Free Trade 56, Trade, investments and taxes in APEC countries

The Albert Del Rosario Institute (ADRi) has published my new paper, in time for the Asia Pacific Economic Cooperation (APEC) Summit this coming November 18-19 here in Manila. My special thanks to ADRi President, Prof. Dindo Manhit.

I put a number of tables in that paper, data sources from the World Bank, UN Conference on Trade and Development (UNCTAD), World Trade Organization (WTO), Alas Oplas & Co. CPAs (AOC), Bangko Sentral ng Pilipinas (BSP) and the Philippine Statistics Authority (PSA).

Foreign direct investments (FDI) inward stock is a good indicator of how much FDIs have accumulated in a country net of outflows through time.

FDI net inflows is a better indicator than plain inflows because a country may get huge amount of FDI inflows but also suffering from huge outflows so that the net inflow is actually negative. Like the US, Russia, Hong Kong, Taiwan, Japan, S. Korea and Malaysia, at least for the the years 2012-2014.

 APEC countries are marked red here.

Trade bureaucracies as a form of non-tariff barrier (NTB).

My Concluding notes

1. To have more trade and investments, governments should learn to step back from too many regulations and taxation. 

2. Corporate income and other taxes in the Philippines in particular should decline in the face of rising tax competition among ASEAN countries. 

3. Non-tariff barriers (NTBs) like import licensing and SPS measures should be relaxed and reduced. 

4. Global capitalism is about integration and competition, complementation and substitution, happening simultaneously. 

5. Markets in a competitive environment always result in innovation and business creativity. 

6. Governments should focus on their core and basic function – lay down fair rules for all players, be an impartial judge or referee in cases of disputes, protect private property ownership, enforce the rule of law, contracts between and among people.

The 12-pages paper is also posted in slideshare.

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See also:

Free Trade 52, More on the Gravity model, September 08, 2015

Free Trade 53, TPP "final push" this September + paper by Dr. Clarete, September 19, 2015 

Free Trade 54, Eco-protectionism at APEC 2015 meeting, September 28, 2015 

Free Trade 55, TPP Agreement, finally, October 06, 2015
Business 360 8: TPP, RCEP, SAARC and Free Trade, June 17, 2013 

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

Transport Econ 16, Stratbase ADR Institute forum on Manila Transport Infra Solutions

Solving, or worsening, the traffic congestion in Metro Manila and neighboring cities and provinces is a subject that seems to have created hundreds of thousands, perhaps millions, of "experts" on the subject. Almost everyone has a great plan and solution/s how to address the problem, some of which are useful, some may be not.

Listening to real experts and people in the sector therefore, in a live, non-stop exchange of ideas, is a big treat. I myself have my own views and proposals how to address the problem but given the field of invited participants and speakers yesterday, I opted to just listen.

I am referring to the Stratbase Albert Del Rosario Institute (ADRi) Round Table Discussion (RTD) yesterday on “Greater Manila Transport Infrastructure Solutions: Thinking Beyond EDSA" at the Tower Club, Philamlife Tower, Makati City.

Opening remarks was given by ADRi President, Prof. Dindo Manhit, holding the microphone. In this photo from left: Eduardo Yap (Management Association of the PH, MAP), Atty. Tim Abejo (CitizenWatch.ph), Dindo, Dr. Epictetus Patalinghug (UP College of Business Administration), and Yuya Takagi (Japan International Cooperation Agency, JICA). 

Dindo mentioned about their paper that described not "Daang Matuwid" (straight road) but "Daang Masikip" (narrow road) because of the various "carmageddon" that happened this year alone. Hence, the forum's theme of "thinking beyond Edsa."

Mr. Yap, holding the microphone, gave a short but great presentation, of MAP's analysis and proposals that were also given to government Cabinet officials in charge of Metro Manila and the nation's infra. He talked for instance about building a subway from north to south of Metro Manila, as the technologies like huge tunnel borers are available; or if building above-ground rails and skyways, pre-fab structures are available.

Rene Santiago of the Foundation for Economic Freedom (FEF) gave a long discussion after Mr. Yap's presentation. The exchanges started with Manila's public transpo including buses, trains (LRT, MRT, PNR), the road infrastructures needed to respond to rising volume of vehicles. Then shifted to Manila ports decongestion, optimizing the ports of Batangas and Subic, moving the containers by rail, moving and decentralizing the Bureau of Customs' inspection procedures.

From left: Voltaire Wycoco of ICTSI, Atty. Michael Sagcal, Spokesperson of the Department of Transportation and Communications (DOTC), Ferdinand Inacay, President and Chief Executive Officer of MRail, Inc., and Mohamed Ghandar, Director, Asia Region and General Manager of ICTSI.

After the forum. From left:
Wilford Wong (Citizenwatch.ph); Rupert Paul Manhit (Stratbase);
Yuya Takagi (JICA); Voltaire Wycoco (ICTSI);
Patrick San Juan and Floro Advient (JICA);
Prof. Epictetus Patalinghug (Cesar Virata School of Business- UP);
Atty. Michael Sagcal (DOTC); Bienvenido Oplas (Minimal Govt. Thinkers);
Ferdinand Inacay (MRail, Inc.); Prof. Dindo Manhit (ADRi);
Mohamed Ghandar (ICTSI); Cynthia Hernandez (KPMG);
Chito Francisco (LRMC); Rene Santiago (FEF);
Atty. Tim Abejo (Citizenwatch.ph); Atty. Franco Sarmiento (HOR);
Eduardo Yap (MAP); Atty. Ed Relucio (HOR); Atty. Lysander Castillo (PBEST).

Not in the group photo but administered the RTD were ADRi Deputy Executive Director Angelica Mangahas (left) who introduced the guests and moderated the discussion, and ADRi Executive Director Atty. Kaye Clemente (right), who summarized the discussion and gave the closing remarks.

Ok, I did not talk yesterday, I simply listened. Now I will talk in this space :-)
To help address, help reduce, the daily traffic congestion in M.Manila -- have less government intervention.

Traffic congestion is an engineering problem with engineering solutions; it is a result of some market failures with market solutions. Like those unsolicited proposals to build more LRT/MRTs since 20 or 30 years ago under build-operate-transfer (BOT) and hence, no cost to the government except securing the road right of way (ROW) and enforcing property rights. Like those air-con vans that bring office personnel from their houses/villages straight to Makati, Ortigas, BGC, Eastwood, Manila, airport, and so on, with just "one ride."

When government says "NO, no one moves, no one builds anything, unless you get our signatures and permits first", then a one-week paralysis can become 5, 10, 20 years paralysis.

All photos above I got from Stratbase ADRi fb album. Thanks Krystyna, Mikee, Kaye.
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See also: 
Transport Econ 12: Bus Rapid Transit (BRT) and Tricycles, April 21, 2014 
Transport Econ 13: On Prohibiting S. Luzon Provincial Buses to Enter M.Manila, August 30, 2014 
Transport Econ 14: On the MRT and LRT Fare Hike, January 06, 2015 
Transport Econ 15, On having 2 cars or more, July 20, 2015

BWorld 5, Transportation Bureaucracy and Uber, June 16, 2015  

BWorld 8, Manila's Traffic and Transport Woes, June 27, 2015
New Think Tank, Albert Del Rosario Institute for Strategic and International Studies, November 24, 2014

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

Citizen Watch 3: Political and Economic Reforms After SONA 2014

Yesterday, I participated in Round 3 of Citizen Watch's Roundtable Discussion, on political and economic reforms after the 5th State of the Nation Address (SONA) of President Aquino last August. The forum was held at UP NCPAG, Diliman campus. Jointly organized by Stratbase Research Institute (SRI), and the Office of the VP for Public Affairs, UP Diliman.

The Participants were:

1. Prospero "Popoy" De Vera, the UP Vice-President for Public Affairs.

2. Ramon Casiple, Executive Director of the Institute For Political And Electoral Reform (IPER)

3. Atty. Randy Bello, Vice President For Internals of Tax Management Assn. of the Philippines (TMAP)

4. Vincent Lazatin, Executive Director of Transparency And Accountability Network (TAN)

5. Atty. Tim Abejo, Convenor of Democracy Watch

6. Atty. Ysan Castillo, Secretary General of Philippine Business for Environmental Stewardship (PBEST),

7, Francis Isaac, representative of DLSU - DLSU-Jesse M. Robredo Institute of Governance

8. Dindo Manhit, President of Stratbase Research Institute (SRI)

9. Nonoy Oplas, President of the Minimal Government Thinkers, Inc.

Wilford Wong, Secretary General of Citizen Watch, was the moderator.

In this photo, from left: Ysan, Tim, Randy, me, Francis.

On my part, I focused my discussion on the last three subjects of PNoy's SONA -- impending power shortage next year, high rice prices, and govermment budget.

On power shortage, I said that the threat of brown outs in the Luzon grid in the hot months next year is real. But there are short- and medium-term solutions. S-T solutions include (a) more peak-load plants, diesel barges, but there will be electricity rate hike as diesel is expensive compared to coal, natural gas, geothermal, hydro;

(b) reduce power demand by asking some big consumers like industrial zones, big mining firms, to have their own gen sets on peak hours of hot months.

M-T solutions include (a) reduce bureaucracies and permits required in building and commissioning new power plants, and

(b) reduce taxes and royalties on power; Malampaya royalty is an energy tax that contributes to our expensive electricity; up to P1.45/kWh.

In this photo, from left: Mon, Vince, Popoy, Dindo.

On high rise prices, I argued that the PH should embrace free trade and junk protectionism in rice trading. Vietnam and Thailand simply have huge, contiguous, well-irrigated rice land, up to 9 and 10 M hectares vs PH's only 4.7 M hectares of rice land. Rice in our two neighbors are simply cheap because of their huge production. Why should government insist on expensive rice via trade protectionism and NFA monopoly on rice trading?

Besides, NFA is a huge debt generator; currently around P155 B debt; it cannot and will not pay this debt, so very soon, we taxpayers will pay more to pay back this huge NFA debt, on top of already huge public debt of the national govt.

On fiscal irresponsibility, I argued that government should aim for budget balance, or even budget surplus, on years that there are no major crisis like severe damage by strong typhoons. When in crisis, borrow; when things are normal, pay old or new debt. Persistent borrowings means the government, its officials and bureaucracies, are simply living beyond their means. Lots of wastes and inefficiencies in government.

The Executive branch is generally wasteful; their wastes are tolerated by the Legislative branch, in exchange for their own wastes plus pork barrel. The public and media only lambast pork barrel.

From left to right: Ysan, Tim, me, Randy, Mon, Wilford, SRI staff, Francis.

The exchanges among participants were lively. There was a longer discussion on the budget and on power/energy problems. I briefly debated Mon Casiple and Tim on WESM, ERC's price cap, power situation last December, etc. Civil debate of course, focus on the issue. If there was a projector, I could have shown some charts and tables about WESM and various power plants.

The two sponsors of the discussion, right. Popoy/UP also gave each participant a bag of recent community papers and publications produced by UP. Modest but nice snacks and lunch were also served, yummy.

All photos from Citizen Watch Philippines' facebook page, except the 3rd photo, from my camera phone.

I made a paper for this forum with 10 tables and 3 charts on those 3 subjects that I mentioned above. SRI will publish it soon.
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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

Citizen Watch 2: On Power and Jobs

* Reposting this from Business Mirror.

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Group urges P-Noy to focus more on power generation andjob creation

27 Aug 2014  Written by David Cagahastian

CIVIL-SOCIETY group Citizenwatch has proposed several action plans that the Aquino administration should focus on in its last two years in office, particularly in the areas of power generation and promotion of medium-scale enterprises to create more jobs.

In a recent roundtable discussion among the conveners of Citizenwatch, the need to lower the costs of power and to provide for a reliable source of power for industries was underscored as one of the most important problems that must be addressed by the government.

Prof. Dindo Manhit, who convened the roundtable discussion, enumerated possible action plans that can address the looming power crisis.

Free trade advocate Nonoy Oplas of Minimal Government Thinkers Inc. said that the government must reduce red tape to be able to make the Philippines competitive, especially in light of the upcoming integration of the ten members of the Asean. He said that reducing red tape would help in addressing many of the country’s problems, including the power crisis.

“In energy for instance, I think [Energy] Secretary Jericho Petilla said that feasibility studies show that building a power plant will require about 100 signatures from the barangay to the Department of Energy, etc. In this case, more government is a problem,” Oplas said.

The coming financial integration of the 10 Asean members was also discussed, with focus on providing for financing for micro, small, and medium enterprises (MSMEs) as a program that will make Philippine industries competitive with its counterparts in other Asean countries.

Sergio Ortiz-Luis, president of the Philippine Exporters Confederation said that the financing of MSMEs is critical to the Philippines because these types of enterprises comprise 99 percent of our entire economy.

“One of the disadvantages of our local industries is financing. We are the only ones still talking about it whereas our neighbors have already resolved the issue of financing for MSMEs,” Ortiz-Luis said.

Alfredo Yao, president of the Philippine Chamber of Commerce and Industry, also provided his suggestions on how to make the country competitive amid the Asean integration. He said that the government needs to address the concerns on power, infrastructure and red tape to be able to attract more foreign investments when the Asean integration starts in 2015.

“In the several forums that we have conducted, the high cost of power and logistics, inadequate transport infrastructure, conflicting laws and regulations, issues related to taxation, business permits and licensing, and access of SMEs to financing and technology were the most common concerns raised that beset the private sector’s readiness for and competitiveness under AEC [Asean Economic Community],” Yao said.

“There is a need for the government and private sector to heed the adoption of an industrial road map for Philippine industries to be able to compete with the forthcoming Asean integration. This should mainstream the enhancement of a competitive business environment, where SMEs are able to participate effectively and benefit from the global production network being built by Asean with its trade partners and important export markets,” he added.

Citizenwatch is an independent network of professionals, which advocates for the interests of not just the less privileged sector, but also of society as a whole whose mission is to stand up against powerful interests whenever they curtail the citizens’ right to health, safety, financial security and right to fully participate in democratic society.

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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

Stratbase Forum on ASEAN Competitiveness

Last Wednesday, I attended a Citizen Watch round table discussion on "An Economic Reform Agenda for ASEAN Competitiveness" organized by the Stratbase Research Institute (SRI), a Makati-based think tank. It was held at the Tower Club, 33rd floor of Philam Life building. I think it was my first time to see that place. Nice.

Only 10 of us were invited, nine came.Photo below, from left: Dr. Epictetus "Lingling" Patalinghug of the UP College of Business Administration and Foundation for Economic Freedom (FEF) fellow; Calixto "Toti" Chikiamco, President of the FEF; Dr. Dindo Manhit, President of SRI, Dr. CP David of UP NIGS and PBEST; me, and Ms. Nelia Halcon, Executive Director of the Chamber of Mines of the Philippines (COMP).

The forum was moderated by Orly Oxales, Exec. Dir. of SRI while Dindo gave the opening message. Orly asked us to give a 3-5 minutes insights on how to achieve further PH and ASEAN competitiveness.

On the side, from left: Cong. Rey Umali of Oriental Mindoro, and Chairman of the House Committee on Energy, Sergio Luis Ortiz, President of the Philippine Exports Confederation (PhilExport), Salvador "Jun" Enriquez, former DBM Secretary and now CPRM Consultant, and George Chua, President of the Federation of Philippine Industries (FPI).

I prepared a paper, "Taxation, Regulation, Trade and Rule of Law: Reform Challenges for the Philippines and ASEAN Competitiveness", 12 pages including 9 tables and 2 charts. SRI printed and circulated it among the participants. Dindo liked it too, SRI will publish it in their website soon.

Below, CP David speaking. He narrated that aside from being an Earth scientist, he is also helping his wife in their business, running a pre-school, and the hard life of being an entrepreneur being pressured to submit many requirements to get various permits from various government agencies, and the burden of paying various taxes and fees.

George Chua discussed how the various bureaucracies, local and national, can be non-friendly to entrepreneurs. He cited one case, his importation. Because of the truck ban on certain hours by the Manila City government (Mayor is convicted ex-President Erap Estrada), there is huge congestion of cargos and ships at Manila international port. The ship that carried his imported goods arrived last June 5, but it was able to dock and unload the cargo only on June 12, and he was able to finally get the shipment last July 2. Productivity losses are huge.

The number of documents required by the BIR has also multiplied in recent years. So it is not only the actual taxes and fees to pay that have increased, but also the cost of compliance.

It was a great forum. Thanks again to Dindo and SRI for inviting me there. They will publish highlights of the discussion in their website soon.

All photos above I got from PBEST facebook page.