Stratbase-ADRi's Pilipinas Conference 2016

Last December 08, 2016, Stratbase-Albert del Rosario Institute (ADRi) held a big "Pilipinas Conference 2016" at The Conservatory, Manila Peninsula Hotel in Makati. I was invited, I came, good event. 

Panel 1 on Federalism debate. Stratbase-ADRi President Dindo Manhit and Former DFA Secretary Albert Del Rosario (3rd and 4th) joined the panel in the group photo: Left to right, Atty. Anthony Abad (Moderator), Dr. Ronald Mendoza (Dean, Ateneo School of Government), Dr. Paul Hutchcroft (Professor of Political and Social Change, Coral Bell School of Asia Pacific Affairs, Australian National University), and Dr., Julio Teehankee (Dean, College of Liberal Arts- De La Salle University Manila).

Panel 2 about the South China Sea territorial disputes. Speakers from top left, clockwise: Dr. Amy Searight, Southeast Asia Program Director of Center for Strategic and International Studies; DND Sec. Delfin Lorenzana; Aaron Connelly , a Research Fellow for East Asia Program at the Lowy Institute for International Policy; and Ambassador Shingo Yamagami, Acting Director General of the Japan Institute for International Affairs. 

 

Panel 3 on "Promotion of Foreign Investments anf Enhancements of SMEs: Sharing Strategies and Opportunities". Left to right: Elizabeth Lee (Moderator), Vivencio Dizon (President & CEO of Bases Conversion Development Authority), Dr. Astrid Tuminez (Regional Director, Southeast Asia Legal and Corporatwe Affairs, Microsoft), George Barcelon (President, Philippine Chamber of Commerce and Industry), Hans Sicat (Philippine Stock Exchange), and Laurence Cua (Country Manager, Uber).

I liked the presentation of Astrid, especially the 3 waves of innovation. I didn't know that the 2nd wave ended in 2015, so this year and the coming years are the 3rd wave. Knowledge-intensive, artificial intelligence, robots, more modern gadgets. 

Panel 4 on "The Philippine Footprint in Southeast Asia and Beyond", left to right: Joey Concepcion (Chairman & CEO, RFM Corporatoin Go Negosyo), Atty. Michael Toledo (Moderator), Enrique Razon Jr. (Chairman & CEO, International Container Terminal Services, Inc.), and Jaime Augusto Zobel de Ayala (Chairman, Ayala Corporation).

I like the frankness of Ricky Razon, he's straight-talking. Like the Constitution should be amended every 5 years or 3 to be more flexible with the times, need to remove economic nationalism and allow more foreign investments here, etc.

Closing remarks was given by Vice President Leni Robredo. Photo with former DFA Secretary Albert Del Rosario and Stratbase ADR Institute President Dindo Manhit.

Cocktails after. I enjoyed the food, drinks, networking. Here with some UPSE guys, left to right: Jeffrey Ng (Cathay Land), Dr. Epictetus Patalinghug, Dr. Vic Paqueo, me. Dr. Patalinghug was my teachers in Econ 171 (Agri Econ) in UPSE in the 80s, Doc Vic my teached in Econ 181 (Labor Econ). Jeffrey and VP Leni were classmates and batchmates at UPSE batch 1986.

The Stratbase-ADRi team and staff.

Thanks for the great event, Dindo and team. I enjoyed it.

BWorld 16, Growth, capitalism and inequality

* This is my article yesterday in BusinessWorld Weekender.
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Growth, capitalism and inequality

“Improving the position of the poorest by giving them what we took from the wealthy, would temporarily quicken the closing-up of the ranks, it would, before long, slow down the movement of the whole and in the long-run hold back those in the rear. All obstacles to the rise of some are, in the long run, obstacles to the rise of all… To prevent progress at the top would soon prevent it all the way down.”

-- Friedrich Hayek, The Constitution of Liberty (1960), Chap. 3, “The Common Sense of Progress”

Many people have mixed feelings and attitude towards economic freedom and inequality. They want to be freed from too many regulations, prohibitions and  taxes that tend to stifle individual creativity and entrepreneurship, yet they also want more regulations to  control inequality that result from more individual freedom.

A forum on “Poverty, Inequality and Inclusive Growth” was held last August 12, 2015 by the Albert Del Rosario (ADR) Institute at the Tower Club in Makati. It was convened by Dr. Epictetus Patalinghug, a Professor at the UP College of Business Administration. He also gave a lecture and discussed five topics, (1) macroeconomic policy and poverty alleviation, (2) poverty-growth linkage, (3) inequality in the past and present, (4) employment impact of growth, and (5) how growth can be more inclusive.

The three reactors were Dr. Vic Paqueo of the Philippine Institute for Development Studies (PIDS), Mr. Ferdie Diaz of the Employers Confederation of the Philippines (ECOP) Co-Chair on TWG on Labor and Social Policy Issues, and yours truly as head of Minimal Government Thinkers.

I argued the “politically incorrect” position that inequality is necessary and overall, is good for human progress. Consider for instance how previously heavily-repressed people in the ASEAN – Cambodia, Laos, Myanmar, Vietnam (CLMVV) – have managed to improve their average per capita income over the past two decades. They experienced a doubling (2x) of per capita GDP in just one decade, from 2004-2014.

As other people’s income expand very fast, their income gap with their poorer countrymen also expands.

Is rising inequality a bigger problem than rising income for people in Asia? From a global survey conducted by PEW Research Center in the US in April to May 2014, the answer is No.

The PEW survey was based on telephone and face-to-face interviews conducted under the direction of Princeton Survey Research Associates International. The average sample size per country was 1,000 adults, 18 years old  and above.

One question was, "Are people better off in a free-market economy given the wide disparities in wealth that might result?" Agree or Disagree (See Table 2).

Respondents in socialist Vietnam and China have high support for free market capitalism despite the rise in inequality, than people who are against it. High support also of people in Malaysia and the Philippines.

Overall result covering 44 countries, majority of the people around the world were willing to accept inequality to have a free market system. About two-third (2/3) of the survey respondents said they are better off under capitalism despite the inequality.

Another interesting question in the PEW survey was, “What would do more to reduce the gap between the rich and the poor in our country?”

http://www.pewglobal.org/2014/10/09/emerging-and-developing-economies-much-more-optimistic-than-rich-countries-about-the-future/#free-market-seen-as-best-despite-inequality

Majority of respondents in Asia, especially in Vietnam, Philippines and Thailand, favored low taxes, not high taxes, to reduce inequality. Meaning they are driven less by envy (“tax the rich more”) but by a desire to become rich and middle class themselves, and they do not want high taxes to negate whatever expansion in income that they will attain in the future. Low taxes on corporations also encourage more investments, more jobs for the poor, and economic growth.

Perhaps the best indicator that the world, the people in the planet today are better off compared to their ancestors despite rising wealth inequality, is the rising life expectancy. Even the super-rich more than a century would be lucky if they live up to 60 years old as average life expectancy in the world at the start of the 19^th century was only 48 years old. Now, even the poor can expect to live up to 80+, 90+ years.

In the Philippines, the average life expectancy in 2010 was 69 years (67 for males, 71 for females). By now, it should be almost 70 years.

Infant mortality is declining too, even children from poor families are dying less than before.

To summarize the points in this paper,

1. Equal people are not free and free people are not equal.  Income and wealth inequality per se is not the problem, high poverty is. To force equality among the people, massive political repression will happen.

2. The United Nations, the various multilaterals and foreign aid, various national governments are stirring the politics of envy in their continuous call to fight inequality and forcing equality. A government that’s big enough to give everything you want is also big enough to take everything you have.

3. Inequality due to individual freedom will lead to innovation and substantial poverty alleviation. In the words of Friedrich Hayek again in his book, The Constitution of Liberty,

“The rapid economic advance that we have come to expect seems in a large measure to be the result of this inequality and to be impossible without it. Progress at such a fast rate cannot proceed on a uniform front but must take place in echelon fashion, with some far ahead of the rest…. The over-all speed of advance will be increased by those who move fastest. Even if many fall behind at first, the cumulative effect of the preparation of the path will, before long, sufficiently facilitate their advance that they will be able to keep their place in the march.”

4.  Income taxes, personal and corporate, should go down drastically. Efficiency and hard work is not a crime to be penalized by high taxes. And if government should create new welfare programs, it should abolish or shrink old programs that do not work.

Bienvenido S. Oplas, Jr. heads a free-market think tank, Minimal Government Thinkers, Inc., and is a fellow of the South East Asia Network for Development (SEANET). 

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See also: 

BWorld 12, Investments, APEC and economic liberalization, July 25, 2015 

BWorld 13, SONA's liberalism, five years after, July 28, 2015 

BWorld 14, OFWs, MERS-CoV and the DFA, August 08, 2015 

BWorld 15, The PH electricity market, August 15, 2015 

Inequality 25: On High CEOs Pay and Legislated Minimum Wages, April 30, 2015 

Inequality 26, Pew survey result on support for free market, July 27, 2015 

Inequality 27, ADR Institute forum on poverty and growth, August 18, 2015

Inequality 27, ADR Institute forum on poverty and growth

Last Wednesday, July 12, the Albert Del Rosario (ADR) Institute held a forum on "Poverty, inequality and  inclusive growth" in Makati. I was one of three reactors to the discussion and presentation by Dr. Epictetus "Lingling" Patalinghug of the UP College of Law. The other two  were Dr. Vic Paqueo of PIDS and Mr. Ferdie Diaz of ECOP.

F.Hayek, among other thinkers who have written about the subject, provided the philosophical basis about the necessity of inequality and why things can be done more efficiently if there is diversity and spontaneity, not forced equality, among people.

A well-attended event despite the heavy rains and flooding, and traffic, in the morning.

I borrowed this chart from Dr. Balisacan of NEDA, also my former teacher at UPSE.

An illustration that it's not inequality per se, but the degree of poverty in society, that is the more important problem that people and governments should address.

Perhaps the best proof that people today are a lot better off compared to our forefathers, 2 or more decades ago, is this chart -- death from  infectious diseases has  significantly declined, while morbidity and death from non-infectious, non-communicable diseases, has declined.

Among the participants that day.

(L-R): HOR CPBD Director Manuel Aquino; ADB Senior Health Specialist Dr. Eduardo Banzon; PIDS Senior Research Fellow Dr. Celia M. Reyes; Former NEDA Director General  Romy Neri; PIDS and FEF Fellow Dr. Vic Paqueo; ADRi Trustee and UP Diliman Cesar E.A. Virata School of Business Prof. Emeritus Dr. Lingling Patalinghug; ADRi President Prof. Dindo Manhit; First Director General of NEDA Dr. Gerardo Sicat; RCBC Board Director Mr. Cesar Virata; me, and ECOP Co-Chair Ferdie Diaz.

Thanks again to Prof. Dindo Manhit for the invite to that nice forum. Thanks also to Mikee Maralit of the Institute for the photos.

My 13-slides presentation is posted here.

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See also: 

Globalization, Mobility and Inequality, February 18, 2014 

Business 360 18: Innovation, Inequality and Inclusive Growth, August 25, 2014 

EFN Asia 45: Growth, Inequality and the Philippines, November 15, 2014

Inequality 23: On Poverty, Agriculture and Motorcycles, March 10, 2015 

Inequality 24: Inheritance, Poverty and Envy, April 17, 2015
Inequality 25: On High CEOs Pay and Legislated Minimum Wages, April 30, 2015 

Inequality 26, Pew survey result on support for free market, July 27, 2015

BWorld 12, Investments, APEC and economic liberalization

* This is my article yesterday in BWorld Weekender.

MANILA WILL HOST the annual Asia-Pacific Economic Cooperation (APEC) Summit this coming November 18-19, 2015, or less than four months from now. Presidents and Prime Ministers of the 21 member-countries including the three largest economies in the world, US, China and Japan, will be coming to Manila for two days to discuss and sign certain agreements related to trade, investments and related concerns.

The Philippines’ trade and investments in the face of ASEAN integration just five months from now was also discussed last July 15 at the Tower Club in Makati City, sponsored by the Albert Del Rosario (ADR) Institute.

The convenor and main speaker was Dr. Epictetus Patalinghug (UP College of Business Administration, and a Trustee of ADR Institute). Discussants were Dr. Gilbert Llanto (President of the Philippine Institute for Development Studies/PIDS), Dr. Ramon Clarete (UP School of Economics/UPSE Prof. and former Dean), Mr. Donald Dee (Honorary Chairman, Philippine Chamber of Commerce and Industry/PCCI), and Atty. Wilfredo Villanueva (Head of Tax and General Counsel, SGV & Co.).

In his presentation, “The Role of Exports and Foreign Direct Investments in Industrial Development,” Dr. Patalinghug said that the five striking resemblance among highly successful economies were: (a) Openness to the global economy, (b) Macroeconomic stability, (c) High saving and investment, (d) Market allocation, and (e) Leadership and governance.

He also showed this summary of Philippine economic history. (See Table 1)

That is an objective and correct assessment. And it is not unique to the Philippines or its neighbors in the ASEAN, but rather the general trend for the rest of the world. If we check the economic integration and liberalization of the four newcomers to the ASEAN, namely Cambodia, Myanmar, Laos and Vietnam (CMLV), their pace of liberalization in trade and investments on average was much faster than the Philippines.

Let us focus on investments; in particular, foreign direct investments (FDIs). The UN Conference on Trade and Development (UNCTAD) released the World Investment Report (WIR) 2015 last month and that paper shows many interesting data. (See Table 2)

There was significant expansion in FDI inward stock (ie, net of FDI outflows) in many APEC member-economies. In particular, the expansion from 1994 to 2014 (two decades) were as follows:

* Americas: Peru 18x, Mexico and Chile 10x, US 7x, Canada 6x.

* North Asia: China 15x, S. Korea 12x, Japan 9x, HK 7x, Taiwan 5x.

* Southeast Asia: Vietnam 23x, Singapore 17x, Indonesia 16x, Thailand 13x, Philippines 11x, Malaysia 6x.

Australia, New Zealand and PNG did not experience significant FDI expansion.

Russia and Brunei are the “outliers” with 114x and 103x expansion, respectively, mainly because they have very low base in 1994. Russia has emerged from partial disintegration where a number of central Asian economies (Georgia, Kazakhstan, Tajikistan,…) separated from the former USSR. APEC was formed in 1989 but Russia, along with Vietnam and Peru, joined it only in 1998.

In terms of FDI stock/GDP ratio, three economies that have undertaken unilateral trade liberalization (meaning no or little trade negotiations) stand out: Hong Kong, Singapore and Chile, with ratio of 535%, 296% and 80%, respectively.

Some important lessons from the above numbers and discussion:

One, openness to trade almost always results in high attractiveness to foreign investments and all the opportunities they bring -- technological, financial, managerial, and market access. Clear examples are HK, Singapore and Chile. Also the socialist economies China and Vietnam that allowed certain degrees of economic freedom and the market system.

Two, global capitalism is about integration and competition, complementation and substitution, happening simultaneously. Business risks will always be there. Companies and people need to keep their radar for adaptation and familiarization of those risks, while keeping the pace of innovation at regular or higher levels.

Three, for the Philippines, its FDI stock/GDP ratio of 20% is the lowest among its neighbors in SE Asia, but this is not something to look down or commiserate. Some richer economies have rates lower than 20% like Taiwan, Japan, S. Korea and China. Nonetheless, this should be one reminder that the country needs to amend its Constitution to remove protectionist provisions that restrict or prohibit foreign investments in many sectors of the Philippine economy.

Four, more than low taxes and/or high profit, foreign businessmen are concerned more with the security of their investments, that threats of confiscation and political harassment are zero or kept to the minimum. Respect of private property, rule of law, and economic freedom by the people, producers and consumers alike, domestic and foreign entrepreneurs alike, are important factors to attract, retain and expand investments in the economy.

Bienvenido S. Oplas, Jr. heads the free market think tank, Minimal Government Thinkers, Inc., and also a fellow of the South East Asia Network for Development (SEANET), a regional center that advocates trade and investments liberalization.

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See also: 

BWorld 8, Manila's Traffic and Transport Woes, June 27, 215 

BWorld 9, Poitical populism vs. tax realism, July 05, 2015 

BWorld 10, Greece crisis, pension and rule of law, July 11, 2015 

BWorld 11, China's stockmarket and central planning, July 18, 2015

ADR Institute, Part 2

The newly-launched think tank, Albert Del Rosario Institute for Strategic and International Studies (ADR Institute), held last Friday, November 21, 2014. The Board members, from left:

1. Benjamin Philip Romualdez, President of the Chamber of Mines of the Philippines (COMP), 
2. Victor Andres "Dindo" Manhit, Founder and Managing Director, Stratbase, also Professor of Political Science, DLSU,
3. Manny V. Pangilinan, head of Metro Pacific Investments, Smart/PLDT, Meralco, TV5, etc., 
4. Edgardo Lacson, honorary Chair of the Philippine Chamber of Commerce and Industry (PCCI) and President of the Employers’ Confederation of the Philippines (ECOP), 
5. Albert del Rosario, DFA Secretary,
6. Raul Pangalangan, former dean of the UP College of Law and publisher of the Phil. Daily Inquirer, 
7. Rene de Castro of DLSU International Studies Department, 
8. Epictetus Patalinghug of the UP College of Business Administration, 
9. Primo “CP” David of UP Diliman Geology and Environmental Science, 
10. Francisco Magno of DLSU Political Science Department, Director of the Jesse Robredo Institute of Governance, DLSU. and
11. (Not in  the photo) Ernest “Ernie” Bower, senior adviser and Sumitro chair for Southeast Asia Studies at the Washington-based Center for Strategic and International Studies (CSIS).

Good mixture of personalities. Is this a think tank of big business? Somehow Yes, with MVP there, heads of ECOP and COMP. Is this a think tank of academics? Somehow Yes, with known academics from UP Diliman (NIGS, CBA) and DLSU. Is this a think tank of civil society? Somehow Yes, with PDI Publisher, Robredo Institute, FEF guys there. Again, good mixture of people with different professional backgrounds.

I think the think tank's main clients will  be foreign  governments (through their embassies in Manila), big firms at the Philippine Stock Exchange, PCCI, etc. I saw many diplomats and some ambassadors that night, including US Ambassador Philip Goldberg, cool guy.

Some photos that night where I was an "extra". Below from left: Dr. Vic Paqueo of UPSE, PIDS, former WB/ILO consultant; Dr. Lingling Patalinghug, and Cong. Kit Belmonte. Vic was my former teacher in Econ. 181 (Labor Econ) while Ninong Lingling (yes, he's among my wedding godfathers) was my former teacher in Econ. 171 (Agri Econ) at UPSE sometime in 1983 or 84. Kit was a rich kid, mestizo, but very militant activist in UP then.

From left: Dindo Manhit, Kit Belmonte, Vic Paqueo, Raul Pangalangan, Totol Batuhan, Lingling Patalinghug, Digitel President Doy Vea, me.

From left: Edgardo Lacson (PSE, PCCI, ECOP), Ronnie Recidoro of COMP, me and Dindo. The three of us were discussing about mining and mineral potential, lots of jobs, money and government taxes, of the country, then I dragged Dindo for the photo.

Stratbase's young and dynamic staff, from left: Claudette Guevarra, Krystyna Dy, Bianca Soriano, Mikee Maralit, Lloyd Zaragoza. Me and Kiko Magno were extras here. Mikee is the one who directly invites me in some Stratbase/CitizenWatch events, she is a former student of my wife at DLSU.

Minimal Government Thinkers simply networks with other think tanks, research institutes, and other civil society organizations, like Stratbase and ADR Institute. For us, minimal government = maximum civil society. Things that can be done by individuals and their voluntary organizations need not be assigned to government, local, national or international/multilateral. Because government = coercion. So a minimal or limited government means minimum of coercion in society.

Thanks again for the invite, Dindo and Stratbase. Hope to see you in another round of discussions.
All photos above from Stratbase fb wall.
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See also:
Stratbase Forum on ASEAN Competitiveness, July 25, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014
Citizen Watch 2: On Power and Jobs, August 30, 2014
New Think Tank, Albert Del Rosario Institute for Strategic and International Studies, November 24, 2014

New Think Tank, Albert Del Rosario Institute for Strategic and International Studies

Last Friday, I was one of the invitees of Stratbase Consultancy Group in relaunching the Stratbase Research Institute (SRI) into the Albert Del Rosario Institute for Strategic and International Studies (ADR-ISIS). It was also the 10th anniversary of Stratbase. A number of academic and corporate VIPs there, and only two legislators. Good crowd, it was held at the Manila Polo Club in Makati.

Seated below are among the Board Members of the new think tank. From left: Dr. Epictetus Patalinghug of the UP College of Business Administration, Manny V. Pangilinan, head of Metro Pacific Investments, Smart/PLDT, Meralco, TV5, etc; Dr. Rene de Castro of DLSU International Studies Department, Dr. Francisco Magno of DLSU Political Science Department.

The other board members are Dr. Primo “CP” David of UP Diliman Geology and Environmental Science, Atfy Raul Pangalangan, former dean of the UP College of Law and publisher of the Philippine Daily Inquirer, Benjamin Philip Romualdez, President of the Chamber of Mines of the Philippines (COMP), Edgardo Lacson, honorary Chair of the Philippine Chamber of Commerce and Industry (PCCI) and President of the Employers’ Confederation of the Philippines (ECOP), and Ernest “Ernie” Bower, senior adviser and Sumitro chair for Southeast Asia Studies at the Washington-based Center for Strategic and International Studies (CSIS).

Photo below seated, DFA Sec. Albert del Rosario (ADR), four Ambassadors from different countries, and Mr. Romualdez of COMP.

Sec. ADR giving a speech about the new think tank named after him. He was introduced by the founder and Managing Director of Stratbase, Prof. Dindo Manhit, after Dindo gave an overview of Stratbase's 10 years of accomplishments.

A story from Business Mirror a day before the event. Similar story was reported by Manila Bulletin, The Tribune, Manila Standard and the Inquirer.

I met a number of old friends and new acquitaintances there. This photo from left: me, Gary Olivar who is a fellow UPSE alumni, also the Spokesperson of former President Gloria M. Arroyo, Sen. Sonny Angara, Arnel Casanova, President and CEO of the Bases Conversion Development Authority (BCDA), and Felix Ang, President of Cats Motors.

Again with Sen. Angara, Ramon Casiple, President of the Institute for  Political  and Electoral Reforms (IPER), Carol Manhit (Dindo's wife) and _______.

Among the various UP Diliman guys and alumni that night. With fellow UPSE alumni Jeffrey Ng, President of Cathay Metal Corp. and Cathay Land, Raul Pangalanan of UP Law, and Cong. Kit Belmonte of Quezon City. Kit was a former famous UP student leader, coming from a very rich family yet a very activist, "mestisong tibak".

With Prof. Kiko Magno, a DLSU Spanish visiting Prof., DFA Assistant Sec. for Legal Affairs Eddie Vega. Kiko, Ed and me are also fellow alumni of the UP Sapul, Polititical Science Club.

Ok, ADR-ISIS is not a free market think tank advocating limited government, unlike our partner think tanks within the  Economic Freedom Network (EFN) Asia, but I think the ADR think tank guys are open to hearing free market perspectives.  For instance, I was a participant in two small group round table discussions held by CitizenWatch Philippines/Stratbase this year. And two of my papers, one on ASEAN free trade and the other on the Philippines power/energy and rice trade sectors, were published by SRI. Thanks to Dindo.

I hope this informal partnership will continue in the coming years.
Photos above from PBEST, Mikee and my cameraphone.
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See also:
Stratbase Forum on ASEAN Competitiveness, July 25, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014
Citizen Watch 2: On Power and Jobs, August 30, 2014