore.

One problem is climate and ESG drama. If it's oil gas coal exploration and production, the environmentalists, UN, etc come to remind us that fossil fuels cause less rain and more rain, less flood and more flood, less dogs and more dogs. Then the private banks and insurance companies starve such investments for the same reason.

There are a number of suggestions that "globalization is almost dead."

I don't believe that. Perhaps the appropriate term is "free trade is almost dead". Gobalization will never die, but free trade can. Now it's politicized trade. Even if commodities are cheap but the source country is an enemy of the importing country or government, then trade will be restricted, even prohibited. too much politics now.