Government and Taxes: October 2023

Sunday, October 29, 2023

BWorld 648, Energizing growth: Lessons from UAE, France, and other countries

Oct. 17, 2023
https://www.bworldonline.com/opinion/2023/10/17/551802/energizing-growth-lessons-from-uae-france-and-other-countries/

(Part 2 of a series)

DUBAI, UAE — This is my first time setting foot in the Middle East. I am going to Nice, France for the Tholos Forum 2023. My sponsor booked me at Emirates Air so the route is Manila-Dubai-Nice and back.

From several videos and photos I had seen, Dubai is very bright at night, very developed and rich. I see this at the airport. Our plane landed at 4:30 a.m. and there are bright lights all around. The United Arab Emirates’ (UAE) power generation in 1985 was only 12.2 terawatt-hours (TWH) while Philippines’ was 22.8 TWH. By 2005, the UAE overtook the Philippines with 60.7 TWH while ours was 56.6 TWH. The UAE, along with Saudi Arabia, Qatar, and other Middle East countries, optimized their oil and gas reserves and kept exporting. They did not follow the climate lobby of “keep fossil fuels on the ground” and they are correct, world demand for fossil fuels will never decline.

SENSITIVITY OF GDP GROWTH FROM POWER GENERATION GROWTH

The UAE is also a good example of a country rapidly expanding its power generation which in turn prods more economic activities and higher GDP growth. In Table 1, I attempted to derive a “sensitivity” or responsiveness of 1% growth in power generation and its potential effect in GDP growth. I excluded countries with more than 500 terawatt-hours (TWH) in power generation in 2022 — China, India, South Korea, Japan, the US, Canada, Brazil, Germany — because they seem to be outliers.

For several countries, a 1% increase in power generation contributes to a 1%+ increase in GDP growth. Clear cases are Indonesia, Vietnam, the Philippines, Saudi Arabia, the UAE, Mexico, and Argentina. This does not hold for richer Asians, like Taiwan and Malaysia, and the Europeans as their power generation growth has slowed down in recent years.

There are many factors for a country’s fast or slow growth and power generation is just one of them — but it is a major contributor because most business and human activities require energy, especially from fossil fuels (land, sea, and air transportation; power generation, etc.).

The result shows that for many developing countries, there is a positive correlation between fast growth in power generation and fast GDP growth (see Table 1).

PANDESAL FORUM WITH ERC CHAIR

Last Friday, Oct. 13, I attended a special Pandesal Forum at Kamuning Bakery in Quezon City for columnists and editors. The lone guest was Energy Regulatory Commission (ERC) Chairperson and CEO Monalisa Dimalanta, and the moderator was Wilson Flores.

Ms. Dimalanta gave her usual clear and non-ambiguous explanation of issues related to electricity pricing, power security, grid stability, generation competition, distribution regulation, rural electrification, and related topics. For me the major takeaways from her talk were the following:

1. Power generation and supply are competitive; power transmission is a monopoly and easier to monitor; distribution is a geographical monopoly but there are many distributors (121 electric cooperatives or ECs and about 20 private corporate distribution utilities or DUs) and they make regulation more time consuming and complicated. I suggested that ultimately all ECs should become corporations with lots of mergers, with fewer DUs nationwide. She agreed.

2. The National Grid Corp. of the Philippines (better known as the NGCP) indeed has many delayed or uncompleted projects that until now contribute to yellow or red alerts and even occasional rotating blackouts. Penalizing it might help, but penalties do not really contribute to grid stability — the fines just go to the national treasury and not to the affected consumers. There is a need to address bureaucratic bottlenecks and the Energy Virtual One-Stop Shop law is a big help on this.

FRANCE AMBASSADOR VISITS DBM

My trip to France may not have been possible due to limited time between when the invite was sent to me and the trip itself. Good thing that my friend wrote to the France Ambassador to the Philippines, Her Excellency Marie Fontanel, and her office considered my case positively.

Last Friday, Ambassador Fontanel paid a courtesy visit to Department of Budget and Management (DBM) Secretary Amenah Pangandaman and other DBM officials. Their discussion covered diplomatic, trade and investment relations between the Philippines and France, especially on defense, agriculture, and infrastructure, among others. Good discussion between intelligent officials.

I hope that France will greatly help the Philippines develop our nuclear energy generation.

THOLOS FORUM, PANEL ON CLIMATE

The Tholos Forum 2023 is a three-day conference running from Oct. 16 to 18. On Day 3, a panel, “Climate is the key to global free market innovation and acceleration,” will feature Grover Norquist of the Americans for Tax Reforms (ATR) as one of the speakers. It will be moderated by Rod Richardson of the Grace Richardson Fund. I hope nuclear energy, including small modular reactors (SMR) and micro modular reactors (MMR), will be tackled.

The Philippines need to go into nuclear energy production because previous government policies have killed new “greenfield” coal power plants and allow only “brownfield” coal plants, but space will be limited. Meanwhile, the government and the climate lobby are pushing hard for intermittent and unreliable wind-solar power generation. Table 2 lists countries that the Philippines can use as inspiration for nuclear development, especially France and the UAE.

There is no climate crisis or climate emergency. There is only the natural climate cycle of warming-cooling-warming-cooling in multiple-year, even multiple-century cycles, ever since planet Earth was born some 4.6 billion years ago. What we do have is persistent economic deprivation for many people, and we need more energy production, both from conventional thermal plants and conventional renewables like hydro and geothermal, to help remedy this. Plus nuclear. Consumer freedom and choice should prevail when it comes to what type of energy source they will get based on their needs.
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Fiscal Irresponsibility 32, US public debt rising by $7.7 B/day

The Biden administration and their Democrat Party are on the over-spending roll since they started in office January 20, 2021. Outstanding US public debt as of end-2020 (Trump administration) of $27.748 trillion became $28.429 by end-2021, $31.420 trillion by end-2022, and $33.676 trillion as of last Friday, Oct. 26, 2023.

I computed the average increase in US public debt from end-2022 (Dec. 31, 2022) to last Friday Oct. 26 2023, it's $7.67 B/day. I think it's horrible.

https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny

Their budget deficit in fiscal year 2023 (ending end-Sept) was $1.7 trillion, or about $4.7 B/day, deficit alone. Revenues are not and will not be capable of catching up with runaway over-spending.

Meanwhile I saw these recent reports, enjoy.

The Ticking Time Bomb Gets Closer to Zero as the National Debt Quietly Blows Past $33 Trillion
SEPTEMBER 19, 2023 BY MICHAEL MAHARREY
https://schiffgold.com/key-gold-news/the-ticking-time-bomb-gets-closer-to-zero-as-the-national-debt-quietly-blows-past-33-trillion/

The United States Deficit Road to Ruin
22 October, 2023 Daniel Lacalle
https://www.dlacalle.com/en/the-united-states-deficit-road-to-ruin/

"High public deficits mean lower growth, lower real wages, and more debt in the future. All of it leads to higher taxes and persistent inflation. There is no such thing as a balanced budget with ever-increasing government size and constant erosion of the private sector via higher taxes."

Biden Administration Runs Third-Largest Budget Deficit in US History
OCTOBER 23, 2023 BY MICHAEL MAHARREY
https://schiffgold.com/key-gold-news/biden-administration-runs-third-largest-budget-deficit-in-us-history/

"The US government blew through $6.13 trillion in fiscal 2023. That was down slightly from last year’s total expenditures, but the numbers were skewed by student loan forgiveness accounting. If you factor out the reversal of student loan forgiveness, the Biden administration spent $6.46 trillion in fiscal 2023, an 8.8% year-over-year increase in actual spending."

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Saturday, October 28, 2023

BWorld 647, Declining unemployment and the Tholos forum

Declining unemployment and the Tholos forum
October 12, 2023 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2023/10/12/551076/declining-unemployment-and-the-tholos-forum/

There were a number of positive economic stories in the Philippines recently as reported in BusinessWorld: “AMRO sees PHL as fastest-growing economy in the region” (Oct. 5), “Marcos removes cap on rice prices” (Oct. 5), “Philippine manufacturing output peaks in August” (Oct. 6), “Jobless rate dips to 3-month low in August” (Oct. 6), “NAIA 9-month passenger traffic surpasses 2022 full-year tally” (Oct. 8), “‘Much better’ growth seen in 2nd half” (Oct. 9), “IMF still sees PHL as one of region’s strongest economies this year” (Oct. 11), “FDI net inflows jump to 3-month high in July” (Oct. 11).

So, despite the Philippines’ slowing GDP growth and high inflation rates in the second and third quarters of 2023, the unemployment rate went down to 4.4% in August. Then the manufacturing purchasing managers’ index (PMI) stayed above 50. The PMI is an indicator of whether market conditions are expanding, staying the same, or contracting as viewed by purchasing managers.

I checked the data for the ASEAN-5 on unemployment rates and manufacturing PMI over the last three years. All five countries — Indonesia, Malaysia, the Philippines, Thailand, and Vietnam — showed declining unemployment, which is good. But when looking at the manufacturing PMI, only Indonesia and the Philippines had an index above 50 as of September. The other three countries have seen declining PMI, below 50, especially Thailand and Malaysia (see Table 1).

Congrats to the economic team, particularly Secretaries Benjamin Diokno of the Finance department, Amenah Pangandaman of the Budget and Management department, and Arsenio Balisacan of the National Economic and Development Authority, for leading the positive business outlook of the country.

THOLOS FORUM 2023

Meanwhile, the Tholos Foundation in the US will hold the Tholos Forum 2023 with the theme, “Coalitions, Freedom, Innovation” on Oct. 16 to 18 in Nice, France. Among the topics to be discussed in the conference are digital taxes, harm reduction, the international property rights index (IPRI), climate and energy, US and Germany politics, and country updates from international participants. This writer is one of Tholos International Fellows.

Results of IPRI 2023, which was launched by the Property Rights Alliance (PRA, Washington DC) in late September, will be presented again by Lorenzo Montanari, Executive Director of PRA.

The IPRI is a composite of three sub-indices: legal and political (LP) environment, physical property, and intellectual property protection. Basic data for LP to derive the index come from the World Justice Project and the World Bank’s World Governance Indicators. The Philippines showed a deterioration in its global ranking, from 70th in 2018 to 85th in 2023, pulled down by a low score in LP due to a poor performance in the rule of law and political stability — and/or other countries simply improved (see Table 2).

My suspicion on why the Philippines and other ASEAN countries have low overall scores is that the World Bank’s data on world governance is itself tainted. Nonetheless, various economic and business indicators, like those in Table 1, point to the Philippines having an improving overall business environment.

I will write more about the Tholos Forum next week.
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On Barangay and SK elections

The Barangay and Sangguniang Kabataan (SK) elections this coming Monday Oct. 30, in 42,029 barangays nationwide. One Brgy Captain plus 7 Brgy Councilors, and 1 SK chairman plus 7 SK Councilors, to be elected in each barangay. The youth, aged 18-30 yo, can vote 16 officials, Barangay plus SK.

Spectacle, can be messy in many places. Below, the candidates in our barangay in Makati. The incumbent Brgy. Captain Cajes is challenged by Mr. Gabuya.

See that, all tarps materials, plastic and other non renewable materials. The anti "plastic crisis", anti "garbage crisis", anti petrochem fossil fuel activists should be very active and noisy during political campaign seasons.

They are silent, no "plastic crisis" narrative on the menu. Why... Maybe because there are no capitalist multinationals to attack and lambast. Rather these are barangay, village level political leaders using tons and tons of tarps and other plastic materials. Funny activists.

Meanwhile, I understand the need for barangay leaders. They are the grassroots level of governance especially in maintaining peace and order in the communities. In rural barangays, the idea of being called in a barangay meeting is enough deterrent for people to cause any trouble in their neighborhood. It's often a shameful experience when the neighbors know that a person has been called to a barangay meeting for complaints by other people or neighbors.

But I do not support continued SK. Young people should focus on school studies, sports and entrepreneurship, not politics. By having mandatory and institutionalized offices for young people, more young people will learn the ins and outs of politics, including the divisiveness and dishonest way to win votes and the position.

The SK should be abolished. Should have been abolished yesterday.

Friday, October 27, 2023

BWorld 646, Revisiting the lockdown, the role of CDC PH and Doc Iggy Agbayani

Revisiting the lockdown, the role of CDC PH and Doc Iggy Agbayani
October 10, 2023 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2023/10/10/550579/revisiting-the-lockdown-the-role-of-cdc-ph-and-doc-iggy-agbayani/

“This pandemic has uncovered a sickness not just of the virus but of our society. There is a palpable bias by social media platforms, health institutions, some health experts, health regulators, and some political leaders against a whole array of means and medicine with potential for prevention and cure, cheap, readily available, proven safe and effective measures against COVID-19… Instead, we have guidelines that are generally ineffective, expensive and relatively unsafe such as Remdesivir, lockdowns of business and face-to-face schools, irrational quarantines… This nefarious reaction to a health crisis is largely driven by profit and an undemocratic agenda of the powerful corporations and individuals. It is time to act now for the sake of our country and our children. So may God help us all.”
— Dr. Benigno “Doc Iggy” Agbayani, Jr., Founding President, Concerned Doctors and Citizens of the Philippines (CDC PH), presentation at the public hearing of Committee on Good Government and Accountability, House of Representatives, May 17, 2021.

“The state should not have any power [over] its citizens if it can’t be made accountable for a harm it is causing. Remove the immunity from litigation from injury caused by an experimental vaccination and consent induced by force or coercion and incomplete or false information… The drug makers, administering doctors, government are all exempted from legal liabilities in case of Covax injuries and/or death.”
— Doc Iggy Agbayani, Twitter, Feb. 15, 2022.

On Oct. 5, Doc Iggy passed away. CDC PH issued a statement that day and said, “Under his leadership, CDC PH became a beacon of light for many Filipinos during the darkest day of the pandemic, giving them hope and courage instead of fear, and averting numerous hospitalizations and deaths.

“Very few know that Doc Iggy opted to step down from the presidency of CDC PH when an old malpractice suit filed against him that had been in the court system for years was suddenly resurrected. This was not long after he began to speak up for the millions of us Filipinos who were being forced to give up our Constitutional rights and liberties, adopt unscientific medical protocols, and ingest insufficiently tested medicines for what has now been proven to be a highly suspect and extremely politicized virus.

“Sadly, not only was the old case made to suddenly move forward at record speed, but it also resulted in his conviction despite all indications of his innocence. Because he knew he had done no wrong, Doc Iggy refused to seek a pardon or apply for parole as it would affirm his conviction and sentence as either fair or just. They were neither.”

In September 2020, CDC PH was formed with one clear goal: to flatten the fear via early treatment of vulnerable people and lift the lockdown. It was the first big anti-lockdown group in the country and Doc Iggy was the first president.

I joined CDC PH about one week after its launching. They needed a volunteer economist to help them understand the economic damage of the lockdown. And I have been critical and opposed to the lockdown since its imposition in mid-March 2020. I wrote several columns on it in BusinessWorld in 2020: “End the lockdown, no more extension” (April 22), “Inter-Agency to Terminate Functional businesses (IATF)” (June 10, when Philippines’ unemployment rate jumped from 5.3% in January to 17.7% in April), “Economic hardships worse than virus risks” (July 15), “Flatten the fear and hysteria, not the economy” (Sept. 23), “GDP contraction, CDC PH, and medicine taxes” (Nov. 11, when GDP growth in 2020 was -0.7% in Q1, -16.9% in Q2, and -11.5% in Q3).

The horrible lockdown policies by the Philippine government and its consultants and experts caused the economy to contract by 9.5% in 2020 – the worst in Asia that year, and the worst Philippines economic performance after WW2. Government shutdown of many tax-paying businesses and public transportation caused massive unemployment and economic deprivation among people in the private sector. But government personnel, from national to barangay level, received all their salaries, bonuses, and allowances intact so hefty borrowing was needed in 2020 that continues until today.

The Philippines’ gross debt/GDP ratio jumped from 37% in 2019 to 52% in 2020 and 57.5% in 2022. In contrast, several Asian economies did not resort to severe lockdowns, and they were able to grow in 2020 (Bangladesh, Taiwan, and Vietnam) and their debt/GDP ratio from 2019 to 2020 either declined or increased slightly. (See Table 1)

Currently high inflation is the number one concern of many Filipinos. Our January-September 2023 inflation rate is now 6.6%, twice that of Malaysia and Vietnam and about thrice that of Thailand and Taiwan.

I was wondering if somehow this is still related to the COVID pandemic, a sort of delayed “fiscal hangover” to the horrible lockdowns of 2020-2021? When I rechecked numbers, the answer seems to be “Yes.” Government has been over-borrowing from 2020-2022, the P0.88 trillion borrowed in 2019 became an average of P2.24 trillion/year in 2020-2022. (See Table 2)

High government borrowing means high interest rates as government competes with corporations and households in getting loans. High interest rates force companies and households to also raise the prices of their products, services, and labor, and this contributes to higher inflation.

I attended the wake of Doc Iggy last Sunday. There were so many people who came, so many flowers and wreaths. There were his family and relatives, classmates from Philippine Science High School (batch 1982), his UP College of Medicine classmates (batch 1991), his colleagues from Manila Doctors Hospital and UP Philippine General Hospital, his CDC PH family and friends. Congressmen Mike Defensor and Dante Marcoleta also came to reiterate their high respect and esteem of the man. The two legislators had invited him and other CDC PH doctors to speak in a number of Congress public hearings in 2021 about health protocols and possibly ending the lockdown.

Doc Iggy is considered a hero by so many people: those who despaired during the lockdown and were given medical hope and courage to stand up for their civil liberties; hundreds of his fellow inmates at Manila City Jail who experienced, for the first time, a big number of specialist doctors giving free medical consultation with free medicines, even food and some education materials. The inmates were very happy that Doc Iggy was with them because he pulled his network of doctors and volunteers. Now they wonder if they will experience the same privilege which they never had before. The family and friends of Doc Iggy say they will come back.

The main lessons for all – that the lockdown dictatorship was wrong and diabolical; that kindness of the heart, humility, and purity of intention to help others will help us have a peaceful and compassionate society. Doc Iggy has shown the way.

Maraming maraming salamat Doc, sa iyong katalinuhan, katapangan, at kabaitan. (Thank you very much Doc, for your intelligence, courage, and kindness.)
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Energy 172, Wind energy surprises, energy realism series

The wind surprise is this: wind power will become even more expensive -- not cheaper as promised -- to make them "viable" so that they can help "save the planet." The proposed price of up to £95/MWh or about P6.55/kwh (at P69/£) wind generation cost alone. Transmission cost should be high because those onshore and offshore wind farms are far away from urban centers where power demand is high, or where electricity is more needed. See other reports here, enjoy.
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1. Electricity prices ‘must rise by 70pc to pay for more wind farms’
Warning from UK's biggest energy generator comes after latest bidding round received no offers to build new farms
By Jonathan Leake 25 October 2023
https://www.telegraph.co.uk/business/2023/10/25/electricity-prices-rise-70pc-pay-wind-farms-energy/

2. Offshore Wind Demands £95/MWh
By Paul Homewood October 26, 2023
https://notalotofpeopleknowthat.wordpress.com/2023/10/26/offshore-wind-demands-95-mwh/

3. Britain’s offshore wind industry is running out of puff
Key projects are buckling under the weight of spiralling costs and rigid planning rules
By Matt Oliver and Szu Ping Chan 25 June 2023
https://www.telegraph.co.uk/business/2023/06/25/britain-offshore-wind-industry-at-risk/

4. 1.4GW Wind Project in UK Cancelled as Costs Soared
by Bloomberg|William Mathis|, July 20, 2023
https://www.rigzone.com/news/wire/14gw_wind_project_in_uk_cancelled_as_costs_soared-20-jul-2023-173391-article/

5. As renewable-energy demand soars amid extreme heat, rising costs are making offshore wind projects so expensive that ‘it doesn’t make sense to continue’
BY WILL MATHIS AND BLOOMBERG. July 22, 2023
https://fortune.com/2023/07/22/offshore-wind-projects-nixed-due-to-costs-despite-clean-energy-needs/

6. Stalled coastal wind power projects imperil Biden’s climate agenda
Funding shortfalls are imperiling projects in New York, New Jersey and beyond.
By RY RIVARD and MARIE J. FRENCH 07/26/2023
https://www.politico.com/news/2023/07/26/climate-biden-offshore-energy-00107983

7. Dominion hides huge offshore wind cost risk
David Wojick July 31st, 2023
https://www.cfact.org/2023/07/31/dominion-hides-huge-offshore-wind-cost-risk/

8. One third of electricity demand supplied by sun, wind and water (on average, that is)
by Michel July 31, 2023
https://trustyetverify.wordpress.com/2023/07/31/one-third-of-electricity-demand-supplied-by-sun-wind-and-water-on-average-that-is/

"...Meaning that the difference between the lower and upper boundary will keep increasing over time. Basically, electricity production by solar and wind will at times start to exceed demand, while the need for backup at specific times of the year will stay high.

If we now just install three times as much, then we have more than twice too much at the peak and are almost 90% short at the lowest point."

9. Stalled coastal wind power projects imperil Biden’s climate agenda
Funding shortfalls are imperiling projects in New York, New Jersey and beyond.
By RY RIVARD and MARIE J. FRENCH 07/26/2023
https://www.politico.com/news/2023/07/26/climate-biden-offshore-energy-00107983

10. Offshore Wind Industry Is Caught In a Financial Hurricane
The question of who pays for the relatively high cost of generating power out at sea has become more contentious in an era of high inflation and interest rates.
1 August 2023
https://www.bloomberg.com/opinion/articles/2023-08-01/offshore-wind-industry-is-caught-in-a-financial-hurricane

11. There Is A Financial Crisis Brewing In Offshore Wind Energy
By Haley Zaremba - Aug 02, 2023
https://oilprice.com/Alternative-Energy/Wind-Power/There-Is-A-Financial-Crisis-Brewing-In-Offshore-Wind-Energy.html

12. Wind Industry Seeks More Support As Costs Spiral Out Of Control
By Irina Slav - Aug 09, 2023
https://oilprice.com/Alternative-Energy/Wind-Power/Wind-Industry-Seeks-More-Support-As-Costs-Spiral-Out-Of-Control.html

13. World's Largest Offshore Wind Farm-Maker Crashes Most On Record After Catastrophic Results
Tyler Durden Aug 30, 2023
https://www.zerohedge.com/markets/worlds-largest-offshore-wind-farm-maker-crashes-most-record-after-catastrophic-results

14. Support for offshore wind sinks as costs soar
David Wojick September 6th, 2023
https://www.cfact.org/2023/09/06/support-for-offshore-wind-sinks-as-costs-soar/

15. Orsted Ready to Abandon US Wind Projects as It Asks for Help
‘We are still upholding a real option to walk away,’ CEO says
Danish developer’s shares have plunged about 37% this year
By Priscila Azevedo Rocha and Todd Gillespie
5 September 2023Updated on 6 September 2023
https://www.bloomberg.com/news/articles/2023-09-05/orsted-ready-to-abandon-wind-projects-as-it-calls-on-us-for-help

16. Offshore wind developers halt UK expansion over ‘uncompetitive’ prices
Net zero ambitions put in doubt after Treasury accused of ‘not listening’ to energy industry over growing global competition
By Emma Gatten 7 September 2023
https://www.telegraph.co.uk/news/2023/09/07/net-zero-offshore-wind-expansion-uk-developers-halt-prices/

17. Turbulent Times For Biden's Offshore Wind Farms As Orsted CEO Warns: Abandoning US Projects A 'Real Option'
Tyler Durden Sep 08, 2023
https://www.zerohedge.com/markets/turbulent-times-bidens-offshore-wind-farms-orsted-ceo-warns-abandoning-us-projects-real

18. Wind industry on hold after auction flop spooks developers
Bosses warn that lack of state support risks undermining Britain’s overall net zero goals
By Matt Oliver 17 September 2023
https://www.telegraph.co.uk/business/2023/09/17/wind-industry-on-hold-after-auction-flop-spooks-developers/

19. Desperate governors beg for offshore wind cost relief
David Wojick September 25th, 2023
https://www.cfact.org/2023/09/25/desperate-governors-beg-for-offshore-wind-cost-relief/

20. Beware the offshore wind oligarchy
David Wojick October 22nd, 2023
https://www.cfact.org/2023/10/22/beware-the-offshore-wind-oligarchy/

21. The Wind is Always Blowing Somewhere Fallacy
Roger Caiazza October 25, 2023
https://wattsupwiththat.com/2023/10/24/the-wind-is-always-blowing-somewhere-fallacy/

22. Profit At China’s Top Wind Firm Slumps 98%
By Charles Kennedy - Oct 26, 2023
https://oilprice.com/Latest-Energy-News/World-News/Profit-At-Chinas-Top-Wind-Firm-Slumps-98-As-Headwinds-Abound.html

23. Siemens Energy Shares Crash 37% As Renewable Bust Sparks 'Green Panic'
Tyler Durden Oct. 26, 2023
https://www.zerohedge.com/commodities/siemens-energy-shares-crash-37-renewable-bust-sparks-green-panic

24. Is The ESG Investing Boom Already Over?
By Alex Kimani - Jun 15, 2023
After peaking at $17.1 trillion in 2020, ESG assets in the United States dropped sharply to just $8.4 trillion in 2022.
Oil and gas companies are pushing back against activist proposals in their boardrooms.
https://oilprice.com/Energy/Energy-General/Is-The-ESG-Investing-Boom-Already-Over.html
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Meanwhile, here is my "Energy realism" (not alarmism) series and related papers in BusinessWorld, My Cup of Liberty:

Part 5 Sept 14, Why we need more coal, gas and nuclear power plants,
https://www.bworldonline.com/opinion/2023/09/14/545313/energy-realism-why-we-need-more-coal-gas-and-nuclear-power-plants/

Sept. 5, Economic basis of net zero is zero,
https://www.bworldonline.com/opinion/2023/09/05/543391/economic-basis-of-net-zero-is-zero/

Part 4 Aug. 17, Energy realism: Decarbonization and deindustrialization, https://www.bworldonline.com/opinion/2023/08/17/539962/energy-realism-decarbonization-and-deindustrialization/

Aug 3, Energy at SONA 2023 and electric cooperatives, https://www.bworldonline.com/opinion/2023/08/03/537440/energy-at-sona-2023-and-electric-cooperatives/

July 25, First year of Marcos: Assessing energy policies, https://www.bworldonline.com/opinion/2023/07/25/535715/first-year-of-marcos-assessing-energy-policies/

Part 3 July 13, Energy realism: Oil-coal consumption and NGCP’s delayed projects, https://www.bworldonline.com/opinion/2023/07/13/533840/energy-realism-oil-coal-consumption-and-ngcps-delayed-projects/

Part 2 July 5, Energy realism: G7, BRICS, and other big Asian economies, https://www.bworldonline.com/opinion/2023/07/06/532516/energy-realism-g7-brics-and-other-big-asian-economies/

Part 1 June 29, Energy realism: Raising consumption and economic growth,
https://www.bworldonline.com/opinion/2023/06/29/531213/energy-realism-raising-consumption-and-economic-growth/
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See also:
Energy 169, PH's WESM demographics, April 19, 2023
Energy 170, Electric cooperatives and NPC, May 07, 2023
Energy 171, Nuclear power plants, many are old but still working with zero accident, July 04, 2023.

Friday, October 20, 2023

BWorld 645, Financing growth: Reducing interest payments and spending control

October 5, 2023.
https://www.bworldonline.com/opinion/2023/10/05/549699/financing-growth-reducing-interest-payments-and-spending-control/

(Part 5 of a series)

Browsing again through the various tables of the Budget of Expenditures and Sources of Financing (BESF), a key document submitted by the Department of Budget and Management (DBM) to Congress yearly, I was surprised to see that of the P5.68-trillion proposed budget for 2024, P670 billion of it is for interest payments of our public debt alone, with principal amortization not included yet. This year the interest payments come to P582 billion.

This is a huge annual transfer of resources from taxpayers — including taxi drivers and tractor operators — to rich institutional lenders. We have huge annual interest payments because we have huge annual borrowings to cover the huge annual budget deficit due to high expenditures while revenues are not catching up with needs.

The lockdown dictatorship of 2020-2021 was a fiscal monster. Many tax-paying businesses were closed down while the government kept spending for its own personnel — national down to barangay. Their salaries, allowances, and bonuses were given intact, plus there were various subsidies that were also given to the public. The annual borrowing of about P0.8 trillion in 2019 became P2.2 trillion a year from 2020 to 2022. The huge loans of 2020 were immediately felt in the jump in interest payments in 2021 and this has gained momentum since.

BIG BUDGET AGENCIES AND PROGRAMS

The table shows the big agencies and programs, all candidates for some spending cuts.

Here are my proposed budget cuts (in case there are legislators who will bother to listen).

One, the state universities and colleges (SUCs): The government’s big expenditures and subsidies for basic elementary and secondary education is understandable, but its extra big spending for tertiary education is not. The really poor students do not reach college, they start working after high school graduation. Many students in SUCs are car owners and have the means to pay for their school fees. The budget for SUCs and the Commission for Higher Education (CHED) is P143 billion this year and P146 billion next year. A potential cut of 20% — or about P30 billion — will help.

Two, the Department of Health and PhilHealth: They will receive a combined P315 billion this year and P306 billion next year, while other agencies have their own annual health services spending too (the Armed Forces of the Philippines hospital, the Philippine National Police hospital, University of the Philippines-Philippine General Hospital, etc.). Plus, there are LGU hospitals — the City of Manila alone has six city-funded hospitals. A potential cut of 10%, or another P30 billion, will help.

Three, some infrastructure projects of the Department of Public Works and Highways and Department of Transportation can instead be assigned for Public-Private Partnership (PPP) funding, plus Maharlika Investment Fund funding. Long-term obligations and contracts between government and private proponents should be respected and not changed midway to attract more investor confidence.

Four, military and uniformed personnel (MUP) pension: Currently this is about P164 billion a year when it should be zero. Other government employees — doctors and nurses, educators and teachers, engineers and agriculturists, etc. — pay for their own future pension via deductions from their monthly salaries, but MUPs pay zero. And these particular pensioners have their pensions indexed to the pay of current active personnel of the same rank which is rising yearly. And the pension is tax-free, extendable to the spouse when the pensioner has passed away. An average tax of 25% on the P164 billion pension, or P41 billion, will help. Plus, monthly contributions by active MUPs.

Five, the rightsizing of agencies, and the abolition or shrinking of those with duplicating functions and passe mandates. Since LGUs now have more money because of the Mandanas ruling, they can assume more social responsibilities like education and healthcare and, thus, national spending on education and healthcare can step back.

IMF REVIEW MISSION ON FISCAL REFORMS

The International Monetary Fund (IMF) has visited the country and conducted the “2023 Article IV Mission to the Philippines.” Among their observations is “Fiscal consolidation is on track, as envisaged under the Medium-Term Fiscal Framework.”

It noted budgeting reforms by the DBM under Secretary Amenah Pangandaman. The IMF said, “Reforms focusing on enhancing public financial management (PFM) has gained momentum. Key legislative initiatives include the Progressive Budgeting for Better and Modernized Governance bill, and National Government Rightsizing bill. The digital transformation of the PFM…”

I am no fan of the IMF but I agree with them on this assessment. The current DBM leadership is serious when it comes to those budget modernization and rightsizing reforms.

Every single year, the Finance department and the DBM scratch their heads over how to allocate very limited resources because all agencies, from national to local, always say they need more money. Any new revenues are always met by new spending concocted by agencies and their lobbying consultants. Assuming P500 billion in new revenues can be generated next year, one can be 100% sure that there will be moves from various agencies to invent new programs or expand existing ones.

The goal of drastically reducing the budget deficit/GDP ratio from the current 5-6% to 3% by 2028, and reducing the public debt/GDP ratio to 40% or less by 2028, can be attained more via 1.) spending control, 2.) lifting or suspending the VAT-exempt privileges of many sectors, and, 3.) developing simpler, profit-based taxation like the mining tax reforms.

A level playing field, both in business regulations and tax imposition, means that all players in each sector should be levied the same taxes and fees. In the energy sector, for instance, both conventional or fossil fuel power plants and renewable plants should pay VAT, import tax, income tax, and so on.
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The flat, bare lands of Saudi, Kuwait, Iraq, Syria, south Turkey

Last Sunday midnight I travelled from Manila to Nice, France via Dubai, Emirates Air. Arrived Dubai 4:30am, then the connecting flight Dubai-Nice took off about 7am local time, lucky that I was on a window seat on the left but the left wing of the plane covers my view. Anyway, the plane passed by the Persian Gulf. Later I saw many rounded structures, looked like oil storage facilities, on the shore. I think it was Dammam, Saudi Arabia. Then an area with many high rise structures, could be Kuwait. Then Iraq. Saudi, Kuwait, Iraq, just flat, very little structures or farms, mainly for oil gas extraction.

With such geography, there is really no other reason for the US to invade Iraq in 2003 but to get its oil and gas. Lousy me that I believed the US government, media, etc. propaganda that Saddam has WMD (weapons of mass destruction) that time so the invasion was justified.

The huge Tigris River in northern Iraq could be one of the big rivers seen from the air but I could not identify them.

I don't know what lake is this. Still in Iraq. Then the plane turned left after passing Iraq, it could be Syria and the plane avoided its airspace. It is a bit mountainous but still no vegetation.

Anyway, the bulk of US forces have left Iraq, they lost in getting rid of militants. Same way that US has lost in Afghanistan, they invaded it in 2001 then left in a hurry in 2021, the Taliban that was the object of invasion has returned to power.

Sunday, October 15, 2023

BWorld 644, Energizing growth: The role of fossil fuels in economic development

Energizing growth: The role of fossil fuels in economic development
October 3, 2023 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2023/10/03/549203/energizing-growth-the-role-of-fossil-fuels-in-economic-development/

(Part 1 of a series)

This writer has come up with a new series on “Energizing growth,” looking at the role of energy policies in helping sustain or curtail economic growth of countries.

I constructed the accompanying table showing the primary energy consumption (PEC) in exajoules (EJ) of many countries, and the average growth rates of their PEC and gross domestic product (GDP) from 1979 to 2022 or over 43 years. I chose 1979 as the base year because that is within the 1960s and ’70s which was the period with the highest PEC for many European countries.

PEC covers not only power or electricity generation but also fuel for transportation (land, sea, and air). So, the bulk of PEC by countries are from fossil fuels, with a clear example being Singapore. Its PEC of 3.16 EJ in 2022 saw 99% of it coming from fossil fuels: 84% from oil (transportation) and 15% from natural gas (power generation).

I grouped the countries into four: Group A are East Asians plus India and Australia; Group B are North and South Americans; Group C are Europeans, and Group D are Middle East countries and Africans.

The numbers show the following.

One, when it comes to PEC levels, all countries in Groups A, B, and D have expanded from 1979 to 2022. Many Group C countries experienced PEC declines over the same period: Germany, the UK, Italy, France, Poland. I find this mind-boggling.

Two, when it comes to PEC growth, Group A countries have had the fastest expansion over the 43 years covered, 1979 to 2022. Japan is an exception among the Group A as it is infected by the anti-fossil fuel movement in G7, and Group C countries have had the slowest growth, especially Germany, the UK, and Italy. The next slowest is Group B.

Three, when it comes to GDP growth, we see the same trend: Group A has the fastest growth except for Japan, which has been crawling below 1% over the past three decades. Group C has the slowest, growth, especially Italy, Germany, and France.

So, the lessons and policy implications are clear:

One, if countries want faster economic growth, their PEC must expand fast, and since the bulk of PEC is from fossil fuels (oil, gas, and coal), countries should not put a brake on fossil fuel use.

Two, if countries want slow growth, the Europeans, especially Germany, the UK, and Italy, provide clear examples of how, with four decades of actual data in PEC decline and crawling growth, even degrowth. Venezuela in South America is another example of a country exhibiting PEC decline over the last decade and growth contraction over the same period.

Three, the Philippines, in particular, has had the smallest PEC among the countries in the table. There are no reasons to expect that if the country should slow down or cut its fossil fuel consumption that it would be able to sustain high growth. Our main national agenda and priority should be fast, sustained growth to provide more jobs, more bright lights for our people, and higher government revenues to pay off and reduce the ever-rising public debt while sustaining public infrastructure spending.

Meanwhile, here are three notes.

One, check out the recent energy reports in BusinessWorld (written by Sheldeen Joy Talavera): “DoE endorses 86 projects for operating permits” (Sept. 20), “DoE says still on track to hit renewables goal” (Sept. 28), and, “Indonesia assures PHL of continued access to coal” (Oct. 1).

The bulk of those 86 projects are oil plants, peaking plants to avoid blackouts as more intermittent sources enter the grid. Thank you, Indonesia for your generous assurance.

Two, there were short rotating blackouts in some parts of Metro Manila last Sunday evening, Oct. 1. The National Grid Corp. of the Philippines (NGCP) issued a statement that night: “At 6:45 p.m., NGCP monitored a grid disturbance affecting the San Jose-Nagsaag 500-kV transmission line 2 and multiple power plants in Luzon and resulting in automatic load dropping (ALD).”

See that? (A) a “grid disturbance” of a transmission line in Bulacan (San Jose) and Pangasinan (Nagsaag) affected four large power plants in distant Quezon province, and, (B) this all happened on a Sunday night when power demand was low.

I hope that the NGCP will not blame the power plants again and this time admit that it was their fault, that their 500-kV transmission line started it, and that they continue to be unable to modernize and improve their transmission lines.

“Automatic load dropping” means rotating blackouts because the power supply is not there due to a NGCP transmission line (or “highway”) problem. Some electricity consumers and end-users in Luzon were adversely affected. But the bigger victim is the Philippine economy because of the image it presents: that 32 years after the huge and frequent blackouts of 1991-1992, occasional rotating blackouts and yellow-red alerts still continue.

Come on, NGCP. Help the country have a good image when it comes to power generation stability. Please, no more blackouts due to your frequently faulty transmission lines. No more delayed projects that lead to congestion in power-surplus islands and the inability to send electricity to power-deficit islands.

Three, check out this column’s recent “Energy realism” (not alarmism) series: Part 1, “Energy realism: Raising consumption and economic growth” (June 29); Part 2, “Energy realism: G7, BRICS, and other big Asian economies” (July 5); Part 3, “Energy realism: Oil-coal consumption and NGCP’s delayed projects” (July 13); Part 4, “Energy realism: Decarbonization and deindustrialization” (Aug. 17); “Economic basis of net zero is zero” (Sept. 5); and, Part 5, “Why we need more coal, gas and nuclear power plants (Sept. 14).
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See also:
BWorld 641, Power generation mix and fiscal irresponsibility, October 01, 2023
BWorld 642, Financing growth: a rice tariff cut, an MUP pension cut, and reforms in excise tax in mining, oil, and coal, October 08, 2023
BWorld 643, Global trade deceleration and economic growth due to large population, October 08, 2023.

Doc Iggy Agbayani letter to his fellow doctors

This is Doc Iggy Agbayani's letter to the Supreme Court. He drafted this around September 16 or a month ago.
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An open letter to my fellow Filipino Doctors and Friends

“There can be no Reckless Imprudence (a criminal complaint) if it is not voluntarily done. It can only be voluntary if there was no legal obligation, no compulsion, nor persuasion and made without payment or recompense in any form a voluntary conveyance.”

I write as a prisoner of Manila City Jail and a doctor. I am not a lawyer but I have studied my case thoroughly with all the focus and benefit of time in jail. I am a licensed Physician and a highly trained and experienced Orthopedic Surgeon that still believes in the freedom of speech and of true Justice. As a human being I value independent and critical thinking because they are keys to our better perception of the truth.

I blame the complainant, a lawyer who teaches criminal law and married to a physician, for intentionally filing a malicious accusation to make sure I suffered severely through sixteen years of litigation and harassment and my eventual conviction affirmed with finality by the third division of the Supreme Court.

I know in my heart and mind that a grave injustice had been foisted upon me because I am not guilty of any crime. Well-meaning lawyers have told me that it is nearly impossible to reverse the decisions of the SC. But I live in hope - in humanity and justice despite my experience, and because I have seen so many people, some who I don’t even know, wanting to help me fight for my cause of seeking Justice not just for me but now also for the protection of the Medical profession.

I have been convicted of reckless imprudence and sentenced to jail for one year and a day. I have now served three months and twenty five days of this sentence in one of the most congested city jails in the world. As you can imagine, this conviction has caused me and my family not only of mental suffering and humiliation but also of tremendous anxiety for my future as a surgeon and doctor.

I believe it is the first of its kind for a case of Reckless Imprudence to prosper in the courts as a result of a medical complication. This idea was further enhanced when veteran jail officers here in Manila City Jail told me that this was the first time to their knowledge, that a doctor, due to his profession, was convicted for reckless imprudence. And that such cases of reckless imprudence are almost always due to vehicular accidents. This was a complete eye opener for me and so I began my research and study while in jail.

The records show that the surgical instruments I used have been sterilized and all steps to avoid infection was adhered to by me and nursing staff. As a Doctor and Surgeon of more than thirty years, I can sincerely confirm that infections do occur almost routinely and likely even daily in all hospitals of Manila despite our best efforts because there are factors beyond our control such as the hospital, the sterility of the instruments used and the factors associated with the patient himself. No surgeon can claim honestly that a post-operation infection will never occur.

In my opinion, the most important and significant root cause of error or injustice in my case is the use of Reckless imprudence resulting in serious physical injury to charge me. Reckless imprudence requires that the act must be done "voluntarily". The law states: "Reckless imprudence consists in voluntarily, but without malice, doing or failing to do an act from which material damage results." No matter the outcome, be it slight, severe or even death, the manner or the circumstances in which the act or cause was done is what defines it to be a crime or of the nature of civil damages.

By definition, the word voluntarily as it is used in law means:

a. Acting or done without legal obligation, compulsion, or persuasion b. made without payment or recompense in any form a voluntary conveyance."

A patient consults a doctor for a health problem in the hope of finding a cure. Persuading or compensating a doctor to act based on the agreement between patient and doctor is not a voluntary action but a joint agreement or partnership with the patient.

My case is entirely different from a true case of reckless imprudence where for example a pedestrian accidentally, and therefore without malice, gets hit by a driver-bearing vehicle and suffers physical injury as a result. A civil case of malpractice, negligence or incompetence on the other hand may be the right cases to file under because the alleged cause is not an act done in a voluntary manner. It is also clearly understood that payment or compensation was expected and was done so with a fully informed consent by the complainant. The treatment or action offered is based on the information offered by the complainant/patient and subsequently agreed upon by both parties.

Moreover, I learned that in a published Supreme Court decision of a reckless impudence resulting in serious physical case, defined the sentence of such a crime to be a fixed two months and one day. Yet I am still here in jail now for more than three months and still counting

In my opinion the courts may have committed an oversight by putting more weight on legal or procedural technicalities rather than my substantive human rights. Pointing out for example that it was my lawyer who was faulted by the courts for causing the loss of my statutory privilege of appealing my case in both the RTC and the CA. In doing so they also took my right to a fair trial that in my mere knowledge of the Law should be given automatically to those accused of criminal cases. And despite putting the blame on my lawyer, all punishment was given to me alone. And yet again I discovered recently in another Supreme Court ruling, a criminal conviction was reversed on the grounds that a lawyer’s inability to perform his duties should not be cause for any accused to lose his constitutionally given right to liberty.

I therefore with hope and good intention that you my fellow doctors, individually or through the various medical and surgical organizations, to read and share this open letter to help us Doctors understand what has happened to me. I sincerely believe that by our awareness we will be able to protect our beloved profession better against predators and opportunist who are already using my case as a legal precedent to file a criminal cases for any complication arising from any of our treatment or surgery. It is time we Doctors heal and protect ourselves too, but eventually for the good of our patients.

Sincerely,

Dr. Benigno “Iggy” Agbayani Jr.

Addendum:

Dr Benigno “Iggy” Agbayani, passed away last October 5, 2023 at Manila City Jail, while continually fighting for justice for the medical community and improving the health conditions of the rest of the unfortunate persons deprived of liberty.
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I am adding one photo of doc Iggy below, him talking to Cong. Lito Atienza. Plus Francis Abraham (between the two) and me.

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See also:
Covid 81, Dr. Iggy Agbayani in my column, April 18, 2023
Covid 83, Pfizer trial, EMA and CDC studies, June 21, 2023
CDC PH statement on the passing of Doc Iggy Agbayani, Oct. 08, 2023.

Sunday, October 08, 2023

BWorld 643, Global trade deceleration and economic growth due to large population

Global trade deceleration and economic growth due to large population
September 28, 2023 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2023/09/28/548241/global-trade-deceleration-and-economic-growth-due-to-large-population/

The deteriorating global and regional economic environment this year is better seen in the deceleration in value and growth of merchandise trade. The World Trade Organization (WTO) has reported the second quarter (Q2) 2023 data for merchandise exports.

In Table 1, I compare exports performance in Q1 + Q2 or the first half (H1) of 2020 to 2023. Global exports contracted by 4.6% in H1 2023 compared to H1 2022. I grouped the countries into three: Group A is made up of G7 industrial countries, Group B is the BRICS nations, and Group C contains major and medium East Asian exporters. European exports have expanded among each other, but all East Asian exporting countries plus India suffered contractions this year.

Despite this trend, the fastest growing major economies in the world are Asian, led by India, China, the Philippines, and Indonesia with gross domestic product (GDP) growth of 5% to 7% in H1 2023, whereas Europeans were crawling at -0.2% to 1.2% over the same period.

I think the main explanation for this is the dynamic domestic economies of these four Asian countries thanks to their big populations: 1.4 billion each for China and India, and 275 million and 113 million for Indonesia and the Philippines, respectively. The beauty of having a big population is it also means there is a big supply of entrepreneurs and workers, producers and consumers. So, when the global business and economic environment deteriorates, there is a big and strong domestic market to continue the business momentum.

Nonetheless, Philippines merchandise exports were the smallest among the ASEAN-6. There is a need to clear up bottlenecks in exports production and trade facilitation. See the BusinessWorld reports related to this, written by Justine Irish D. Tabile and John Victor D. Ordoñez: “Five ecozones could be proclaimed by October” (Sept. 17), “Trade boost expected from partnerships forged by ASEAN business organizations” (Sept. 19), “PCCI to help encourage greater use of FTAs” (Sept. 25), and, “PPP bill approved on 3rd reading” (Sept. 25).

Back to population and economic growth. In the middle of this month, the Philippine Statistics Authority (PSA) released 2022’s full monthly data for vital statistics. I summarize the annual and average monthly data (see Table 2).

Births: There was consistent decline in the number of births, from 139,500/month in 2019 to only 113,700/month in 2021 which is bad. The good thing was that there was a slight recovery to 118,200/month in 2022, but it is still low compared to 2019’s average.

Deaths: There was no excess mortality in 2020 compared to 2019 despite all the scare mongering over COVID-19 and its related severe lockdowns and business closures. High excess mortality occurred in 2021 — nearly 22,000/month over 2019 levels — especially in the second half when mass vaccination went full blast.

The computed net increase in population (births less deaths) has declined from 87,800/month in 2019 to only 40,400/month in 2021, and slightly up to 62,200/month in 2022.

Marriages have declined significantly, from 36,000/month in 2019 to only 20,000/month in 2020. This has recovered to 37,000/month in 2022 (see Table 2).

There is a need to relax the implementation of the Reproductive Health (RH) law of 2012 (RA 10354). State funding of population control-leaning programs is wrong.

There is also a need to review and assess the impact of mass vaccination against COVID on human fertility, both short and long-term.
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CDC PH statement on the passing of Doc Iggy Agbayani

CDC PH STATEMENT
On the untimely and unexpected Passing of our Beloved Hero Dr. Benigno “Iggy” Agbayani, Jr., Founding President of the Concerned Doctors and Citizens of the Philippines

The Concerned Doctors and Citizens of the Philippines (CDC Ph) regrets to announce the passing on October 5, 2023, of our beloved brother-in-arms and first President, Benigno “Doc Iggy” Agbayani, Jr.

For those who may not be aware, Doc Iggy was at the forefront of CDC Ph's earliest attempts to bring to the attention of the government and the public life-saving early treatment medications and protocols which were not just safe and affordable, but which would also save the national economy from the destructive impact of the lockdowns.

Under his leadership, CDCPh became a beacon of light for many Filipinos during the darkest day of the pandemic, giving them hope and courage instead of fear, and averting numerous hospitalizations and deaths.

Very few know that Doc Iggy opted to step down from the presidency of CDC Ph when an old malpractice suit filed against him that had been in the court system for years was suddenly resurrected. This was not long after he began to speak up for the millions of us Filipinos who were being forced to give up our Constitutional rights and liberties, adopt unscientific medical protocols and ingest insufficiently-tested medicines for what has now been proven to be a highly suspect and extremely politicized virus.

Sadly, not only was the old case made to suddenly move forward at record speed, but it also resulted in his conviction despite all indications of his innocence. Because he knew he had done no wrong, Doc Iggy refused to seek a pardon or apply for parole as it would affirm his conviction and sentence as either fair or just. They were neither.

Just 10 days before a medical mission Doc Iggy had planned for the prison together with CDC Ph doctors, and just 40 days before his early release for Good Conduct on Nov 15, 2023

The Philippines lost a true hero of the medical profession.

A conscientious man of science who was not content to toe the Big Pharma line and sell his integrity for 30 filthy pieces of silver.

A courageous man who was unafraid to face off against the powers-that-be literally for the lives of the millions who could not fight for themselves.

A compassionate healer to the very end and at tremendous cost to himself and his family, he kept his oath to "First do no harm."

It has been an honor and a privilege for the Concerned Doctors and Citizens of the Philippines to stand with you, Doc Iggy, over the three short years we were blessed to spend with you. Your courage and fortitude will always serve to keep alive the flame that you helped light within every one of us.

Maraming salamat, Doc Iggy!

October 5, 2023
CDC Ph Executive Committee
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BWorld 642, Financing growth: a rice tariff cut, an MUP pension cut, and reforms in excise tax in mining, oil, and coal

Sept. 26, 2023
https://www.bworldonline.com/opinion/2023/09/26/547660/financing-growth-a-rice-tariff-cut-an-mup-pension-cut-and-reforms-in-excise-tax-in-mining-oil-and-coal/

(Part 4 of a series)

There were lots of business developments last week, but I will comment on just the four issues below. The reports in BusinessWorld on each subject will provide more context about the issues:

1. Rice price control and tariff reduction: “DoF defends plan to cut import tariffs on rice” (Sept. 19), “Rice import tariff cuts should not depress farmgate prices — NEDA” (Sept. 20), and, “Key Palace meeting to review rice price controls next week” (Sept. 21).

2. The military and uniformed personnel (MUP) pension reform bill: “Key MUP pension reform clause out” (Sept. 20), and, “House version of MUP reform may still pose fiscal risks” (Sept. 22).

3. Mining tax reform: “House OK’s mining fiscal regime bill” (Sept. 19), “Margin-based mining tax bill in line with industry guidance” (Sept. 19), and, “Miners see fiscal bill boosting investment, gov’t revenue” (Sept. 24).

4. Proposed suspension of the oil excise tax: “Lawmaker pushes 50% tax cut on coal, other oil products” (Aug. 20), “Gov’t to lose up to P73B from fuel tax suspension” (Sept. 20), and, “Lawmaker calls for relaxation of biofuel requirement to ease oil prices” (Sept. 21).

Before I discuss these, the economic managers — Finance Secretary Benjamin Diokno, Economics/NEDA Secretary Arsenio Balisacan, and Budget Secretary Amenah Pangandaman, issued a statement last Friday, Sept. 22, about a recent survey on the declining trust of the performance of the Marcos Jr. administration. They argued:

“As surveys are primarily based on perceptions, not facts, let it be clear that on GDP growth, the Philippines’ real GDP growth of 5.3% in the first semester of 2023 in fact proved to be highest among emerging markets in the ASEAN-6, beating Singapore, Malaysia, Indonesia, Vietnam, and Thailand. It was also the third fastest growing economy among Asian countries with available GDP data…”

The economic managers are correct.

In a table, I expanded the comparison of growth performance to more countries. Groups A and B are the big East Asian economies plus India, Group A countries are the fast-growing and Group B countries are the slow-growing Asians in 2023. Group C countries are the biggest economies of North and South America, and Group D countries are the biggest European economies except Russia.

The Philippines had the third fastest GDP growth in the first half (average for first and second quarters or Q1 and Q2) of 2023 among these countries.

When it comes to commodity prices, the Philippines indeed has the highest inflation rate in 2023 among major Asian neighbors (see Table 1).

So, with the bad global and regional economic environment, the Philippines’ growth of 5.3% (6.4% in Q1 and 4.3% in Q2) was already high, so the economic team and the administration deserve praise and commendation. But since this fact is grossly if not deliberately omitted, one can suspect that the attacks on growth deceleration have some element of a political hit job.

The same can be said about our inflation rate. There is the possible deliberate omission of two points. One, our high inflation this year is based on low inflation last year, whereas it is the reverse for Thailand, South Korea, and Singapore. Two, the Americas and Europe have high inflation in 2023 based on already high inflation in 2022, this would be horrible news if this happened in the Philippines.

Now on to No. 1, food inflation and rice trade liberalization. The proposed tariff reduction from 35% (ASEAN-origin like Thailand) and 50% (non-ASEAN origin like India) to zero and 10% is a brilliant move by the economic team. The purpose of import tariffs is to make cheaper goods from abroad become expensive at home in order to protect domestic producers, but this penalizes domestic consumers. The economic team is correct in this move. Their priority is mainly protecting the consumers, helping reduce inflation without necessarily abandoning the food producers. Certain farmer organization leaders are wrong in their continued “penalize rice consumers” lobby.

On No. 2, the MUP pension reform, the House version is practically no reform because full indexation of the pension is retained, and only new recruits will start contributing to the fund. Why call it pension reform when there is no reform? The Senate should consider the following: all incumbent MUPs should contribute to their own future pensions, indexation should be discontinued or disallowed, and pensioners should contribute to the fund via taxation of the monthly pension.

On No. 3, mining tax reform, I was one of the speakers and discussants in the panel on Day 2 of the Mining Philippines 2023 conference last week, Sept. 19-20, at Edsa Shangri-La Hotel. The main presenter was Department of Finance (DoF) Undersecretary Karlo Adriano. Mr. Adriano recognized that the country’s mining tax system is complicated and non-attractive to many potential players who could come in. Consider one of his slides: on top of taxes are two royalties for indigenous people (IP) and on mineral reserves (MR) (see Table 2).

So, the four DoF proposals are: 1.) simplify the mining fiscal regime, 2.) raise the royalty tax outside mineral reservation from zero to 3%, 3.) raise the windfall profit tax from zero to 1-15%, and, 4.) provide thin-capitalization, ring-fencing, transparency, and accountability.

I support the DoF’s proposed reforms. In particular, the shift in taxation from gross revenue to profitability like windfall profit, and the simplification of tax payment, both proposals are good.

Finally on No. 4, the proposed suspension of fuel excise tax, I support this — provided that any projected revenue reduction should be covered by a corresponding spending cut by the same amount, and/or that some existing VAT exemptions should be lifted and those businesses and services should pay VAT.

I argued for these when I was interviewed by Cito Beltran last Thursday, Sept. 21, in his daily program Agenda on Cignal TV, One News Channel.

The other proposal, to cut the coal excise tax, is also good. Before the TRAIN law of 2017 (RA 10963), the coal tax was only P10/ton, then this became P150/ton. Coal power provides about 63% of total electricity generation in the Philippines versus wind+solar’s contribution of only 2.8% of total power generation. So, if we want cheaper electricity, the cost of coal as fuel should decrease, not increase. In future bills amending the TRAIN law, this should be put on the table.

A cut in energy taxes does not necessarily lead to overall revenue losses. Cheaper energy means lower cost of doing business in the Philippines, which will attract more investments and businesses that will pay other taxes and expand overall revenue generation.
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