Government and Taxes: April 2024

Tuesday, April 30, 2024

This blog has reached 2.48 million views

As of today April 30, 6:30pm Manila time, this blog has reached 2.476 million views. The last six months there was high traffic, 305,000 views or 50,833/month or 1,694/day. Before this period the average was only about 350/day.

It reached 2 million views last March 2023, or an increased of 0.476 million over the last 13 months.

The bulk of readers/viewers are from HK and Singapore, 208,000 out of 305,000 views in the last six months. Before, the bulk of readers were from the US.

Here is the all-time views from July 2010 to April 2024, 2.48 million views after 13 years and 10 months. Largest views were on these months:

1. March 2024, 106,866 views
2. April 2024, 66,972 (as of 6:30pm April 30)
3. April 2021, 58,845
4. February 2024, 56,485
5. September 2023, 54,980
6. December 2023, 51,474
7. March 2011, 47,684
8. August 2023, 43,374.

All time views, largest from (1) US, (2) Philippines, (3) Russia, (4) Singapore, (5) HK.

Thank you, readers.
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BWorld 701, A dying free market movement in the world

A dying free market movement in the world
April 25, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/25/590505/a-dying-free-market-movement-in-the-world/

This month is the 20th year that I have been involved in the free market movement. In late April 2004, I went to the US as an Atlas International Fellow. For one month I attended free market conferences, met leaders of market leaning think tanks, research institutes and NGOs in the US and other countries in the world. My trip was sponsored by the Atlas Economic Research Foundation, renamed as the Atlas Network.

I attended the McKinac Leadership Conference at the Mckinac Center in Midland, Michigan, headed by the very articulate and dynamic libertarian Larry Reed. Then the Annual Resource Bank Meeting of the Heritage Foundation, followed by the Atlas Liberty Forum (ALF) at the same hotel in Chicago. My hotel roommate then was the very famous Indian libertarian Barun Mitra, head of the Liberty Institute in Delhi.

This was followed by a series of meetings with free market think tanks in Washington DC, like the Americans for Tax Reforms (ATR) headed by Grover Norquist, the Cato Institute, the Tax Foundation, the Heritage Foundation, etc.

There was one Atlas official who was very friendly with me, Jo Kwong. A Chinese-American libertarian, she recommended me to the Friedrich Naumann Foundation for Freedom (FNF) and FNF has since invited me to their annual Eco-nomic Freedom Network (EFN) Asia conferences: Hong Kong in 2004, Phuket, Thailand in 2005, Kuala Lumpur in 2006, and so on until around 2018 in Singapore. Jo also secured funding for my participation in the ALF in Atlanta in 2008, Los Angeles in March 2009, and the Tear Down the Wall conference in Washington DC in Nov. 2009. In 2010 there was a reorganization in Atlas, Jo and her staff resigned, and ever since I got no sponsored invitations from Atlas.

Another friend who supported me and Minimal Government Thinkers was Julian Morris, then the head of the International Policy Network (IPN) in London. IPN sponsored my participation in the Global Development Summit in June 2005, a global free trade conference to help counter the narratives of the “more government, more taxes, more aid” G8 Summit in Scotland. IPN gave me a modest grant for sustenance of my think tank, plus it support-ed my participation in various free market meetings in Asia from 2006 to around 2011.

After 20 years, I look back and ask myself if the free market movement in the world has progressed, have governments and multilaterals stepped back from too much intervention and coercion in people’s everyday lives?

The quick answer is “no,” and I have observed this since around 2008.

Governments and the United Nations (UN) have invented all sorts of “crisis” narratives since the 1960s until today: population/food crisis, oil/energy crisis, health/NCDs crisis, education crisis, plastic/garbage crisis, climate crisis, virus crisis and so on.

Since all these were “unprecedented” and “man-made” crisis, then the “solutions” are also man-made or more government-focused: universal (or socialized) healthcare, universal education, sin/excise taxes, carbon/oil taxes, renewables subsidy, food subsidy, etc.

To help quantify how much governments have expanded, I checked the size of central government (local governments, if any, are not included) spending and government debts as percent of gross domestic product (GDP). I divided the countries below into four: In Group A are the European countries, in Group B are the North and South American nations, in Group C are the North Asian nations plus India, and in Group D are the ASEAN-6. For many, government spending indeed expanded from 2004 to 2019 (pre-lockdown), including the Philippines where the percentage rose from 19.4% to 21.7% of GDP.

When the lockdown dictatorship was imposed in 2020 in many countries around the world, economic freedom was severely restricted and punished in the name of “fighting the virus.” Government spending jumped from 2020 to 2022, and onwards until 2023.

A more graphic measurement is central government debt as a share of GDP. Here, almost all governments expanded in 2023 over their 2004 levels, except Russia, India, Indonesia, Taiwan and the Philippines (see Table 1).

In the mid 2000s, the Philippines (under the Gloria Macapagal Arroyo administration) had a big public debt (numerator) with a small GDP size (denominator) so the quotient was high — 71% in 2004. With fast growth and hence, larger GDP size during the Benigno Aquino III administration, the government debt/GDP ratio declined to 46% in 2012 and 37% in 2016, and this continued until 2019.

Many free-market groups and leaders made the big mistake of following the United Nations, the World Health Organization, and government narratives that, a.) a lockdown dictatorship was necessary while waiting for the vaccines, b.) that there was no natural immunity via natural infection from the virus, only vax immunity should be trusted, and, c.) only the virus evolves, humans do not evolve and adapt, especially when aided by decades-old and proven treatment.

I checked the websites of some free market think tanks in Asia, Europe, and the US, and I discovered that many of them supported the lockdown, or at least did not issue statements opposing the lockdown. They sheepishly al-lowed government coercion to expand indefinitely. That was so sad.

There are two new trends seen in many developing countries because of the lockdowns and mandatory vaccination. One is that there were high excess deaths in 2021 when there was forced vaccination in many countries.

As I noted in this column last week (“On oil economics and Philippines vital statistics,” April 18), “there were no excess deaths in 2020 over 2019 despite the high number of reported COVID cases, but there was a high num-ber of excess deaths in 2021 (when mass vaccination was done in March 2021 onwards) compared to 2020 and 2019. There were 20,000/month excess deaths in 2021.”

The second trend is the declining birth rates in many countries. In the Philippines, for the period January-August of each year covered, the decline on average was 20,600 fewer births per month from 2020 to 2023.

Combine these two trends — excess deaths in 2021 and declining births in 2021 onwards — the result is declining overall life expectancy in many countries (see Table 2).

The weakening of the free-market movement does not keep me from continuing my advocacy for market-oriented reforms and less government coercion and taxation, explicit or implicit. High and sustained economic growth and job creation is not possible under a restrictive, heavily regulated, and over-taxed business environment.
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Demography 27, Declining life expectancy in many countries, declining births

I posted this in the viber group Oplas Perspectives. Some worrying trend in declining life expectancy and births.

Meanwhile in Europe...

Fertility rates will see 'dramatic decline' with 97% of countries unable to sustain populations

By Lauren Chadwick. 21/03/2024
https://www.euronews.com/health/2024/03/21/global-infertility-rate-will-cause-a-dramatic-decline-in-population-in-97-of-countries-by-

How Europe can dodge a birth rate hard landing

By Mark John, Anne Kauranen and Gergely Szakacs February 14, 2024

https://www.reuters.com/world/europe/how-europe-can-dodge-birth-rate-hard-landing-2024-02-14/

Germany's birth rate falls to lowest level since 2009

Source: Xinhua. 2024-03-21

https://english.news.cn/20240321/d4d25e331e474d169ebcf3fd502987cc/c.html

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See also:
Demography 24, The Maddison Project data, August 13, 2015
Demography 25, Ageing societies, Japan's depopulation, December 29, 2015
Demography 26, Once again on the RH law, August 6, 2016

Monday, April 29, 2024

BWorld 700, On nuclear energy, LFSCOE, and the red-yellow alerts

On nuclear energy, LFSCOE, and the red-yellow alerts
April 23, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/23/589739/on-nuclear-energy-lfscoe-and-the-red-yellow-alerts/

Since I will cover three energy topics in this piece, I will focus on the data and shorten the discussion.

RISE IN NUCLEAR POWER USE AND HIGH GROWTH

Nuclear energy — having the highest energy density, a high capacity factor, and least cost of fuel per kilowatt hour (kwh) of generation — shows that it can help sustain high growth of an economy, among various factors and drivers of economic growth. This is shown in the cases of China, South Korea, India, and Pakistan. Meanwhile, adding more intermittent wind and solar power contributes to slow growth, if not degrowth and deindustrialization. Clear cases of this are shown by the United Kingdon and Germany.

For Table 1, I have grouped the countries into Group A (denuclearizing countries), Group B (fluctuating use), and Group C (countries with rising nuclear energy use).

LEVELIZED FULL SYSTEM COST OF ELECTRICITY

I tackle this since I went through a study, “Levelized Full System Costs of Electricity” (LFSCOE) by Robert Idel, in Energy 259 (2022), published by Elsevier.

The common measurement of economic and energy efficiency of various power sources is the Levelized Costs of Electricity (LCOE) which summarizes different ratios of fixed to variable costs into a single cost metric. But this measurement does not consider the intermittency (or instability, unreliability) and non-dispatchability on demand of renewables. So, a more realistic measurement was created, the LFSCOE.

Under LCOE (where storage cost and backup power are not incorporated), solar and wind power appears “cheap,” only $36-$40/Megawatt hour (MWh). But when storage and related costs are included, the cost of solar jumps to $1,380/MWh in Germany and $413/MWh in Texas.

The capacity factor or actual electricity generation per megawatt of installed power are lowest for solar (only 1.5% in Germany and 10.4% in Texas and hence, unreliable if not dangerous for energy-intensive industries and sectors (see Table 2).

This further explains why countries that added more wind and solar power in their grid are experiencing crawling or stunted growth. Like the United Kingdom and Germany.

YELLOW AND RED ALERTS

Last week, from April 16-18, the Luzon and Visayas grids experienced a prolonged series of yellow and red alerts. The main reason was high electricity demand due to extremely hot weather and cloudless skies almost daily, and the decline of the power supply due to the unscheduled shutdowns of several power plants plus the de-rating of other plants like hydro. In Table 3 are the relevant numbers from the Independent Electricity Market Operator of the Philippines (IEMOP).

In a press conference last Friday, April 19, Energy Secretary Raphael EM Lotilla thanked the various energy stakeholders and the public “for their cooperation in avoiding power interruptions despite the red and yellow alerts that were declared (due) to thin reserves.” He reiterated the need for energy conservation by consumers, mentioned the role of the Interruptible Load Program (ILP) by Meralco and many other distribution utilities and electric cooperatives to augment overall power supply, and the possibility of rain seeding in coordination with the Agriculture Department.

The Energy Regulatory Commission (ERC) also released a statement on April 18 where Chairperson Monalisa Dimalanta emphasized the importance of having “a steady and adequate power supply to meet consumer demands and the grid’s regulating requirements… We have directed power plant operators to submit to the Commission their estimated timelines for the resumption of their operations, and we will continue to monitor their timely compliance.”

The ghost of big blackouts of 1990-1992 continues to hound us after more than three decades. This is not good. As a developing country aspiring to industrialize and have sustained growth, we should focus on high-growth targets, not high-renewables targets. All our efforts to attract foreign and domestic investments (FDIs) will be endangered if investors see the dangers of regular yellow and red alerts.
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Sunday, April 28, 2024

Philip Stevens -- cool, friendly and intelligent

Today I just learned that a good friend Philip Stevens has passed away several months ago.

Phil was a keen researcher, writer and speaker on intellectual property rights (IPR) issues especially related to healthcare and trade. He was the Founder and Executive Director of Geneva Network (GN) based in UK, former analyst at World Intellectual Property Office (WIPO) in Geneva, former Exec. Director of Emerging Markets Health Network (EMHN) in KL, former analyst of International Policy Network (IPN) London.

I met Phil first time when IPN (then headed by Julian Morris) organized the "Global Development Summit" in June 2005 in London. It was a pro-free trade, free market conference and against more aid, more government narrative of the G8 Summit in Scotland the following week.

Then on September 2007, I organized the "Symposium on Intellectual Property, Innovation and Health" at Manila Hotel. It was a Minimal Governent-IPN forum, we made the local preparations and invites, IPN provided the funding. The speakers were Philip Stevens of IPN and Bibek Debroy from India. The moderator was Dr. Epictetus Patalinghug, then Professor at the UP College of Business Administration, also MG adviser.

Phil and Bibek talked among others, about the importance of innovation in medicine development, other measures that the WHO and Health Departments or Ministries of governments can do like improving the health infrastructure, expanding the generic drugs sector, and not become too focused on drug patents and pricing of newly-developed medicines.

Sometime in 2009, I participated in a small group Asian think tanks' IPR and Innovation meeting in Singapore. It was organized by IPN.

Photo below from left: Xingyuan Feng (China), Peter Wong (HK), Krishna Neupane (Nepal), Philip, Julian Morris (UK), Alec Van Gelder (Belgium, also with IPN), Luthfi Assyaukanie (Indonesia), me, Barun Mitra (India). Standing in front were ______ (Thailand) and Wan Saiful Wan Jan (Malaysia).

January 2011 also in Singapore, IPR-Health-Trade seminar organized by IPN.
From left: me, Amir Khan (India) Philip, and Julian Morris of IPN.

Around December 2011 I went again to Singapore for a meeting with some fellow free market leaders in Asia. Night before I met up with Singapore libertarians, the New Asia Republic (NAR) group headed by Donaldson Tan.

From left: Philip, his wife Debbie, me, Xingyuan Feng and Fu Weigang (from China). Donaldson is 2nd from right, beside him is Min Cheong. Behind Donaldson them were other writers and supporters of NAR.

November 2012, Economic Freedom Network (EFN) Asia conference 2012 in Hong Kong. Sponsored by the Friedrich Naumann Foundation for Freedom (FNF) and Lion Rock Institute (HK).

From left: Andrew Work (LRI), Philip, me, CathyWindels (US), and ______.

May 2019, Phil and Geneva Network organized an IPR conference in KL, co-sponsored by IDEAS Malaysia. Group photo after the seminar.

After dinner, from left: Junjie "Jack" Ma (China), me, Amir, and Philip.

Last time I met Phil was September 2019, Geneva Network launched the report "The importance of IPR for growth: reform agenda for ASEAN countries" in Manila at Holiday Inn Makati. GN partners in ASEAN for that report were from the PH, MY, ID, TH and VN. I organized that forum, I successfully got DTI Secretary Ramon M. Lopez as the keynote speaker.

Below, from left: Josephine Santiago, Atty. George Katigbak, Secretary Lopez, Philip, me, and Jesus "Jess" Varela.

Atty. Santiago was the Director General of the Intellectual Property Office of the Philippines (IPOPHL), Atty. Katigbak was with the Foundation for Economic Freedom (FEF) Property Rights Team and served as program MC that afternoon, Jess was the Director of the IPR Committee, Philippine Chamber of Commerce and Industry (PCCI).

Below from left: Jess Varela, Atty Kristine Alcantara, Dir. Gen. Santiago, Atty. Katigbak, me and Philip.

Atty. Alcantara was with the Trade Lawyers firm and also an FEF Fellow. She, Jess and DG Santiago served as reactors to the report presented by Philip that afternoon.

Below, a b&w version of the photo posted by Kristine. Cool.

Here, Phil listening and enjoying the discussion.

Thank you Philip. You and Julian Morris were very helpful and supportive of Minimal Government Thinkers early on. If I had known that you were sick, I should have written you to express how helpful and friendly you were to me.

Until then, my friend. Peaceful journey....
And Debbie, my deep condolence to you and your three kids...
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Friday, April 26, 2024

BWorld 699, On oil economics and Philippines vital statistics

On oil economics and Philippines vital statistics
April 18, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/18/588752/on-oil-economics-and-philippines-vital-statistics/

On April 1, Israel bombed the Iran embassy annex building in Syria. Last Saturday, April 13, Iran sent hundreds of drones and cruise missiles to Israel. Since April 14, the world has been waiting to see if a large-scale counterattack by Israel would happen or not. As of this writing, there has been none; de-escalation of the conflict is good for the world.

OIL ECONOMICS: SUPPLY, DEMAND AND PRICES

World oil prices did not jump up high after the exchange of bombs and missiles between the two countries. WTI crude went from $82/barrel in end-March to $87 on April 5 and $85 as of April 17. Dubai crude was $84/barrel in end-March and went up to $91 on April 5 and $90 as of April 17.

Iran is the third largest oil producer among the 12-members Organization of Petroleum Exporting Countries (OPEC). Its oil output was 3.2 million barrels per day (mbpd) in the first quarter of 2024. But a major war between Israel and Iran will affect not only Iranian oil output and exports but also those of the neighboring countries like Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates (see Table 1).

The US is the largest oil producer and largest oil consumer in the world. In 2023, its total liquids output was 20.9 mbpd but its consumption was 20.6 mbpd. Not all oil is the same so US refineries still import a lot of oil from the Middle East, Africa, and South America with different qualities from US crude oil to produce the desired gasoline and petrochemical products.

Russia is the world’s second largest oil producer. In 2023 it produced 10.93 mbpd while its consumption was only 3.84 mbpd, giving it a surplus of 7.1 mbpd for exports, most of it going to China and India.

China is the fourth largest oil producer (Saudi Arabia is third) but it is the second largest oil consumer after the US. In 2023, China’s oil output was 4.52 mbpd while its consumption was 16.22 mbpd so to cover its deficit of 11.7 mbpd, it buys mostly from Russia, Iran, and Saudi Arabia.

Total global oil demand was 102.21 mbpd in 2023 and is projected to rise to 104.46 mbpd in 2024 and 106.31 mbpd in 2025 (data from OPEC). The bulk of rising global oil demand will be supplied by major oil exporters Russia, Saudi Arabia, and the other OPEC member-countries.

There are three main lessons to draw from current global oil economics.

One, global oil demand keeps rising despite all the demonization against oil and fossil fuels.

Two, de-escalation of the Middle East conflict, especially between Israel and Iran plus its allies in Yemen (Houthis), Lebanon (Hezbollah), Syria and Iraq (Shi’ite militias), and Palestine (Hamas), is very important.

Three, since all major military hot spots in the world have US involvement — Ukraine, Iraq and Syria, Israel-Iran, Taiwan, the South China Sea, etc. — the US should learn to step back from too much interventionism, allow disputing countries to talk to each other and resolve conflicts as peacefully as possible and help stabilize global energy markets.

PHILIPPINES VITAL STATISTICS

Last week, the Philippine Statistics Authority (PSA) released the monthly update of the country’s demographics and mortality statistics for 2023. I summed up the total for January to August and compared it with data for the same period in preceding years. The results are not exactly good.

One, the number of births has been falling since the imposition of lockdown dictatorship in 2020-2021 and mandatory COVID vaccination in 2021-2022.

Two, there were no excess deaths in 2020 over 2019 despite the high number of reported COVID cases, but there was a high number of excess deaths in 2021 (when mass vaccination was done in March 2021 onwards) compared to 2020 and 2019. There were 20,000/month excess deaths in 2021.

Three, the number of marriages significantly declined in 2020-2021 during lockdown. This recovered in 2022, going up to 2018’s level, then declined again in 2023 (see Table 2).

The COVID vaccines, being experimental with no long-term studies on their effect on heart conditions, fertility, and other health indicators, could be a major factor for the rise in excess deaths in 2021 and the decline in births until 2023 and possibly until today.

Economic scarring like the -9.5% GDP performance in 2020 (the worst in Asia that year, the worst in Philippine economic records since post World War 2), very high unemployment numbers and increase in business bankruptcies, and now an emerging demographic problem of declining births — these are the major damage caused by the lockdown dictatorship and mandatory vaccination.

Philippines government, business, and civil society leaders should keep this in mind: that curtailing economic freedom, disrespecting natural immunity from the virus and believing only in so-called vax immunity, are a sure formula for economic underdevelopment and demographic distortion.
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US-China 1, the evil of proxy wars

Among the recent news reported and shared around was the "4,600 Chinese students" enrolled in one university alone in Tuguegarao City, Cagayan province. See this YT clip, https://www.youtube.com/watch?v=eoVJ2o9TF2k

According to local private universities there, there are only 486 foreign students from different nationalities. See these two reports.

1. Cagayan schools: ‘Baseless’ to say Chinese students threaten PH security
By: Luisa Cabato - April 19, 2024
https://globalnation.inquirer.net/232553/cagayan-schools-baseless-to-say-chinese-students-threaten-ph-security

The Medical Colleges of the Northern Philippines (MCNP), University of Cagayan Valley (UCV), University of Saint Louis Tuguegarao (USLT), and Saint Paul University Philippines (SPUP) even called the innuendos as a “blatant display of racism and sinophobia.”

They also dismissed claims that 4,600 foreign students are now enrolled in Cagayan schools.

According to them, only SPUP has enrolled foreign students numbering 486 as of April 17, 2024 because MCNP, UCV, and USLT have zero enrolled foreign students.

2. Get facts straight on Sino students, gov’t execs told
By: Jane Bautista, Marlon Ramos - April 21, 2024
https://newsinfo.inquirer.net/1931821/get-facts-straight-on-sino-students-govt-execs-told

"Cagayan Rep. JosephLara claimed there were more than 4,500 Chinese students presently attending classes in one private university alone.

However, the Bureau of Immigration (BI) said it only issued a total of 1,516 student visas to Chinese nationals in Cagayan last year.

In a joint statement released earlier this week, concerned colleges and universities denied the reports on the influx of Chinese students.

“The current foreign student enrollment at St. Paul University Philippines in Tuguegarao City is 486 graduate students as of April 17, 2024, which consists of various nationalities (Americans, Chinese, Indonesians, Japanese and Vietnamese),” they added.

So Cagayan Cong. Joseph Lara was likely engaged in disinformation for alleging "more than 4,500 Chinese students presently attending classes in one private university alone."

There is one goal by this kind of disinformation -- trillions of Filipino taxpayers' money -- to purchase submarines, battleships, jetfighters, missiles, etc and become a potential meat grinder in the potential proxy war US - China.

The disinformation re 4,600 CN students was deliberate and intentional. Then others are party to the deception.

Russia is small compared to China. China GDP size, population size, exports level, are about 8x larger than Russia. If the US and NATO cannot defeat Russia in Ukraine, the more that US cannot defeat CN in TW, once the bombs start flying. So US will get as many useful idiots as possible to be the arena of its proxy war vs china.

For now the agenda is to make Filipinos as angry as possible vs CN. That CN is evil devil (US is angel). That CN is occupier (US is not). That CN violates the "rules based intl order" (rbio) (but US invasions in Afghanistan, Iraq, Syria, etc are along the rbio).

Instead of PH staying away from a potential huge war US-CN, PH might be dragged as another useful idiot to accept the proxy war. Like what's happening in Ukraine now.

PH problem is how to modernize the economy. Raise agriculture productivity and reduce food inflation. Have lots of electricity supply, houses to have more lights and aircon and avoid blackout. Families riding cars and not tricycles, etc.

It is not our problem if TW would choose war instead of negotiation and compromise with CN. Let TW get the consequences of their decision. PH should not be involved there.

Now the US Congress has approved the $95 billion US taxpayers money to protect other countries' border: $61 B for Ukraine, $26 B for Israel, and $8 B for Taiwan, https://www.zerohedge.com/political/uniparty-reveal-speaker-johnson-pass-953-billion-foreign-aid-package-using-democrats.

Since all major military involvement by the US leads to war, then the possibility of war in Taiwan gets higher. See another report,

US To Convert Pacific Oil Rigs Into Military Bases as Part of Anti-China Buildup
The idea is to create mobile missile defense systems and resupply bases
by Dave DeCamp April 23, 2024
https://news.antiwar.com/2024/04/23/us-to-convert-pacific-oil-rigs-into-military-bases-as-part-of-anti-china-buildup/

"...The US has been expanding its military footprint in the Philippines and in Pacific island nations to give China more targets that it will have to hit.

Gen. Kenneth Wilsbach, the former head of US Pacific Air Forces who is now the commander of Air Combat Command, made this clear in comments to Nikkei Asia last year.

“Obviously, we would like to disperse in as many places as we can to make the targeting problem for the Chinese as difficult as possible,” Wilsbach said. “A lot of those runways where we would operate from are in the Pacific Island nations.”
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Tuesday, April 23, 2024

BWorld 698, Improving state revenue and boosting FDIs

Improving state revenue and boosting FDIs
April 16, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/16/588160/improving-state-revenue-and-boosting-fdis/

Mid-April of each year is the deadline for the filing of income tax with no penalty and many taxpayers beat the deadline, so government revenues are highest in April each year. I checked the revenues for the first two months of 2024 and compared them with the same period in 2021 to 2023.

Practically all major sources of revenues increased in that period, except for excise tax collections by the Bureau of Internal Revenue (BIR), and fees and charges by other agencies (see Table 1).

Among the related reports in BusinessWorld last week were: “Budget deficit projected to narrow further this year” (April 10), “Tobacco growers: Illegal vapes threatening farmer livelihoods” (April 14), and, “BIR releases implementing rules for Ease of Paying Taxes law” (April 14).

The illicit trade in tobacco products, cigarettes, and e-cigarettes and heated products is the major cause of the decline in excise tax collections. Congressman Joey Salceda made an estimate last October, saying that some P60 billion/year in tax revenues is lost due to tobacco smuggling and illicit trade.

It seems that the key government agencies in charge of controlling smuggling and illicit trade like the Philippine Coast Guard (PCG), the Philippine National Police (PNP), the National Bureau of Investigation (NBI), local government units (LGUs), the Bureau of Customs (BoC), and even the BIR are not doing enough to control this major tax leakage, even if their agencies and LGUs’ yearly budgets rely on more taxes.

Perhaps cabinet-level inter-agency action among the Department of Finance (with the BoC and BIR), the Department of the Interior and Local Government (with the Philippine National Police and the LGUs), the Department of Transportation (with the coast guard), and the Justice department (with the NBI) is needed. The budget deficit at around P1.5 trillion/year and public borrowings have been more than P2 trillion/year since 2020 — this should be enough reason for agencies to control tax leaks.

THE EASE OF DOING BUSINESS

On the ease of paying taxes, Finance Secretary Ralph G. Recto said that “the filing and payment of taxes is now easier than ever. (Taxpayers) have an indispensable role to play in our nation’s progress… These revenues will fuel our economic engine towards Bagong Pilipinas — lower poverty rates; increased infrastructure and human capital investments; more quality jobs for our people.”

You are correct there, Mr. Recto. The ease of paying taxes, ease of doing business, and the quality of public infrastructure are among the concerns of investors, local and foreign.

Last week, a new paper, “How to change a constitution by hand-waving (Or, the unbearable lightness of evidence in support of lifting foreign ownership restrictions)” was released by nine faculty members of UP School of Economics (UPSE) and UP Los Baños (UPLB), including two of my former UPSE teachers Noel de Dios and Orville Solon, my former boss Florian Alburo, and undergrad contemporaries Aleli Kraft and Oggie Arcenas.

The authors argued that “evidence shows that lifting equity restrictions is not a necessary condition for explaining the inward stocks of foreign direct investment (FDI) in the cited countries, including the Philippines. While restrictive equity rules may represent a hindrance to FDI, their potential effects are small and sometimes insignificant in comparison to other explanatory variables such as the ease of doing business, physical infrastructure, and perceived corruption.”

They presented several tables showing, among others, that the FDI Regulatory Restrictiveness Index (RRI) is high in the Philippines compared to Vietnam and other ASEAN countries. They did not show the actual level of FDIs through time, so I checked the numbers.

Countries with high GDP size at purchasing power parity (PPP) values also have high levels of FDI inward stock (inflows minus outflows through time). And speaking of infrastructure, electricity generation is a big factor, with considerations of whether investors can avoid occasional blackouts and pay low electricity prices. Among East Asian nations, the Philippines is below-average in GDP size, in FDI in-stock, and in power generation (see Table 2).

So, the UPSE economists are correct in saying that there are many other factors aside from Constitutional restrictions that limit the entry, if not scare away, potential FDIs. Especially when you consider that the government is trying to attract more public-private partnership (PPP) involvement in many infrastructure projects.

Last week, on April 12, the Investment Coordination Committee-Cabinet Committee (ICC-CC) held a meeting presided by National Economic and Development Authority (NEDA) Secretary and ICC-CC Co-Chair Arsenio M. Balisacan. Participating in the meeting were Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman and Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go, and Finance undersecretaries who represented Mr. Recto who was still in Washington, DC.

The ICC-CC officials discussed PPP projects for the approval of the NEDA Board, plus guidelines on the approval of national PPP proposals following the PPP Code Implementing Rules and Regulations.

Other officials I saw in the meeting photos were DBM Undersecretary Joselito R. Basilio, PPP Center Executive Director Cynthia C. Hernandez, Finance Undersecretary Joven Z. Balbosa, NEDA Assistant Secretary Erick Planta, and Monetary Board member Romy Bernardo.

Ms. Pangandaman and Mr. Basilio are persistent in their views that public expenditure should be focused on improving the overall productivity of our people via soft and hard infrastructure programs. They are correct. The latest labor force data showed that our unemployment rate in February declined again, to only 3.5% of the 50.75 million Filipinos in the labor force. This is lower than the February 2023 unemployment rate of 4.8%. Public spending should focus on that important goal of more job creation and reducing the unemployment rate in the country.
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Macroecon 26, Trade, FDI and "strong" US$

Reposting my recent posts in Oplas Perspectives viber group. Enjoy.

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Sunday, April 21, 2024

BWorld 697, Philippine Energy Plan won’t ensure security

Philippine Energy Plan won’t ensure security
April 11, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/11/587197/philippine-energy-plan-wont-ensure-security/

The Philippine Electric Power Industry Forum (PEPIF) 2024 with the theme “Powering a sustainable and secure energy future for the country” held at the Iloilo Convention Center on April 5 was a great success. Audience-packed, information-loaded and networking-rich, it was sponsored by the Independent Electricity Market Operator of the Philippines (IEMOP). Congratulations, IEMOP.

The opening remarks were given by Iloilo City Mayor Jerry Treñas. It was a warm, friendly and challenging message. Warm because he thanked the participants from Metro Manila and other provinces for flying to Iloilo and spending their money there. Challenging because he narrated the huge inconvenience of power blackouts the city and the entire province of Panay and four other provinces suffered in early January and early March, and the need for big power supply given the huge demand from many existing and potential investors and consumers in the province and island.

Energy Secretary Raphael P.M. Lotilla could not come but he gave an inspirational keynote message explaining the need for energy security to help attain economic security. His message was delivered and read by Energy Undersecretary Rowena Guevara. The overall roadmap as contained in the Philippine Energy Plan (PEP) until 2050 and National Renewable Energy Program (NREP) was ably presented by Energy Assistant Secretary Mylene Capongcol.

Other information-packed presentations came from the Energy Regulatory Commission, National Grid Corp. of the Philippines, National Transmission Corp., National Electrification Administration, private players Aboitiz Renewables, Inc. and MORE Power in Iloilo City.

In this column last Tuesday, I made an estimate and forecast of how much new power generation the Philippines should have given the high GDP growth targets set by the economic team — 6-7% for 2024, 6.5-7.5% for 2025 and 6.5-8% for 2026-2028 and avoid blackout.

This piece will attempt to quantify the projected power generation from 2023-2028 given the new committed projects and compare it with the projected needs of the country over the same period.

From a total installed capacity of 28,258 megawatts (MW) in 2022, about 3,193 MW are expected to become operational this year and 2,624 MW next year, for a total of 9,968 MW from 2023-2028 (Table 1).

As mentioned in my previous article, not all megawatts are the same. Conventional thermal power plants have higher energy density, reliability and capacity factor (CF) per MW than conventional renewables such as hydro and geothermal energy, and intermittent renewables such as solar, wind and biomass.

Since not all new power plants committed for the year will start operating in January — some may not start until the fourth quarter — I adjusted the CF to 95% of the actual CF 2017-2022 as measured by IEMOP. My computation of additional generation in gigawatt-hours (GWh) is derived using this formula: (CF 2023-2028) x (committed projects) x (24 hours/day) x (365 days/year). My results show an additional 12,263 GWh or 12.26 terawatt-hours (TWh) this year and 10 TWh in 2028 (Table 2).

To get the total projected generation per year, I derived with this formula — (actual generation 2022) + (projected generation 2023), and so on. My results show total generation rising from 112.52 TWh in 2022 to 123.54 TWh this year to 154.79 TWh in 2028.

Then I compared this projected generation based on committed projects versus projected generation based on GDP growth targets for 2024-2028. My results show a surplus this year, but power deficits of 8.9 TWh in 2027 and 7.4 TWh in 2028 (Table 3).

Other researchers can replicate this exercise using different assumptions like capacity factor for 2023-2028, possible delays or advance in operation of new power plants, and they may come up with different numbers.

My results imply that adding more intermittent RE with low CF like solar with 3,378 MW and wind with 1,234 MW from 2023-2028 can imperil the country’s growth targets with a power deficit and hence, potential blackouts. Investors and consumers will cringe at the idea of having blackouts again just two to four years from now.

So the Philippine Energy Plan can’t ensure energy security. The proposed PEP will not assure energy security for the Philippines.

As a developing country aspiring to industrialize and raise per capita income and create more jobs, our energy policy should be high growth-targeting, not high renewables-targeting. Junking the anti-coal policy of 2017 and anti-nuclear sentiment will be a good start toward this policy shift.
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Climate 108, Masdan mo ang kapaligiran (1978)

This is one of the famous Filipino songs in the late 70s. About "environmental catastrophe" 1970s into the future. Asin band was famous that time too. Some of the lyrics:

Masdan mo ang kapaligiran
by Asin, 1978
https://www.youtube.com/watch?v=jup5tXpyvOU

...Ngunit masdan mo ang tubig sa dagat
Dati'y kulay asul ngayo'y naging itim...

Ang mga batang ngayon lang isinilang
May hangin pa kayang matitikman?
May mga puno pa kaya silang aakyatin
May mga ilog pa kayang lalanguyan?

Darating ang panahon mga ibong gala
Ay wala nang madadapuan
Masdan mo ang mga punong dati ay kay tatag
Ngayo'y namamatay dahil sa 'ting kalokohan.
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Fast forward today 2024, after 46 years...

-- tubig sa dagat, dati kulay asul, ngayon asul pa rin

-- ang mga batang 40s na ngayon, may hangin pa ring natitikman

-- may mga puno pa rin silang aakyatin (pero ayaw na umakyat, marami na bondying)

-- may mga ilog pa rin silang nalalanguyan (marikina river pwede pa, pasig river di na)

-- mga ibong gala, madami pa rin madadapuan

-- mga puno, iba kalaban ng electrical wires ng Meralco kasi matataas at malapad ang branches, fire and electrical hazards na.
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Some members of Asin band now in the US, enjoying modern environment.

Climate alarmism in the 70s may be justified. But after 5 decades, climate alarmism still persists. They were wrong since the 70s or earlier years.

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BWorld 696, Higher deficit ceilings point to dangerous trend

Higher deficit ceilings point to dangerous trend
April 9, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/04/09/586666/higher-deficit-ceilings-point-to-dangerous-trend/

Last week there were several important developments in the macroeconomic and fiscal situation of the Philippines. See these reports in BusinessWorld: “NG debt hits record P15.18 trillion” (April 4), “Philippines lowers growth target for 2024, raises deficit ceilings” (April 4), “PSA lowers economy’s growth to 5.5% in 2023” (April 5), “Inflation accelerates for a second month in a row in March” (April 5).

Public debt keeps rising, not falling. The GDP growth targets made by the Development Budget Coordination Committee (DBCC) were adjusted downwards. And the inflation rate rose to 3.7% in March — although this is just half of the 7.6% inflation in March 2023, the steady decline from October 2023 to January 2024 has halted.

NEW MACROECONOMIC AND FISCAL TARGETS

In Table 1 are the new targets set by the DBCC last week, I arranged them into three sets of parameters: A for macroeconomic assumptions, B for fiscal outlook, and C for GDP growth targets. Then I compared the old targets made in April 2023 with the new ones.

For 2023, the actual growth of 5.5% was lower than the targeted 6-7% but the deficit target was generally achieved.

For 2024, the new deficit target is much higher — P1.48 trillion (5.6% of GDP) vs the P1.36 trillion of the old target. It is the same for 2025, with the new deficit target set much higher at P1.49 trillion compared with the P1.20 trillion in old target (see Table 1).

It is the same trend for 2026 to 2028, the deficit’s new targets are set much higher than the old targets. And this points to a dangerous trend — disbursements and public spending have become more uncontrollable while projected revenues cannot keep up.

Two important medium- to long-term policies should be set.

First, the planned privatization of some government assets — like property of the Ninoy Aquino International Airport or NAIA, the New Bilibid Prison property, the Armed Forces of the Philippines’ golf course, Philippine Amusement and Gaming Corp. (better known as PAGCOR), etc. — should be started earlier.

Second, the planned huge procurement (P2 trillion) of materiel for the Armed Forces of the Philippines (AFP) (submarines, battleships, jetfighters, missiles, ammo) and several hundred billion pesos worth of materiel for the Philippine Coast Guard (PCG) should be junked. Instead, we should focus on high-profile diplomatic negotiations as the cheaper alternative to have a peaceful resolution of the territory disputes in the West Philippine Sea.

If these two measures are not considered, if government will only rely on more taxation while public spending keeps rising fast, the public debt stock will keep rising and interest payments alone would approach P1 trillion/year — it was already P670 billion in 2023.

ELECTRICITY SUPPLY TO SUSTAIN HIGH GROWTH

Last Friday, April 5, I attended the Philippines Electric Power Industry Forum (PEPIF) 2024, which had the theme, “Powering a Sustainable and Secure Energy Future for the Country,” held at the Iloilo Convention Center in Iloilo City. I will write more about it in the next column, but for now I will make my own projection on the amount of electricity in terawatt-hours (TWh) we will need in the medium-term to avoid blackouts because the projected power demand will be high due to high GDP growth targets as discussed above.

First, I computed the average growth in power generation from 2017 to 2022 (it’s 5.1%) to approximate generation in 2023 as data is not yet available from the Department of Energy. Second, I introduced and computed two concepts: 1.) the electricity multiplier in percent expansion (= % growth GDP / % growth power generation), and, 2.) the electricity multiplier in monetary values (= GDP P billion increase / generation TWh increase). All this is done with the assumption of ceteris paribus or all other things/factors being equal or constant.

For the first concept (the electricity multiplier in percent expansion), it shows that a 1% expansion in power generation contributes to a 1.3% expansion in GDP. For the second concept (the electricity multiplier in monetary values), a one TWh increase in power generation contributes to a P236 billion expansion in real GDP size.

But since the country’s per capita kilowatt-hour (kWh) generation remains low and “yellow-red alerts” were still being declared even through 2023, I adjusted the electricity multiplier from 1.3% to 1.2% to help ensure more electricity stability and security in the medium-term.

My results show that the Philippines’ power generation must expand from 5 TWh/year in 2017-2022 (excluding the horrible lockdown year of 2020) to 6.4 TWh/year in 2023-2025, and 8 TWh/year in 2026-2028 (see Table 2).

The electricity multiplier in monetary values from 2023-2028 is at a more realistic level: for every 1 TWh increase in power generation, real GDP size increases by P222 billion.

Since the theme of PEPIF 2024 was focused on renewable energy (RE), lots of the discussions were focused on megawatt (MW) installed capacity expansion by RE, not megawatt-hours (MWh) actual generation expansion. The former can be a deceptive metric because not all MW are the same. A 100-MW solar plant can deliver only about 18 MW of electricity in a day while a 100-MW coal plant and 100-MW gas plant can deliver about 65 MW and 60 MW of electricity in a day, respectively.

For our economic security, we should have energy security, and such can only come from reliable sources like thermal plants (coal, gas, oil peaking plants) and nuclear power. I liked the assessment and speech by Jimmy Villaroman, President of Aboitiz Renewables, Inc. (ARI). He said at the forum:

“We advocate a balanced approach, growing renewable energy and investing in traditional sources… our transition in the Philippines, as in the rest of Asia and the Pacific, must be gradual and intelligent. It has to be well-planned; uniquely suited to each country… We believe LNG is a great complement to RE due to the latter’s inherent intermittency…. We’re also studying the feasibility of small modular reactors… as other long-term solutions.”

Yes, we cannot and should not abandon conventional sources. Sustained high economic growth, more job creation, are goals that are more noble and more practical than high RE share to total energy mix.
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MidEast Africa 13, Notes from Mike Alunan

This is a good post by a friend Mike, a former BusinessMirror columnist, in our viber group Oplas Perspectives. Reposting with his permission, thanks Mike.
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Middle East Notes
by Michael "Mike" Alunan
April 20, 2024

America must learn a lot from numerous lessons in history, otherwise it is bound to repeat past mistakes, to paraphrase a famous quote from George Santayana. As early as the time of the Greeks, the collapse of its civilization was a result of the internecine destructive 28-year war among the Greek city states mainly because of hubris or arrogance and envy among each other. The US is in the same situation, so we are seeing increasingly Pax Americana (US Empire) on the decline. And may implode in the long-run with the financial bubble building up again that could burst and result in crisis worst than 2008.

Between 1947 and 1989, or the cold war alone, the US thru its CIA tried regime change 72 times (See
https://www.washingtonpost.com/news/monkey-cage/wp/2016/12/23/the-cia-says-russia-hacked-the-u-s-election-here-are-6-things-to-learn-from-cold-war-attempts-to-change-regimes/).
This excludes the dozens of involvement in post-cold war military activities like Serbian -Croatia war from1991-95, Iraq war from 2003 to 2011, Afghanistan war from 2001 to 2021 fall of Khadafy in 2011, Maidan coup on Ukraine in 2014, and many more. In fact, ever since the fall of the Soviet Union in 1991, or after the so-called "Cold War" the CIA has been involved in many covert operations, supporting mass movements and opposition groups and color revolutions, and in Eastern Europe were partly responsible for the 5 waves of conversions of most Eastern European states to NATO. Once joining NATO, the US sets up military bases and ballistic missiles, This is fully documented in a book in 2021 by M. E. Sarotte entitled "NOT ONE INCH: America, Russia, and the Making of Post-Cold War Stalemate" – Cold War.

Let's not forget the CIA has been behind the "terrorsist groups," ethnic groups and freedom fighters like Mujahideen which evolved into what is now Al Qaeda, and other terrorist groups like ISIS, Al Nustra, Kurds etc, all involved now in the continuous campaign towards regime change in Syria. I am not in favor of Iran and its Islamic theocracy, but let's face it, It is Iran that has been fighting these terrorists like ISIS and Al Qaeda, backed indirectly by the CIA.

A great source too of updated geo-political analyses are the You Tube interviews of prolific book author intellectual and deep ex-CIA intelligence officer Scott Ritter, who has about 10 published books to his name, and is fairly objective in making his updated analyses on the recent Ukraine and Iran-Israel conflicts.

On the recent Iran-Israel conflict, which could potentially and dangerously trigger a global economic crisis or possibly escalate into a nuclear war, we hope not, Scott Ritter, who has a full grasp of facts and privileged intel information, says Iran is not after a war with Israel, for many reasons, and has thus kept its cool and strategic patience the past few years and decades, and avoided DIRECT confrontation, despite getting hit the past years and decades by a series of Mossad assassinations of its top officers, nuclear scientists, its top general Sulahmeini, et al. Of course, just like the US and Israel, Iran also funds proxy wars like the Houthis of Yemen, Hezbollah and Hamas. Recently, it is Israel and US, which now appear like rogue states, compared to Iran, owing to their actual actions.

Iran is more serious at building peace and development and has made peace with its arch rival Saudi Arabia after fighting for 7-8 years in a proxy war over Yemen, following a peace settlement brokered by China. Both Iran and Saudi have also joined BRICS, along with Egypt, Ethiopia, and United Arab Emirates. About 31 or 41 more countries have signified their interest of joining BRICS, many because of fears they can also be victims of US sanctions like what US did in freezing Russia's $300 Billion assets or Afghanistan's $9 Billion, and other forms of pressures and sanctions, triggering jitters and the current shift to de-dollarization, the increasing interest in BRICS, etc. Jeffrey Sachs, a world-known economist, is also a good source of updates on economic and geo-political trends. Iran and Russia are also developing an alternative. Iran is also building together with Russia alternative multi-modal transport alternatives to the Suez Canal, only as a result of the sanctions, etc.

Iran only struck directly at Israel last April 14, in retaliation of Israel's April 1 fighter jet attacks on Iran's consular office in Damascus, Syria, killing 2 generals and other top level officials. This obviously violated Article 51 of the UN Charter and Geneva and Vienna conventions, which make the Damascus consulate a sovereign territory and justifying an appropriate retaliation vs. Israel. Iran was not serious with harming Israel, or killing Israelis, as it even sought UN Security Council response on Israel's violations of international law, but got no positive response over its complaint over Israel's violation of international law and even Western world's self-imposed "Rules-Based Order." It also gave Israel and the US 72 hours prior warning on its plan to attack Israel, giving the latter ample time to prepare and move valuable assets. On top of this 72 hours, Iran gave another 5 hours warning before its actual attack sending initially its drones, which took 4 hours to travel, giving time for Israel, US and other allies to prepare and shoot down the drones. The missiles followed and hitting two Israeli bases, but not causing major damages. Except a girl as collateral damage. Iran had no intentions of killing people, otherwise it should not have given series of prior warnings.

With his apparent failure at his Gaza genocide project, Netanyahu believes his only way to cling to power is to widen the war in the Middle East and forcibly bring US to its rescue. Otherwise, Netanyahu will be toppled from power, along with his zealot Zionist Knesset cabinet. We do not condone Hamasy Before the Oct. 7 attack of Hamas.

We do not condone Hamas' Oct. 7 attack on Israel, but we grossly detest Israel's disproportionate response towards a genocide on Gaza. Before this event, there were hundreds of thousands protesting against Netanyahu over charges of corruption and other crimes. So it seems Netanyahu;s defense is to go offense, and drag everyone down, including the US, as he capitalizes on the strong Zionist lobby, which actually also includes some 70 Million Christian Zionist. Many Jews are distancing themselves from the Zionist, which is a racist oligarchic and militarist ideology, making use of twisted biblical tales.
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See also:
Unrest in MidEast-Africa 9: Gaddafi falldown, August 24, 2011
Unrest in MidEast Africa 10: Israel-Hamas War 2012, November 26, 2012
MidEast Africa 11: Egypt, Arab Spring and Capitalism, July 05, 2013
MidEast Africa 12: US-Iran conflict, June 21, 2019