Wednesday, March 01, 2023

BWorld 584, Ten trends in inflation, PPP, employment, cancer treatment and energy

BusinessWorld Feb. 13, 2023.

Last week, several important pieces of news and events came out. I am summarizing them here.

1. The Philippines inflation rate was 8.7%. The Philippine Statistics Authority (PSA) released the January inflation data last week, and the number is indeed bad. But last year, Thailand and Singapore also experienced inflation at 14-year highs, South Korea hit a 24-years high, Japan has a 41-year high.

The main contributors of the 8.7% inflation rate (the highest since November 2008) are from housing, water, electricity, gas, other fuels, transport, and food. These are basic necessities so even if the Bangko Sentral ng Pilipinas (BSP) interest rates further rise from the current 5.5% (only 2% last April) to 10%, people will still spend for them. The appropriate policies are to encourage more supply of those goods — cement, steel, electricity, water, etc. — both through domestic production and trade liberalization.

2. Low unemployment rate despite high labor force participation rate (LFPR). The PSA also released last week employment data for December 2022. LFPR is an indicator of people’s optimism or pessimism about the jobs market. They enter the labor force if they think they can find a good job, they don’t join if they think good paying jobs are not available anyway. The two highest LFPR in 2022 were recorded in November at 67.5% and December at 66.4%.

The two lowest unemployment rates in 2022 were also in November at 4.2% and December at 4.3%. That is a three-year low and it is the best situation that one can hope for in the jobs market. People are optimistic they can find good jobs or they can employ themselves via entrepreneurship. And when they do enter the labor force, very few are unemployed.

Last year among the ASEAN-6, the Philippines had the third highest inflation rate next to Thailand and Singapore. And when it came to the unemployment rate, the Philippines had the second highest as of September 2022 next to Indonesia. But the good thing is that Philippines unemployment shows a consistent decline (see Table 1).

3. Lecture on public-private partnership (PPP). On Feb. 8, the inaugural Ruperto P. Alonzo lecture series was held at the UP School of Economics. The speaker was Cynthia Hernandez, Executive Director of the PPP Center. She discussed the big PPP projects since the time of former President Cory Aquino under RA 6957 or build-operate-transfer (BOT) law of 1990, then RA 7718 or Amended BOT law of 1994 under former President Fidel Ramos, and so on. The main reason why I support more PPP in big infrastructure projects is that it relies on user-pay principle, not all taxpayers-pay principle. So the North Luzon Expressway (NLEX) will be paid only by those who use it and not by people who hardly or never use it, like taxpayers and businesses in Bicol, the Visayas, and Mindanao.

4. The Philippine Business Opportunities Forum (PBOF) in Japan. Last Friday, President Ferdinand Marcos, Jr. and the economic team plus infrastructure team held the PBOF in front of many Japanese and foreign investors. Among the important outcome of the Japan trip was the signing of 35 Letters of Intent (LOIs) between the Philippines and Japan that cover business opportunities in energy, manufacturing, transportation, healthcare, and other sectors.

5. Cancer center and treatment is highlighted. Also during the lecture by Ms. Hernandez last week, she mentioned the University of the Philippines-Philippine General Hospital (UP PGH) Cancer Center, a $95 million (or about P5.5 billion) 300-bed capacity hospital for cancer patients. A week before, it was also reported in BusinessWorld, “Cancer center is Marcos gov’t’s first PPP project” (Feb. 2).

6. Cancer is third main cause of death in the Philippines. Last month, the PSA released the “2022 Causes of deaths in the Philippines,” data covering January-September 2022. I expand here with data from way back to 2017. For some reasons, cancer deaths and pneumonia deaths have declined significantly in 2021 and 2022 while COVID deaths came in (see Table 2).

It is possible that regular pneumonia deaths were labeled as COVID deaths because reporting of COVID cases and deaths were incentivized via higher PhilHealth coverage and subsidies if the patient was sick or died of COVID than non-COVID causes.

7. Cancer treatment is underfunded while COVID vaccination funding remains bloated. Another report in BusinessWorld last week was “More public funds seen needed for cancer care in PHL” (Feb. 9). It quotes Dr. Marvin Jonne Mendoza, head of the medical oncology section of the National Kidney and Transplant Institute, saying that the 2023 General Appropriations Act includes P1.56 billion for two cancer funds but for breast cancer, a patient needs P300,000 to P450,000 to complete the required 18 treatment cycles, and there are at least 27,000 new breast cancer cases/year in the Philippines. Even taking the low-end of P300,000/patient, this means some P8.1 billion is needed to deal with breast cancer alone.

Compare that with COVID vaccine procurement plus logistics of about P88.6 billion in 2021, P45 billion in 2022, and P24.5 billion in 2023.

8. New medicines are replacing chemotherapy. My older brother, Manong Nestor Oplas, died about 17 years ago of prostate cancer. His wife and my sister-in-law, Ate Alita Oplas died of cervical cancer several months ahead of Manong. As both went through painful and expensive treatments including chemo, my well-off sister covered their costly treatment, but both died young, only in their early 50s. My father died of liver cancer but he was almost 90 years old when he rested. Three of my wedding godparents also died of cancer.

If these new anti-cancer medicines — through intravenous or subcutaneous delivery — were available say two decades ago, my brother and sister-in-law, godparents and many other friends, may have lived longer.

9. The budget this year for “Prevention and Control of Non-Communicable Diseases” like cancer is P2.91 billion. The Department of Health has a total budget of P209.13 billion from the General Appropriations Act of 2023.

10. Last Friday, the Independent Electricity Market Operator of the Philippines (IEMOP) held a media briefing and they reported two pieces of good news. One was the launch of the Wholesale Electricity Spot Market (WESM) Mindanao on Jan. 26. Two is the start of operation of the Mindanao-Visayas Interconnection Program (MVIP) this coming March. This is a long-delayed project by the National Grid Corp. of the Philippines (NGCP) — the original target was end-2020, which became 2021, then became 2022. With President Marcos Jr. at the WESM Mindanao launch and announcing the March 2023 operation of MVIP, the NGCP will have no more excuses to keep delaying completion of the project.

The MVIP is important because Mindanao often has power surpluses — it has many new coal power plants — while Visayas and Luzon have occasional power deficits. In Mindanao, coal is 53% of installed capacity but contributes 62.5% of actual power generation.

The trends show bad numbers in inflation but good numbers in employment, energy, PPP, and foreign investments. In health, the continuing distortion in public spending in favor of COVID vaccination spending should stop and resources be diverted to controlling cancer and other non-communicable diseases.

See also:
BWorld 581, 10 trends in GDP and trade in 2022 and 2023, February 09, 2023
BWorld 582, Ten things about the military and uniformed personnel pension system, February 16, 2023
BWorld 583, Ten trends in global and Philippine energy, February 17, 2023.

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