BWorld 778, Declining births and urbanized cities of the Philippines

Declining births and urbanized cities of the Philippines

February 20, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/02/20/654247/declining-births-and-urbanized-cities-of-the-philippines/

 

On Jan. 31, the Philippine Statistics Authority (PSA) released the report, “Birth, Marriage, and Death Statistics for 2024 (Provisional, as of 30 November 2024).” I downloaded the Excel file for 2023-2024 and compared the monthly data of previous years, with 2019 serving as the baseline before the lockdowns of 2020 to mid-2022.

 

The number of births in the Philippines keeps declining. The monthly averages for January-May of each year declined, from 133,355 in 2019 to 100,749 in 2021 and 90,315 in 2024. This is not good. The average number of deaths per month see-sawed from 51,975 in 2019 to 63,643 in 2021, then 48,324 in 2024.

 

Despite the high number of reported COVID-19 cases in 2020 there were no “excess deaths” that year (an increase in the number of deaths from the previous year). It was in 2021, when COVID vaccination became mandatory, that “excess” deaths were high — there were nearly 880,000 deaths that year, or 259,400 more than in 2019 (see Table 1).

 

The net increase in population (births minus deaths) for the January-May period has been declining, from 81,380/month in 2019, to 37,100/month in 2021, and 41,990/month in 2024. That is not good. I have always suspected that those experimental vaccines which were made mandatory (otherwise people were not allowed to enter schools, offices, malls, etc.) have short- to long-term adverse effects on people’s health. So far this is slowly being confirmed via adverse demographic trends in the country.

 

ECONOMIC PERFORMANCE OF CITIES

On Feb. 7, the PSA released its report, “2023 Economic Performance of the Highly Urbanized Cities (HUC) in the Philippines.” It showed that Quezon City and Makati City are the only trillionaires, and that Davao City and Cebu City are the only non-Metro Manila cities in the top 10 wealthiest HUCs in the country.

 

In terms of annual growth, Puerto Princesa City in Palawan was highest with growth of 10.6% in 2023, followed by Iloilo and Bacolod cities with 10.5% and 10.0% growth respectively. I heard that the city government of Puerto Princesa was bragging about its performance — and rightly so. But I also wanted to see just how big or how small the real production in the city is.

 

So, I checked the PSA’s attached Excel files by region, and I compared the provincial product accounts and HUC accounts of regions in Mimaropa (Mindoro, Marinduque, Romblon, Palawan), Visayas, and Mindanao. It is not a good idea to compare them (except Davao and Cebu) with the HUCs in Metro Manila, Region 3 (Central Luzon), and Region 4 (Calabarzon) which are huge and rich.

 

It turns out that among the HUCs in Mimaropa-Visayas-Mindanao, Puerto Princesa was the second smallest or second poorest in 2023 after Tacloban City (see Table 2).

 

The last time I went to Puerto Princesa City was in 2019. The tourist areas of the city are beautiful — the underground river, the white sand beaches, the small exotic islands, a zoo, a crocodile farm, and so on. But the city itself does not look “highly urbanized.”

 

For one thing, there are frequent blackouts so all the hotels and resorts, malls, and big restaurants have gensets. This immediately raises the cost of business. Thus, food prices, hotel rooms, and tours are not exactly cheap in Puerto Princessa. Tourist arrivals recovered to the 2019 level only in 2023.

 

Then, many roads are not well-paved. Many streets are dark at night — which is related to the insufficient power supply discussed above. Plus, there are many stray dogs on the road that contribute to more accidents.

 

Three, I read that the majority of households are not connected to a sewage system. That the water supply is intermittent during the dry or summer months. And that city’s health services are wanting, with patients and their companions having to start queuing as early as 4 a.m.

 

Four, flooding is frequent in many areas including the north national highway. There must be blocked waterways somewhere, while buildings were given construction permits despite the danger of flooding. There was heavy flooding again early this month, from Feb. 8-10.

 

I read that the political leadership of Puerto Princesa City has been controlled by one family for three decades. This is not good.

 

About the blackouts, Palawan does not have big power plants except the oil gensets of Napocor and some private companies.

 

Years ago, DMCI and other companies proposed putting up a coal plant in Palawan, but this was vehemently opposed by many environmentalists because coal is a fossil fuel. But the same environmentalists are silent about the fact that the diesel and bunker oil that run the big gensets are also fossil fuels.

 

And then there is the state of the Palawan Electric Cooperative (Paleco). Data from the Energy Regulatory Commission (ERC) showed that Paleco’s System Average Interruption Duration Index (SAIDI) in 2023 for scheduled maintenance shutdown was 1,337 minutes (equivalent to 22 hours) while for some private distribution utilities like Visayan Electric Co. (VECO) it was only 163 minutes (three hours). When it comes to power supply instabilities, Paleco’s SAIDI in 2023 was 3,154 minutes (53 hours) while that of VECO was only eight minutes.

 

The city and the provincial leadership must make drastic changes in their infrastructure, energy, and other sectoral reforms.

PhilStar 29, A growth target of 7% is viable

A growth target of 7% is viable

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star

February 20, 2025 | 12:00am

https://www.philstar.com/business/2025/02/20/2422709/growth-target-7-viable

 

Last week this column argued “Why Philippine growth of six to 6.5 percent in 2025 is possible.” The three main reasons with corresponding numbers that I gave were the 2025 election cycle growth, low base growth, and declining inflation and unemployment rates.

 

The past few days showed a rise in global economic optimism. One, improvement in US-Russia economic and diplomatic relations and eminent end to Ukraine war with high level face to face meeting between the foreign affairs secretaries or ministers of both countries last Feb. 18 held in Saudi Arabia.

 

Two, Vietnam as the fastest growing large economy in the world in 2024 (growth of 7.0 percent) has revised its growth target for 2025 from 6.5-7.0 percent to 8.0 percent, anchored by stronger industrial manufacturing.

 

Three, China reiterated their growth target of 5.0 percent in 2025, from 5.3 percent growth in 2023 and 5.0 percent in 2024. China is the Philippines’ largest trade partner, total trade (merchandise exports plus imports) was 40.3 percent of total in 2023 and 42.2 percent in 2024.

 

Four, Japan is the second largest trade partner of the Philippines and it showed a surprising mild recovery of 1.2 percent growth in the fourth quarter 2024, from -0.8, -0.8, and 0.6 percent in the first to third quarter, respectively. So the quarterly growth in 2025 is expected to be high from low-base (2024) effect. Then the meeting between US President Donald Trump and Japan Prime Minister Ishiba Shigeru last Feb. 7, huge Japan investment pledge up to $1 trillion in the US and leveling of tariff rate discrepancy between the two. These are good ingredients for rising growth of both countries this year. The US is third largest trade partner of the Philippines.

 

So a decline in threats of big, prolonged wars and an increase in economic optimism, these should have positive effect on business and investments in the Philippines and many other countries. A seven percent growth or higher in 2025 is possible for us.

 

The country’s economic team can further fine-tune the growth targets from 2025 to 2028, focus on the high end of eight percent growth target by instituting some hard fiscal and economic reforms.

 

Last Feb. 17 the Economic Development Group (EDG) and the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) met but they focused on inflation control, digitalization of social programs, common towers and mining policy.

 

Members of the EDG include EDG chairperson and Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go, Finance Secretary Ralph Recto and NEDA Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, Trade Secretary Maria Cristina Aldeguer-Roque.

 

There is a need to significantly change our fiscal condition, reduce the borrowings. Our financing or net borrowings significantly jumped from P0.8 trillion in 2019 to an average of P2.2 trillion/year for four years 2020 to 2023, though expected to taper to around P1.6 trillion in 2024. Our interest payment alone from January-November 2024 (no December data yet) of P705 billion means we were paying an average of P64.1 billion per month or P2.1 billion per day. Huge and wasteful.

 

The CREATE MORE law of 2024 (RA 12066) and its implementing rules and regulations signed last Monday, Feb. 17, will help improve the business environment of the country, expand the tax base.

 

One fiscal measure is to reduce incidence of illicit trade and smuggling which significantly reduce government tax revenues, particularly in tobacco products. During the Tobacco Summit last month Jan. 27-28 held at Seda Vertis North, I was one of the speakers and I showed and discussed the Laffer Curve of Philippines tobacco taxation, the numbers.

 

Tobacco tax revenues peaked at P176 billion in 2021 when the tax rate was P50/pack. When it became P55/pack in 2022, revenues declined to P160 billion; when it became P60/pack in 2023, revenues declined further to P135 billion. In 2024 at P63/pack, revenues would be flat at around P140 billion.

 

The goal of taxation should be to optimize revenues. If higher tax rate results in lower revenues, then tax rate should step back, go down to a level where revenues were highest. That is why I argued that tobacco tax rate should go back to P50/pack, reduce the price difference between legal vs illegal cigarettes. Currently the tax is P66/pack and the cheapest product is about P120/pack for legal and P50/pack for illegal tobacco.

 

On the expenditure side, spending by national government agencies should flatline if not decline as the mandatory share of local government units (LGUs) to total revenues keeps rising. Allotment to LGUs increased from P530 billion in 2017 to P1.103 trillion in 2022 or doubling in just five years. It was P941 billion in January-November 2024. So certain social and economic programs of many national agencies should be devolved and given to LGUs.

BWorld 777, PDUs vs ECs

PDUs vs ECs

February 18, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/02/18/653701/pdus-vs-ecs/

 

Last week, on Feb. 11, the Independent Electricity Market Operator of the Philippines (IEMOP) released the report, “Market Operations Highlights January 2025,” in a media briefing. They also released the monthly prices of the Wholesale Electricity Spot Market (WESM) from June 2021 to January 2025. For the purposes of brevity, I have used the comparative prices in January and June over four years. The prices show a declining trend.

 

In the power generation mix, coal remains the backbone of electricity production in the Philippines. Solar plus wind contributed only 2.2% of total generation in June 2022, 3.5% in June 2024, and 5.5% in January 2025 (see Table 1).

 

 

The anti-coal, pro-wind/solar environmental and business lobbies are misguided if they genuinely want the country to industrialize and create more jobs. Their advocacy to retire coal early will lead to frequent blackouts, and thus to manufacturing companies shutting down and moving to Vietnam, Indonesia, Malaysia, etc. where power supply (mainly from coal plants) keeps rising yearly and where electricity prices are low.

 

Also last week, on Feb. 13, the Energy Regulatory Commission (ERC) released the report, “Analysis of 2024 Power Generation Rates Yields Downtrend Trend.” They highlighted that “Between 2023 to 2024, ERC noted that the national average annual generation rate dropped by almost 10% from P7.50/kilowatt-hour (kWh) to P6.64/kWh… most areas in the Philippines, except for select regions, saw a significant cut in generation rates in 2024.”

 

This is good.

 

But while some regions on certain months have lower generation prices than Metro Manila (which is part of the Meralco franchise area), price is not the only or main criteria if we want the power sector to support sustained economic growth. Very often higher prices, like high body temperatures or fever, are just a symptom and not the cause. The main criteria or consideration should be power stability in order to avoid blackouts, to avoid using candles and gensets.

 

I saw data from the ERC on two important metrics that measure power stability or instability: the System Average Interruption Duration Index (SAIDI) which is measured in minutes in a year, and the System Average Interruption Frequency Index (SAIFI), or how many times in a year a power interruption occurs. The lower the indices, the better, the more stable the power supply is.

 

Three situations are considered: Scheduled maintenance; Power supply or grid-related outages like supply deficiency, plant tripping, transmission maintenance, etc.; and All Others which are things like vehicles hitting poles, etc. So I compared the performance of private distribution utilities (DUs) with electric cooperatives (ECs) in the same province or neighboring geographical area using the ERC’s metrics.

 

For Scheduled maintenance, Meralco’s SAIDI was 51 minutes while Batangas EC (BATELEC) 1’s was 257 minutes (or 4+ hours) and BATELEC 2’s was 1,386 minutes (23 hours).

 

For Power supply, Meralco’s SAIDI was 26 minutes while BATELEC 1’s was 2,676 minutes (47 hours or nearly two days) and BATELEC 2’s was 1,819 minutes (30 hours).

 

This is the main reason why many of the mayors in towns in Batangas province which are under BATELEC 1 and 2 wanted their towns to be serviced by Meralco. The price per kWh between the three power providers may be similar but the frequency and duration of blackouts is horrible. The townspeople are inconvenienced and suffer discomfort, their appliances and bulbs are damaged, and they need to use candles or gensets often, and so on. Meralco opted to help BATELEC and other ECs improve their services via technology sharing.

 

Several mayors also want to be out of the franchise area of Northern Davao EC (NORDECO), formerly Davao North EC (DANECO), and instead have their towns be served by Davao Light and Power Co. (DLPC).

 

The SAIDI in Power Supply in 2023 for DLPC was 61 minutes while that of NORDECO was 1,256 minutes (21 hours). The SAIDI in 2022 for DLPC was 31 minutes and that of NORDECO was 10,283 minutes (171 hours or seven days).

 

The same trend between private distribution utilities vs electric cooperatives can be found in Zambales with Subic EnerZone (SEZ) vs ZAMECO; in Cebu with VECO vs CEBECO.

 

I included in Table 2 North Negros EC (NONECO) because its franchise area includes my birthplace, Cadiz City. The SAIDI of NONECO is bad compared to DUs like VECO, MERALCO, or DLPC.

 

 

This column has argued in the past, and will reiterate here, that all ECs should become corporations, or their franchise areas be served by corporate DUs, monitored by the Securities and Exchange Commission (SEC) along with other public service companies like airlines, bus lines, shipping lines, water companies, etc. ECs should not be protected by a political body — the National Electrification Administration (NEA) — and occasionally subsidized by taxpayers via a higher NEA budget.

 

During the 3rd Ruperto P. Alonzo lecture on the “Energy Trilemma” held on Feb. 7 at the UP School of Economics (UPSE) and organized by the Program in Development Economics Alumni Association (PDEAA), there were two good speakers — Congressman Mark Cojuangco and Eric Francia, CEO of ACEN.

 

Mr. Cojuangco talked about the virtues of nuclear energy and Mr. Francia talked about the virtues of the retail competition and open access (RCOA) provision of the EPIRA law, among others. While ACEN is gung-ho about having a purely RE portfolio, Mr. Francia is wise enough to recognize the role of coal and gas plants in ensuring the power stability of the country.

 

The lecture was followed by the PDEAA alumni homecoming, also at UPSE, and we want to acknowledge and thank the National Grid Corp. of the Philippines (NGCP) for its donation, which I failed to mention in this column last week. The NGCP’s role as provider of the transmission backbone and highway between many power plants to DUs, ECs, and retail electricity suppliers is important. 

PhilStar 28, Why Philippine growth of 6 to 6.5% in 2025 is possible

Why Philippine growth of 6 to 6.5% in 2025 is possible

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

February 13, 2025 | 12:00am

https://www.philstar.com/business/2025/02/13/2421136/why-philippine-growth-6-65-2025-possible

 

The three quick reasons for this argument are: election cycle growth, low base growth and declining unemployment and inflation. The former refers to either a high growth the previous year is retained in election year, or election year has higher growth than previous year. Recent election years were 2013, 2016, 2019, 2022; then this coming May 2025.

 

The base effect growth refers to a low base and low growth the previous year often leads to higher base and higher growth the next year. Here are the numbers.

 

Election cycle growth

 

In 2012 and 2013, the Philippines has flat high growth of 6.9 and 6.8 percent respectively. Other neighbors have opposite result, Indonesia from 6.0 to 5.6 percent, Malaysia from 5.5 to 4.7 percent, Thailand from 7.2 to 2.7 percent.

 

In 2015 and 2016, the Philippines grew from 6.3 to 7.1 percent while Vietnam decelerated from 7.0 to 6.7 percent, Malaysia from 5.0 to 4.5 percent, Japan from 1.6 to 0.8 percent.

 

In 2018 and 2019, the Philippines has another flat high growth of 6.3 and 6.1 percent respectively. Many neighbors have deceleration: Malaysia has 4.8 and 4.4 percent, Singapore has 3.5 and 1.3 percent, Thailand has 4.2 and 2.1 percent. China has 6.7 and 6.0 percent, Korea has 3.2 and 2.3 percent, Japan has 0.6 and -0.4 percent.

 

And in 2021 and 2022, Philippines grew from 5.7 to 7.6 percent. Further recovery from horrible economic contraction in 2020 also contributed to this high growth, aside from being an election year. Several neighbors have opposite results: Singapore has 9.7 and 3.8 percent, China has 8.4 and 3.0 percent, Korea has 4.6 and 2.7 percent, Japan has 2.7 and 1.2 percent.

 

So there is reason to be more optimistic in 2025 than 2024. People and politicians withheld spending and saved last year, and will spend higher this year, particularly in official campaign period mid-February to early May.

 

Low base growth

 

The clearest example of this is from a contraction of -9.5 percent in 2020 to 5.7 percent growth in 2021, then 7.6 percent in 2022. Before that, a very low 1.4 percent in 2009 then 7.3 percent in 2010; also 3.9 percent in 2011 then 6.9 percent in 2012. The contraction in 2020 was the worst economic performance in Asia, and the worst in Philippine economic history since post World War 2. That is how dictatorial the Philippines lockdown in 2020 was compared to lockdown policies of many countries in the world.

 

Household consumption constitutes 73 percent of GDP. In 2024, it grew only 4.8 percent, low base and low growth, while the average growth from 2012 to 2019 prior to lockdown was 6.2 percent.

 

Investments or gross capital formation constitutes 22 percent of GDP. So household consumption plus investments constitute 95 percent of GDP. If investments will continue its average growth of nine percent in 2022 to 2024, and if household consumption will grow by at least 5.5 percent this year, these two can significantly pull up overall GDP growth to 6.0 to 6.5 percent. The growth target by the economic team in 2025 is achievable.

 

Declining unemployment and inflation

 

Last week the Philippine Statistics Authority (PSA) released the labor data for December 2024, it was another low 3.1 percent of total labor force. So the full year January-December 2024 unemployment rate was only 3.8 percent – an all-time low since the 80s or even earlier period. Another indicator of good economic stewardship by the economic team and other agencies in attracting and keeping job-creating investors and entrepreneurs.

 

Also last week the PSA released the inflation data for January 2025, only 2.9 percent. Philippine inflation declining from 5.6 percent in 2022, 6.0 percent in 2023, and 3.2 percent in 2024.

 

To summarize, these four factors will further support my contention that a 6.0 to 6.5 percent growth in 2025 is achievable: (a) low unemployment rate momentum, meaning more people have jobs and spending power; (b) deceleration of inflation in 2024 and January 2025 that will inspire more consumer confidence this year; (c) low base in household consumption in 2024; and (d) high election spending in the first two quarters this year.

 

And lastly I will add that energy prices this year will stabilize at low prices mainly because of Trump’s drill baby drill policy. Oil, LNG and coal production and exports by the US will further rise, helping depress their global prices, and translated to lower energy and electricity prices domestically.

BWorld 776, On the ERC rates reset and nuclear energy

On the ERC rates reset and nuclear energy

February 11, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/02/11/652275/on-the-erc-rates-reset-and-nuclear-energy/

 

Last week, on Feb. 3, the House Committee on Energy held a public hearing about a Meralco refund and an investigation on the absence of a rate reset in the last decade for Meralco and the National Grid Corp. of the Philippines (NGCP).

 

The main issues were previously reported here: “ERC amends resolution to keep Meralco regulatory reset on track” (BusinessWorld, Dec. 29, 2024), “Senate bill extending Meralco franchise OK’d on 2nd reading” (BusinessWorld, Jan. 29), and “Meralco to refund P19 billion to consumers” (Philippine Star, Jan. 29).

 

This column and reactions in BusinessWorld also discussed the same topic two years ago: “Low power supply and Meralco distribution cost” (April 3, 2023), “Response to Bienvenido S. Oplas, Jr.’s April 3 piece, ‘Low power supply and Meralco distribution cost’,” by Alfredo Non (April 7, 2023), “More on Meralco distribution charges and energy transition” (April 13, 2023).

 

The representatives at the House Committee hearing last week focused their questions on former Energy Regulatory Commission (ERC) Commissioner Alfredo Non, who led the ERC for seven years (July 2011 to July 2018) when the scheduled fourth reset was not made. He said, among others, that the reset computation is very complicated, and a correction was needed in the third reset.

 

So far Meralco has refunded P48 billion to the consumers and is scheduled to refund another P19 billion. Public assumption was that Meralco’s distribution rate was bloated but when I checked the numbers from 2011 to 2018, this is not the case.

 

I checked the Meralco website and disaggregated the total charges from August 2011 to July 2018. I chose this period because this is the time that Mr. Non was ERC Commissioner, and he had oversight function for Universal Charge in Missionary Electrification (UC-ME) and Feed-in Tariff Allowance (FIT-All). UC-ME is a subsidy to customers of off-grid islands and provinces while FIT-All is subsidy to renewable energy (RE) companies that provide intermittent power like solar and wind under the RE law of 2008 (RA 9513).

 

I found that the generation rate by generation companies (gencos), the NGCP’s transmission rate, Meralco’s distribution-supply-metering (DSM) rate, system loss, government taxes, and subsidies to lifeline customers were generally flat over those seven years.

 

But the UC-ME rate increased significantly, from only 10 centavos in 2011 to 44 centavos in 2018; and the FIT-All rate increased from four centavos in 2015 to 24 centavos in 2018 (see Table 1).

 

So three narratives are debunked or belied by the above numbers. The first being that electricity prices “keep rising,” since the prices in 2016-2017 were even lower than the prices in 2011-2012. Secondly, that gencos of conventional power plants like coal and gas, the NGCP, and private distribution utilities like Meralco are to blame for the refund — which is a far out idea. And third, that the ERC leadership in that period were blameless — it was they, especially Mr. Non, that allowed the big jump in the UC-ME and FIT-All.

 

RPA ENERGY LECTURE

Also last week, on Feb. 7, the 3rd Ruperto P. Alonzo (RPA) Annual Memorial Lecture was held at the UP School of Economics (UPSE) in Diliman, Quezon City. The lecture, organized by the UPSE Program in Development Economics Alumni Association (PDEAA), was titled “Energy Trilemma: An Analysis of Philippines Situation.”

 

The four speakers were House Committee on Nuclear Energy Chairperson Representative Mark Cojuangco, Department of Energy Undersecretary Rowena Guevarra, ACEN President Eric Francia, and Institute of Climate and Sustainable Cities Advisor Albert Dalusung. It was moderated well by energy lawyer Jay Layug. I will discuss in another column the discussions that afternoon. For now I want to highlight the potential role of nuclear energy in helping reduce inflation.

 

Countries with a declining share of nuclear power over total generation from 2003 to 2023 have experienced generally high or rising inflation rates, and vice versa. Significant declines in nuclear/total generation were seen in Sweden, the UK, Germany, and Japan and their inflation rates increased.

 

In contrast, Asian nations that have a generally flat share of nuclear/total generation, or have increased it over the same period have experienced low or declining inflation rates — like China, India, South Korea, and the United Arab Emirates (see Table 2).

 

 

Mr. Cojuangco is correct in consistently and passionately advocating that the Philippines resume the operation of the nuclear plant in Bataan, and the construction of large nuclear plants in Pangasinan and other provinces in the country.

 

Meanwhile PDEAA officers and organizers want to thank the following who gave donations for the alumni homecoming that followed after the RPA lecture. Donations, mostly in kind, were used for raffle prizes and giveaways: Ferdinand Constantino, Jack Teotico of Galerie Joaquin, Aboitiz Power, GSIS, Meralco, the Metrobank Foundation, and Robinsons Retail. Thank you.

Canada Day 2025

Last Thursday June 26 was Canada Day held at Fairmont Hotel, Makati. 

Below my co-participants in the "Philippines Nuclear Trade Mission to Canada" last March 2024 led by Acting Secretary of DOE Sharon Garin (6th from left). Also in the photo is CA Ambassador to PH David Hartman (next to Sec. Garin). Not present here are officials from DOST, ERC, and other local media who came with us.

The ballroom was full, many from the diplomatic community in Manila plus Philippines government officials and business leaders.

Thank you, Canada Embassy. Special mention Guy Boileau and Eleonore Rupprecht.

BWorld 775, On PhilHealth’s excess funds again, and Open Government Partnership

On PhilHealth’s excess funds again, and Open Government Partnership

February 6, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2025/02/06/651406/on-philhealths-excess-funds-again-and-open-government-partnership/

 

Last Tuesday, Feb. 4, the Counsel of Government-owned and -controlled corporations (GOCCs), Solomon M. Hermosura, went to the Supreme Court to defend the transfer by the Philippine Health Insurance Corp. (PhilHealth) of excess funds to the National Treasury — saying that it was lawful and that it does not impair the constitutional right to health, and thus petitions against it should be dismissed by the Court.

 

It is lawful, he said, because it complies with the Department of Finance (DoF) Circular 003-2024. It affirms the Filipinos’ right to health because in 2024, PhilHealth increased the all-case rates package by at least 95%, and enhanced outpatient packages for chronic conditions with greater coverage for critical and life-saving treatments.

 

Despite remitting P60 billion in excess funds last year, Mr. Hermosura pointed that PhilHealth’s operating budget for 2025 has been increased to P284 billion — P25 billion more than its 2024 budget, and P118 billion more than its 2022 budget of P166 billion.

 

Good arguments, Mr. Hermosura. And a good initiative, Finance Secretary Ralph G. Recto. I have argued before and I will argue again that between health parochialism (and education or social work parochialism, etc.) and fiscal realism, the latter should prevail.

 

Health and social welfare spending by both national and local governments jumped a great deal from 2020-2024, even if the virus scare has simmered starting February 2022 when the election campaign period started.

 

The budget deficit averaged P1.54 trillion/year in 2020-2023, from only P0.52 trillion/year in 2017-2019. Financing or borrowings averaged P2.20 trillion/year in 2020-2023, from only P0.81 trillion/year in 2017-2019.

 

But in 2024, some fiscal “mini-miracles” happened.

 

One, non-tax revenues jumped from an average of P333 billion/year in 2020 to 2023, to P555.3 billion from January-November 2024 alone. This was mainly because Mr. Recto increased the mandatory remittances of GOCCs from 50% to 75%.

 

Two, financing or borrowing decreased from P2.2 trillion/year in the last four years to only P1.24 trillion in January-November 2024. This was mainly because the DoF avoided new borrowings to finance certain expenditures by tapping the excess funds of PhilHealth and the Philippine Deposit Insurance Corp. or PDIC.

 

Again, I support the DoF and the rest of economic team, and the GOCCs Counsel for arguing the legal and fiscal rationality of transferring the excess funds of PhilHealth and PDIC to the National Government.

 

Government should cut not only borrowings but also expenditures. Many subsidies must be cut and discontinued, people should go back being self-reliant and not dependent on the state for their household needs. In exchange, the state should cut income tax and other taxes to allow the people to keep more of their money and savings for themselves and their households.

 

OGP MEETING

The Open Government Partnership (OGP) Asia and Pacific Regional Meeting Philippines 2025 kicked off this week, Feb. 3 to 7, with events mostly held at UP Bonifacio Global City (BGC) and the Grand Hyatt Manila in BGC. Among the many topics discussed were transparency in public procurement, digital governance, anti-corruption and public integrity.

 

I attended the panel on “Leveraging strategic collaborations to address corruption” yesterday, Feb. 5, at the Grand Hyatt. It was sponsored by Stratbase and Democracy Watch and the keynote speaker was Budget Secretary Amenah F. Pangandaman.

 

Corruption is a perennial issue in practically all governments around the world, from multilateral agencies to national down to local governments. I checked Transparency International’s corruption index, and limited my comparison to four ASEAN countries. I then compared their index scores with their employment data to test the hypothesis that “high corruption is equal to low job creation and high unemployment.”

 

The Philippines has been declining on the corruption perception index over the last 10 years, and its unemployment rate was also declining (except during 2020-2021 lockdown dictatorship). Indonesia exhibits the same pattern.

 

Malaysia has had wild fluctuation in the corruption index while its unemployment rate has been falling back to pre-lockdown levels. Vietnam has a weird situation: it is rising on the corruption index yet has declining unemployment (see the accompanying chart).

 

So, open government is good and should ultimately lead to more transparency and less corruption. But it will take time because the corrupt personnel and officials will always find ways to cover up their acts.

 

To effectively cut down on corruption, we should move towards cutting down the size of government, and cutting the government’s spending, bureaucracies, and subsidies. And we should cut the taxes and borrowings needed to sustain big government.

 

In December 2023, Argentina’s President Javier Milei’s first month in office, he cut the number of government ministries or departments from 19 to nine and quickly achieved a budget surplus after two months, and slowly stabilized prices. There was no civil war as predicted by the anti-deregulation lobbyists and activists.

 

US President Donald Trump and Department of Government Efficiency (DOGE) czar Elon Musk are also doing a similar quick and big cuts in federal agencies, bureaucracies, and expenditures. Milei’s pace of deregulation and his results have inspired Trump and Musk to do their own deregulation and spending cuts, borrowing cuts, and, very soon, another tax cut.

PhilStar 27, From energy regulation to deregulation, Part 2

From energy regulation to deregulation, Part 2

 

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

February 6, 2025 | 12:00am

https://www.philstar.com/business/2025/02/06/2419448/energy-regulation-deregulation-part-2

 

In 2000 or one year before the Electric Power Industry Reform Act of 2001 (EPIRA, RA 9136), the primary energy consumption (PEC, for transportation, cooking, electricity, etc.) of these four ASEAN countries in exajoules (EJ) were as follows: Indonesia 4.19, Malaysia 2.20, Philippines 1.11, Vietnam 0.77. One EJ is equivalent to 277.78 terawatt-hours of electricity.

 

In 2010 or after a decade, their respective PEC in EJ were: 6.26, 3.36, 1.23, 1.94. Vietnam overtook the Philippines in 2004. And in 2023, their respective PEC in EJ were: 10.11, 4.81, 2.19, 4.89.

 

The percentage increase from 2000 to 2023 were as follows: Indonesia 141.3 percent, Malaysia 118.5 percent, Philippines 98 percent, Vietnam 534.5 percent.

 

The main reason for this perhaps is that Indonesia, Malaysia and Vietnam subsidize their energy while the Philippines taxes its energy. The most recent energy tax hike was under the TRAIN law of 2017 (RA 10963): diesel from zero to P6/liter, gasoline from P4 to P10/liter, LPG from zero to P3/liter, coal from P10 to P150/ton.

 

Aside from energy taxation, energy regulation must have contributed also to slow expansion of PEC in the Philippines relative to its ASEAN neighbors like Indonesia, Malaysia and Vietnam.

 

The Energy Regulatory Commission (ERC) was created under Chapter IV of EPIRA law with a primary function to “promote competition, encourage market development, ensure customer choice, and penalize the abuse of market power” (Section 43).

 

There is a Congress Bill amending EPIRA particularly the ERC. In the latest House Committee Report No. 1381 submitted by the Committee on Energy and Committee on Appropriations last Jan. 25, 2025, one proposal is to have “benchmarking rates” not only for transmission and distribution but also for “procurement of necessary power supply for distribution utilities (DUs) and ancillary services (AS)”, meaning power supply agreements (PSAs) between generation companies (gencos) and DUs, AS.

 

The ERC itself has been conducting consultation and group discussion about this plus other amendments in EPIRA. This “benchmarking” for power generation is wrong and unnecessary, here are five reasons why.

 

One, generation sector under EPIRA is deregulated and competitive, no monopoly or oligopoly in any region or any technology or source of electricity. Those who over-price will risk not getting any supply contract, those who cartelize can be blindsided by new players and merchant power plants.

 

Two, competitive selection process (CSP) supervised by the ERC itself is sufficient to ensure price competitiveness. There is no provision in EPIRA stating that the costs of generators shall be regulated by the ERC, no provision that generators must disclose their costs to the ERC.

 

Three, the retail competition and open access (RCOA) provision of EPIRA makes the end-consumers as ultimate regulator -- in pricing, electricity source and other criteria. ERC itself can become relevant only when there is breach of contract between the gencos and end-consumers.

 

Four, “one price fits all” via benchmarking in generation is price control and hence, price dictatorship. Price differentiation under consumer segmentation allows for best and competitive pricing for different consumers. Even in the same bus company plying same route say Cubao to Baguio, there is no single monthly pay for all drivers, the more experienced drivers are paid higher than less experienced ones.

 

Five, the main factor that affect electricity pricing is how large the supply is relative to the demand, which determines the level of supply margin and reserves. Energy regulation should be kept to the minimum so that more players, more investors will come in to expand power supply and hence, increase power reserves that can bring down electricity prices both short- and long-term.

 

Again, the most expensive electricity is no electricity, a blackout. The rich will turn to gensets running on diesel, more costly and more polluting while the poor will turn to candles which can cause fires and damage to lives and properties.

 

Energy deregulation to further expand energy investment and supply can be the elephant in the room in terms of ensuring price competitiveness. Regulation should focus on enforcement of contracts between power suppliers and consumers, penalize the wrong-doers, discipline the market towards more competition and not deception.

 

RPA Lecture on Energy Trilemma

 

Tomorrow Feb. 7 at 3 p.m., the 3rd Ruperto P. Alonzo (RPA) Annual Memorial Lecture will be held at the Elizabeth Yu Gokongwei room of UP School of Economics (UPSE), Diliman, Quezon City. The speakers will be House committee on nuclear energy chairperson Rep. Mark Cojuangco, DOE UnderSecretary Rowena Guevarra, ACEN president Eric Francia and Institute of Climate advisor Albert Dalusung. The lecture is free and open to the public, no need to pre-register.

 

After the RPA lecture, the UPSE Program in Development Economics (PDE) alumni homecoming will follow at the same venue.  Prof. RPA (+) was a highly respected faculty member of UPSE and PDE was his beloved program. Hence, the annual lecture was named after him. Before he passed away, he did a number of energy economics research, he was focused on energy security, stability and price competitiveness. Hence, he was agnostic about where the energy source will come from so long as the power sector can support and sustain the country’s high growth agenda.