BWorld 212, Commodities competition and the mining debate

* This is my article in BusinessWorld on May 15, 2018. The chart is added here as it was not accommodated in the column due to space constraints that day.

Commodities competition as defined in this piece refers to companies that are producing certain commodities and are competing for investors. Thus, energy companies are those that plan to attract more investors and expand operations when world energy prices are high as compared to those companies producing agricultural, industrial, and other commodities.

This is a continuation of a series of pieces about competition.

Last week we discussed overall competition and the role of the Philippine Competition Commission (PCC), electricity competition and the role of Philippine Electricity Market Corp. (PEMC), innovation and the role of IPR protection.

Endless competition also leads to endless innovation and this results in disruption in global economic balance or imbalance, which, among others, would be discussed in BusinessWorld’s Economic Forum 2018 that carries the theme: “Disruptor or Disrupted? The Philippines at the Crossroads.”

Currently, energy prices especially oil are rising again as the supply from OPEC-Russia remains constricted and US shale oil production expands but insufficient to cope with high world demand. But this rise in energy prices do not represent disruption in the global energy balance yet.

I visited the Commodities section of Trading Economics, https://tradingeconomics.com/commodities, and checked which of the many commodities have “disrupting”prices over the last five years.

The commodities are divided into five groups: (1) Energy (crude oil, natural gas, naptha, propane, uranium, etc.), (2) Metals (gold, silver, manganese, palladium, rhodium, etc.), (3) Agricultural (rice, corn, coffee, cheese, lumber, sugar, soybeans, wheat, etc.), (4) Livestock (poultry, cattle, hogs, beef), and (5) Industrial (coal, copper, cobalt, steel, nickel, lead, aluminum, etc.). There are about 50 commodities in total.

What is surprising is the eminence of certain metallic products.

Four commodities have incurred disruptive price hikes — cobalt, rhodium, palladium, and lumber. Zinc and lithium also have rising price trends but not as steep as these four. The rest of the commodities have up-down-up cycles, or declining prices like uranium.

Cobalt is mainly used to produce high performance alloys and rechargeable batteries. Thus, companies producing batteries for mobile phones, electric cars, motorcycles and buses would be scrambling for limited cobalt supply in the world as Congo is the dominant supplier but politically unstable. Cobalt is found in copper and nickel ores and the Philippines is a major nickel producer in the world and an average copper producer.

Rhodium is a silver-white metallic element that is highly resistant to corrosion. Thus, it is mainly used in automobiles as a catalytic converter, changing harmful unburned hydrocarbons, carbon monoxide, and nitrogen oxide exhaust emissions into less noxious gases. It is found in platinum or nickel ores and other metals, and again, the Philippines is a major player in global nickel production and exports.

Palladium is used in catalytic converters, also in jewelry, dentistry and surgical instruments, watch making, aircraft spark plugs, ceramic capacitors, among others.

High lumber demand is experienced as there is a new trend in building construction using treated wood instead of cement and steel. Innovations in wood treatment allow them to be fire-resistant. Demand for “eco-friendly” packing materials and related products also experience rising demand.

And this brings us to the endless mining debate in the Philippines.

The trend is there — rising if not disruptive price hikes in many metallic products — so why make mining production highly politicized and bureaucratic? Why is that DENR circular that suspended or closed several mining companies issued by a former secretary who believes she can fly still not lifted until now?

Not content with bureaucratic licensing and monitoring of mining companies, mining excise tax has been doubled in the TRAIN 1 law of 2017 and there are moves to further raise this tax in TRAIN 2 bill now in Congress.

A better alternative for Congress would be to ban “small-scale” mining as almost all such mining actually use heavy equipment such as backhoes, bulldozers, and huge trucks. They should then be encouraged to pool their resources to become medium- to large mining corporations registered with SEC and subject to mandatory community projects as provided in the Mining Act of 1995.

Australia and Canada, among the biggest mining powerhouses in the world despite having major environmental NGOs, do not have “small-scale” mines that are harder and more time-consuming to monitor.

The Philippine government should be a partner and not a hindrance to more modern and responsible mining and allow us to take advantage of this upward trend in global metal prices.

The government should be an enabler of disruption, not a disruptor, in the clear potentials of metallic mining.

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See also:
BWorld 204, Mining attractiveness index and the Philippines, April 30, 2018

BWorld 209, Is the PCC a facilitator or a hindrance to business competition? May 15, 2018 

BWorld 210, Electricity competition, EPIRA, and WESM, May 16, 2018 

BWorld 211, Intellectual property, innovation, and prosperity, May 20, 2018

BWorld 209, Is the PCC a facilitator or a hindrance to business competition?

* This is my column in BusinessWorld last May 07, 2018.

Even before the various competition bills in Congress ultimately became the Philippine Competition Act (PCA) of 2015 or RA 10667, I have been asking myself this question.

After all, I have observed that the main creator of monopolies and oligopolies is the government itself through constitutional restrictions on public utilities and creation of “natural monopolies” like electricity transmission and distribution, water distribution, which, in turn, require congressional franchises.

Other monopolies or oligopolies are created by various agencies, like airline routes (CAB franchise), shipping routes (MARINA franchise), telecommunications (NTC franchise or permit), jeepney and bus line route (LTFRB franchise), tricycle route (LGU franchise).

So the basic question would be: What can the Philippine Competition Commission (PCC) do to limit or curtail the granting of such state-created monopolies and oligopolies?

Last week, I interviewed PCC Chairman Arsenio Balisacan in his office. Sir Arsi is a friend and was my former teacher in the ’90s at the graduate program of UP School of Economics on the subject of Development Economics. [The discussion between Mssrs. Oplas and Balisacan, which covered several topics, will be uploaded on BusinessWorld’s YouTube channel soon. — Ed.]

My opening question to him was a light one, “Do many people mistake the PCC with a racing or sports commission?” He smiled and answered that it seems to be a common misconception for many people especially in non-urban areas, they ask what sports competition the PCC is promoting.

The confusion may be understandable as there are 16 Commissions under the Office of the President alone. These are the Commissions on: Climate Change (CCC), Filipinos Overseas (CFO), Filipino Language (CFL), Higher Education (CHED), Anti-Poverty (NAPC), Culture (NCCP), History (NHCP), Indigenous Peoples (NCIP), Muslim Filipinos (NCMF), Pasig River (PRRC), Women (PCM), Racing (PRC), Sports (PSC), Urban Poor (PCUP), Youth (NYC), and the PCC.

I checked the latest report of the World Economic Forum (WEF), the Global Competitiveness Report (GCR) 2017-2018, to see how competitive the Philippine economy is and by extension, the domestic private businesses, compared to its neighbors in East Asia.

Out of 137 countries and economies covered, the Philippines ranked 56th overall. And of the 12 pillars of the GCR, the Philippines scored high in pillar #2 Macroeconomic environment (22nd) and pillar #10 Market size (27th).

But the country scored very low in three pillars: #1 Institutions (Irregular payments and bribes, Favoritism in decisions of government officials, Burden of government regulations, Reliability of police services…); #2 Infrastructure (roads, railroads, ports, air transport,…) and #6 Goods Market Efficiency (Extent of market dominance, Effectiveness of anti-monopoly policy, Number of procedures to start a business, Time to start a business, Burden of customs procedures), (see table).

There is a direct relationship between a competitive economy and its prosperity, and given the relative smallness of the Philippine economy, what seems to be “big” corporations domestically can be small or medium-size compared to the corporations in our East Asian neighbors.

The PCC checks and prohibits three major acts and behavior: (1) Anti-competitive agreements like price fixing/collusion, bid rigging, output limitations, and market sharing; (2) Abuse of dominant position and market power like predatory pricing, discriminatory pricing, exploitative behavior towards consumers and competitors, and limiting production, markets or technological development; and (3) Mergers and acquisitions (M&A) that restrict or lessen competition in the market.

These point to two important issues.

One, the PCC is concerned only with behaviors of existing competing players but does not cover behaviors of state-created monopolies.

And two, many of those behaviors rendered “anti-competitive” are generally short-term and never long-term, so the imposition of penalties may be a question mark.

Take price discrimination or “price differentiation” and “market segmentation” in economics. This is perfectly normal in market competition as the supplier is optimizing revenues from customers with different needs and different budget or resources. Thus, higher prices are set for those deemed wealthy and lower prices for those financially struggling.

In price fixing/collusion, players here may be digging their own graves as they antagonize customers and invite new players that can quickly provide the goods and services at lower prices. If this happens, the collusion can quickly break up and the old players would try to secure their previous market share eaten by the new player/s.

Competition requires innovation, lots of it in terms of product and service quality, variety, marketing and pricing. Player X’s prices compared to its competitors would look “predatory” yesterday, “collusive” today, and “excessive” tomorrow and these are all fine. Those prices can roller coaster at temporary and short-term durations. New players would tend to give low introductory prices to attract many new customers while innovators would tend to give high prices to recoup their high investments in product R&D, consumers survey, and marketing/promotions.

According to the WEF Executive Opinion Survey 2017, the “Most problematic factors for doing business” in the Philippines are: (1) Inefficient government bureaucracy, (2) Inadequate supply of infrastructure, (3) Corruption, (4) Tax regulations, (5) Tax rates, and (6) Policy instability.

So, is the PCC a facilitator or hindrance to overall business competition in the Philippines?

For me, it’s a tie.

The PCC can be a potential hindrance because its long list of prohibitive acts can be additional deterrent to potential players that are already wary of the corrupt bureaucracy, government-created monopolies, poor infrastructure, high tax rates, and policy instabilities.

But it also has two important functions that can facilitate competition.

One, it gives information to potential and incoming players on how they will be treated in case existing players, foreign and local, will charge and accuse them of “anti-competitive” behavior. And two, it can coordinate with other sectoral regulatory agencies and temper their itchiness to regulate, restrict and prohibit as PCC has the overall view of the degree of competition in the country.

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See also:

BWorld 206, Intellectual property rights in East Asia, May 09, 2018 

BWorld 207, Fare control and surge cap are wrong, May 10, 2018 

BWorld 208, Consumer choice in electricity supply and prices, May 11, 2018

Competition Policy 6, Presentation at ALB Thomson-Reuters forum

Last week, I was one of four speakers on the Asian Legal Business (ALB) and Thomson-Reuters' forum on the Competition Policy.

I started with the World Economic Forum (WEF) Global Competitiveness Index (GCI) 2016 report.

Performance of some ASEAN countries and neighbors. The Philippines' overall rank has declined by 10 even though the decline in score was not that big, from 4.39 in 2015 to 4.36 in 2016. This means that some countries have significantly improved their scores relative to the Philippines.

I also showed the various government agencies that give various permits and/or franchises. A franchise is often a monopoly for X number of years, slide borrowed from Andre Palacios' earlier presentation at the PES conference.

Here are examples of government agencies that create monopoly or oligopoly privileges.

The first law, a body in motion will remain in motion unless an external force is acted upon it; a body at rest will remain at rest unless an external force is acted upon it. The second law, the third law...

I asked this question at the audience, true or false? A few said True while none said False.

Two hands. Which one provides real welfare to the people?

Conclusions: 

1. Very often, the purpose of government is to expand government.

2. Newton’s 3rd law of motion revised: For every govt intervention, there is an equal opposite distortion.

3. Improve market efficiency and competition not so much what govt. should do/subsidize but rather, what govt. should NOT do  Less bureaucracies, taxes, fees, regulations, prohibitions.

4. Not so much good governance of BIG government but less governance.

5. Heed Adam Smith’s ‘invisible hands’ of the market, not Keynes’ ‘grabbing hands’ of the state.

From left: Andre "Raj" Palacios (moderator) of the Competition Review Committee (CRC), Moy Tayao of UST Pol. Sci. department, me, Thomson-Reuters Manila head, Henry Schumacher of the European Chamber of Commerce, and Raul Fabella, Chair of the CRC, also of UPSE.

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See also:

Competition Policy 3: Jemy Gatdula's Article, September 16, 2013 

Competition Policy 4: Paradox of Anti-Trust and Fair Competition Legislation, October 05, 2014 

Competition Policy 5: Government as Creator of Monopolies and Oligopolies, April 21, 2015

Competition Policy 5: Government as Creator of Monopolies and Oligopolies

A Philippine Competition Law is coming soon, around July this year, according to Sen. Bam Aquino in a forum that I  attended yesterday in Makati. The main speaker was a friend and  former teacher in Math Econ in  PDE in the late 90s, Dr. Joy Abrenica.

It was a well-attended forum. Mr. Jaime Zobel de Ayala was among the high corporate officials who attended  the forum from beginning to end.

Sen. Bam Aquino himself stayed all throughout too, even if  he was not the main speaker. During the open forum, he discussed many things, like the degree of lobbying from different sectors in his office and that of  other Senators. This is understandable as people express some apprehensions if their companies or sectors might be adversely affected by some provisions.

He said that they expect the Competition bill to become a law before the President delivers his 6th and  last State of the Nation Address (SONA) in late July 2015.

Here are some of the slides discussed by Joy yesterday. I will just show them while discussing other points made by the other discussants.

She went back to history (US, Europe, etc.) in analyzing the philosophy of competition legislation.

I have not read the Senate and House bills on competition policy, one reason why I attended that forum. And it was difficult for me to follow some of Joy's discussion precisely because I have not read the bills.

Tony Abad, one of the three discussants and an expert on competition law of other countries and the congressional bills in  the  PH, emphasized that we need a competition law. Not only for the existing companies, local and foreign, but also because having that law is a requirement for the PH government if it wants to join some existing and emerging trade alliances like the US-led Trans Pacific Partnership (TPP).

I can understand that those economic alliances would require such a law before applicant governments of other countries can be accepted because  they want to see how their companies will be treated here in case they get into legal troubles on "anti-competition" charges someday.

Simon Paterno said that government itself is a big monopoly. State corporations like the National Food Authority (NFA), rice importation certification monopolist; PAGCOR, casino and gaming certification monopolist and a player at the same time; Philippine Ports Authority (PPA) and Manila International Airport Authority (MIAA), monopolists in operating seaports and airports, respectively.

That's a good point. And I will add that ALL monopolies and oligopolies are created by the government via various agencies, local and national.

Tricycle route monopolies are created by the municipal and city governments. Jeepney route monopolies, sometimes bus route monopolies, are created by the Land Transport Franchising Regulatory Board (LTFRB), which is under the DOTC.

Inter-island shipping route monopolies or duopolies are created by the Maritime Industry Authority (MARINA), local airline route monopolies or duopolies are created by the Civil Aeronautics Board (CAB).

Electricity distributors and cooperatives, telecom companies, water utilities, cable TVs, etc. area or geographical  monopolies are all created by Congress via legislative franchising.

See, government is the creator of monopolies and oligopolies. So it is ironic that government is creating a new law supposedly to regulate anti-competition, monopolistic and oligopolistic practices. But then again, government is expected to produce this legislation, so we should have a new law on this soon as this has been filed in previous Congresses some two decades ago.

Personally, I would wish to see a competition law where a new  office or bureaucracy, the Competition Commission or Fair Trade Commission, will have power to clamp on other government agencies (LGUs, LTFRB, CAB, MARINA, PAGCOR, NFA, PPA, etc.) that disallow fair competition because they themselves are the monopolists, or choose special corporate interests as the government-blessed monopolists and duopolists.

But those agencies will fight tooth and nail, horns and claws, to prevent that bill to become a law. And so we will have no competition law this year or the next 10 years or more. And the PH government will be embarrassed in the international community why it has no competition law until this decade or  next decade.

And that means we will have to accept this new law, imperfect of course, even "ugly" for some sectors. We can settle with that as a compromise, then work for its amendment in  the coming years and decades.
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See also:
Competition and Prosperity, KL Conference, October 12, 2011

Fierce Competition is Fair Competition, January 22, 2013 

Competition Policy 3: Jemy Gatdula's Article, September 16, 2013 

Competition Policy 4: Paradox of Anti-Trust and Fair Competition Legislation, October 05, 2014

Competition Policy 3: Jemy Gatdula's Article

The proposal to have a Competition Law in the Philippines has been there since about two decades now. No law yet, and neither is it becoming a law soon.

Somehow I support having a Competition Law, but this is secondary to the bigger, more important proposal, to amend the Philippine Constitution to abolish the limit on foreign equity investments, and the restriction on foreign professionals to practice their profession here.

Meanwhile, a friend, Atty. Jemy Gatdula, recently wrote an article on Competition policy, posted in his column in BusinessWorld last September 05, 2013. Italics below is mine.

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THE COUNTRY has seen loud calls from the general public to institute reforms, from the PDAF to the FOI. Among these fashionable areas of reform is on competition policy. However, through the years, your Trade Tripper has learned that if there’s a thing that the public (particularly foreign businesses) wants immediately accomplished, with zero fuss, then generally it’s best indeed to make a fuss about it. It’s when people are emotionally (even hysterically) demanding to rush matters that time to study it becomes a necessity.

As BusinessWorld reported (Competition Law Urged, 28 August 2013) on the East Asia Forum on competition law last week, the consensus seemed to be that “a competition policy is considered important for a country to grow and consider itself an advanced economy.” Furthermore, “competition law should also be separated from politically motivated industrial policy as the latter allows the government to choose which industries to champion instead of letting natural competition occur in the market.”

However, there’s an obvious need to examine the assumptions on which such assertions are made. One assumption can be seen from President Noynoy Aquino’s speech during the forum: “As a student of economics, I know that monopolies are incredibly inefficient. It kills innovation. There is zero impetus, in a monopoly, to continually improve your product or your service, simply because you have your market cornered.”

This was disputed by the Anti-Pinoy Blog <http://antipinoy.com/; see Anti-Trust Bill to Improve Competition in Philippine Economy -- Or Otherwise>: “When you remove the rhetoric -- it boils down to the government wanting to increase regulation of the market under the guise of ‘promoting competition.’ Such a policy does not present any benefit to consumers and imposes more harm. More regulations and more agencies will not improve competition in the protected Philippine economy. It has not worked for decades -- it’s not about to work now.”

“The myth peddled to the common tao is that unregulated markets lead to the creation of monopolies. Therefore government has to step in to ensure that companies will not have a coercive market monopoly. The reality is that coercive monopolies cannot exist without government protection, special regulations, exemptions, and subsidies.”

Nonoy Oplas, president of Minimal Government Thinkers, Inc., agrees: “When government intervenes hard to force or pretend to attain social equality, such intervention will naturally result in subsidizing the lazy and irresponsible, while penalizing and over-taxing the efficient and industrious.” For him, “fierce competition is fair competition. Government-managed or protected competition is not fair competition.” And I concur with his assessment that, at least for the present, the “best anti-monopolization regulation that government can do is to have rule of law strictly enforced.”

Fierce Competition is Fair Competition

"Fair competition" is a nice and neutral term that many sectors in society can identify with. People love competition, the way they like Manny Pacquiao competes with some of the world's great boxers on the ring, or the country's Azkals soccer team competes with great soccer players in Asia. 

But people normally do not like to hear "fierce competition" even if that's the reality in sports and the same reality in many products that are internationally traded like mobile phones, laptops, flat tv and cars. For me,  fierce competition is fair competition, the same way that free trade is fair trade. Government-managed or protected competition is not fair competition.

This Thursday, I will attend this forum organized by the Friedrich Naumann Foundation for Freedom (FNF). I believe in the formulation that competition is key to economic growth. This is similar to the Economic Freedom Network (EFN) Asia conference theme in Kuala Lumpur in October 2011, "Competition: Engine for Growth".

The line up of speakers and panelists for the forum on Thursday is impressive, below.

My thoughts on this subject is that no matter what kind of "Competition Law" that the Philippines will enact, there will be no fair or fierce competition in many important sectors of the economy like power generation, electricity distribution, airlines, shipping lines, bus lines, real estate, malls, water, media, agri-business, universities, hospitals, various professions, and so on.

Why? Because of the Philippine Constitution. Foreign business competitors are simply limited if not outrightly prohibited from competing with local businessmen and professionals in these sectors and sub-sectors. So we Filipinos and Philippine-based foreigners simply have to endure and be contented with whatever the local players can provide us. Where there is relative complacency due to limited competition, service provision by some if not many local players can be poor and mediocre.

Like internet speed. While we can buy modern cell phones, laptops and desktops from abroad as these are  freely-traded commodities from many big global players and manufacturers (Samsung, Apple, HTC, HP, Toshiba, etc.), internet speed is slow if not unstable in many areas as there are only few ISPs and telecom carriers domestically.

The more crucial reform that is needed therefore, is to change the current Constitution created in 1987 and do away with the protectionist, anti-foreign competition provisions. Now this is easier said than done. A change in the Constitution can lead to either less protectionism or more protectionism, although the likelihood of less competition, less protectionism seems higher than the protectionist camp and scenario.

While such change in the Constitution is not yet here, I agree that we will have to tinker with some existing laws in order to remove rigid rules that tend to protect one group of players over the others.

But wait, this will also mean the creation of another bureaucracy, the Fair Trade Commission FTC or an Anti-Trust Commission or Competition Regulation Authority or other names.

I dislike the creation of more bureaucracies on top of existing bureaucracies. It would be more palatable if for every new bureaucracy that the legislators create, they also abolish one or two existing bureaucracies.

Will try to write another blog post after the conference on Thursday.
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See also:
Competition and Prosperity, EFN Asia 8: KL Conference, October 12, 2011
Free Trade 22: Freedom to Trade, February 10, 2012
Free Trade 23: FNF on Free Trade Agreements, February 10, 2012
Free Trade 27: Proposed EU-PH FTA and TRIPS Plus, September 24, 2012

EFN Asia 14: Conference 2012 Resolution on Populism

It is an annual tradition that at the end of each Economic Freedom Network (EFN) Asia Annual Conferences, participants produce a conference resolution -- short, one page, clear and direct -- that summarizes and concludes the two-days activity. I am posting the conference resolutions last year (theme: Competition: Engine for Prosperity, October 11-12, 2011, Kuala Lumpur) and this year (theme: How Welfare Populism Destroys Prosperity, November 6-7, 2012, Hong Kong).

EFN Conference 2011 

Statement on Competition and Prosperity

Preamble

Competition is an essential engine for prosperity. To prosper, all nations should encourage and nurture competition. Competition encourages innovation and creativity.

It motivates producers to make the best offers to consumers, therefore creating lower prices, higher quality products and better services.

The Role of Government

The primary role of the government is to enforce the rule of law, provide impartial judiciary, protect property rights and individual freedom.

Competition is the best regulator; therefore, the government should foster competition rather than restrict it.

Competition in Public Service Delivery

The people will benefit more if the government does not monopolize the delivery of public services.

Competition can be introduced and fostered in the major public services such as education, healthcare, transport, communications, and utilities by diversifying the providers through various form of private participation.

Competition, Economic Freedom and Prosperity

Free market economy is necessary for progress. Empirical evidence shows that open economies are more prosperous.

Competition is a key element in a free market economy.
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EFN Conference 2012 

Statement on Liberal Views on Populism

We the liberals believe that populism is the promise of state-mandated, unsustainable benefits to the broader population without consideration of the long-term costs and benefits. It relies on highly emotive statements. In fact, populism is counterproductive to general well-being and progress, as illustrated by the economic decline of the many countries that have pursued populist agendas.

We are concerned that governments in Asia are turning away from the policies which have been demonstrated to promote prosperity in many parts of the world.

We are confident that people will reject populist policies once they understand the true costs associated with them. 

Those costs include an increasing dependency on the state, weakening the rule of law, propertyrights and individual freedom. Populism also reduces the ability of individuals and local communities to make their own decisions, and undermines the competitiveness of businesses.

Recent moves in Asia to subsidise food and fuel, and to transfer cash are all examples of populist policies that have done more harm than good.

We are confident that if Asia commits itself to liberal values such as property rights and the rule of law, the region will prosper.

We commit to:

* Provide alternative liberal solutions to the real problems that give rise to populism, and educate about the benefits of liberal policies, using positive language and examples.

* Provide public support to politicians, political parties, business groups and other stakeholders that support liberal solutions.

* Expose the high costs in terms of money and disastrous end results of such policies

* Educate politicians and students

* Engage with the media to educate the public more widely

* Engage and create strategic alliances with civil society

* Meet on a regular basis to strengthen our network. 

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More photos during the HK conference.

Running and Freedom 1: FNF Freedom Run 2011

I participated in the first "Freedom Run" organized by the Friedrich Naumann Foundation for Liberty (FNF) yesterday at the University of the Philippines (UP) Diliman campus. It was co-sponsored by UP and I think, the Quezon City government. There were also many corporate sponsors. One could run the 3k or 6k and the theme of the event was "I am Free". Free from corruption, and so on. Nice.

With only 5 hours sleep (had an early Christmas reunion with some friends the night before) and haven't run for the past 10 years or so, I ran the 6k, hahaha. I finished it in 43 minutes, awwww! At around 1.5 km. mark I think, I started walking already. But my goal in joining the run was clear: just finish the 6 kms route, in a brief period to shake and remove the rust in my legs.

What's special with this photo?... hmmm... :-) Ok, I'll tell you. I did not bring a camera but I needed a photo as it was my first run after 10 years or more. The one who took this photo was Jules Maaten, the country director of the FNF himself. Super thanks Jules!

There were probably close to 2,000 runners who participated in the 3k and 6k run. Knowing my physical limitations, I positioned myself in the front of the starting line, knowing that many guys will pass me anyway, so I gave myself a few meters of "lead" over the majority, hehe. And true enough, at the sound of the starting gun, dozens upon dozens of younger lungs and legs passed me.

Sometime in the mid to late 90s, I was running around 7 kms. a week, cycling around 100 kms. a week (I was using a road bike, not a mountain bike) and climbing a mountain once a month, on average. So inflicting limited pain on my body was no stranger to me then. That's why I dared running the 6k even with zero running preparation years before this event.

Here are some photos of the participants, taken from the FNF's facebook photos.

I saw several staff of the FNF there aside from Jules, like Paolo Zamora, John Coronel, Dorothy Salvador and hubby. Chito Gascon of the Liberal Party was also there, but he did not run. My batchmate in UPSE, Gladys Cruz-Sta. Rita, also of the LP was there too, but I did not see her around, only in the photos.

I think this is the first time that a political foundation like FNF has sponsored a running event. It's mostly corporations that sponsor the big events here. I think this is a good initiative to propagate a political foundation's advocacies. In the case of the FNF, it's propagating liberalism, a philosophy that I personally adhere to, especially classic liberalism, not just ordinary liberalism that is propagated by many current political parties around the world.

Back of the shirt says, "It's all about Freedom. ARE YOU FREE?"

Other participants included the Freedom of Information (FOI) group, here in white shirts, led by Nepo Malaluan. A guy called "Zorro" in UP also showed up. And a special participant, a dog riding his master's bicycle.

Freedom and liberty. Especially individual liberty, not national or collective liberty that tends to step on individual freedom "in the name of the nation, the commune, the collective." This goal, for me, sums up what liberalism is.

See the close up quote: individual responsibility, rule of law, human rights and tolerance. These are key words and philosophies that I personally advocate. "People who are afraid of responsibility are afraid of freedom itself." That's from Friedrich Hayek, and I totally agree with him on that.

The last time I saw Jules was early last month in Kuala Lumpur, during the FNF's Economic Freedom Network (EFN) Asia Conference, with the theme, "Competition: Engine for Growth." In this photo from left: DBM Sec. Butch Abad (he was the keynote speaker there), Atty. Tony Abad (he was a speaker in one of the panels), Siggi Herzog, the previous FNF Country Director for the Philippines, now the FNF Regional Director for South Asia, and Jules Maaten.

Competition and running. Governments should take a cue from sports and competition. The role of the organizers and hosts -- like a government -- is simply to lay the rules clear and fair and strictly implement them. Then let the competitors and participants join the race, or the fun, without cheating. The winners are awarded with cash or non-cash freebies, while ordinary participants are awarded with a sense of accomplishment, plus freebies like free food, free shirts, etc. Cheaters and rent-seekers will be penalized with disqualification or other forms of punishment. Hence, there is no need for government to pick winners and losers, like choosing who among the private players will be given special privileges including bail out in times of corporate bankruptcies, and who to be allowed to sink.

How are my legs after being tortured with a 6 kms run-walk within 43 minutes? Oh, they were hellish, since yesterday morning until now now! It's like I went through a physical hazing by a violent fraternity :-)

Thanks again to FNF for organizing that event.

EFN Asia 8: KL Conference, Day 1

This is my article in thelobbyist.biz this morning. It actually covers only the morning session of Day 1 yesterday, I still have to write the afternoon session and post some photos. And now, the conference has unofficially ended, we are still going to the farewell reception in an hour, for the formal closing of the activity. This is an excellent conference, thanks to FNF.
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http://www.thelobbyist.biz/perspectives/less-gorvernment/1195-competition-and-prosperity

Competition and Prosperity

WEDNESDAY, 12 OCTOBER 2011 05:33

WRITTEN BY NONOY OPLAS

Tags: Less Government

Kuala Lumpur -- Competition is the best regulator of business and market players, not government. The more players who compete with each other in producing similar goods and services, the more that they will be forced to provide good quality products at competitive and more affordable prices.

This is the main theme of the 12th Economic Freedom Network (EFN) Asia Conference here in the capital city of Malaysia. Today is the 2nd and last day of the two-days conference with the theme, “Competition, Engine for Prosperity”. The event is sponsored by the Friedrich Naumann Foundation for Liberty (FNF), co-sponsored by two free market-oriented local think tanks, the Institute for Democracy and Economic Affairs (IDEAS) and the Center for Public Policy Studies (CPPS). There was a welcome dinner two nights ago before the start of the conference, hosted by the German Ambassador to Malaysia, Dr. Gunter Guber. I posted photos and stories about it here.

The conference is attended  by more than a hundred participants from many Asian countries especially from China, India, Malaysia, Singapore and Thailand who work in independent, if not free market-oriented think tanks, research institutes and NGOs. Country Directors and regional staff of FNF in Asian countries are also here. Unlike the previous years of the annual EFN Asia conference, only a few of us from the Philippines came here.

Day 1 of the conference yesterday was composed of the opening speeches by FNF Regional Director for Southeast and East Asia, Dr. Rainer Adam, then the head of ASLI, Dr. Michael Yeoh, and the keynote speech of DBM Secretary and top Liberal Party official, Sec. Butch Abad.

The three men expounded the advantages of competition over more government regulations, and the importance of transparency and accountability over secrecy and high bureaucracy. But Sec. Abad, being a high government official in the Philippines, gave more importance to certain government regulations to attain redistribution in society, to protect the marginalized sectors.

The free market system admittedly, will retain if not heighten inequality in society. But this is the natural result since some people are very efficient and very hard working and highly ambitious, while some have little or no ambition in life, who only want to party and drink each day whenever possible. When government intervenes hard to force or pretend to attain social equality, such intervention will naturally result in subsidizing the lazy and irresponsible, while penalizing and over-taxing the efficient and industrious guys.

Anyway, after the opening speeches, the morning session was very interesting. Five speakers from five different countries spoke on just one topic: “What Should be the Role of Government?” The speakers were (a) Prof. Jurgen Morlok, the Chairman of the Board of Trustees of FNF; (b) Battsetseg Shagdar from EBI think tank, Mongolia; (c) Dr. Arianto Patunru from LPEM, Indonesia; (d) Prof. Sheng Hong of Unirule Institute, China, and (e) Barun Mitra of Liberty Institute, India.

My assignment in participating in this EFN Asia Conference was to be a host or moderator in two discussions, including this one. I was lucky to take that role as I thought that ALL the five speakers mentioned really made excellent presentations yesterday.

Jurgen Morlok talked about promulgating the rule of law as the main function of government; to set the rules of the game, to be a referee of competing players, no more, no less. I think this is a bulls-eye statement which I totally agree with.

Baagi Shagdar talked about the pathways of Mongolian society from authoritarianism to democracy the pains and hurdles along the road, and the need for more citizen information and participation in governance.

Aco Patunru opened his presentation with important quotes from (a) Murray Rothbard (government should ensure that rules are equally applied to players, leave the market as competition will regulate the market itself); (b) Ronald Coase (government role is limited to enforce property rights); and  (c)Friedrich Hayek (government should ensure that competition goes on, set the rules and regulations for competition to prosper).

Sheng Hong discussed the recent Unirule research paper, “The Nature Performance and the Reform of State-Owned Enterprises (SOEs) in China. There are many surprising results, well at least for me, from that study. Like SOEs’ average profit from 2001-2009 was 8.1 percent vs. private enterprises’ 12.9 percent. But SOEs enjoy certain privileges that are not available to private companies, like low interest rate, low or zero rental fee, fiscal subsi and royalties. If these perks are removed, the average return on equity of SOEs from 2001-2009 goes down to -6.3 percent, a net loss.

Barun Mitra opened his presentation with a quote from Ayn Rand, “Civilization is the progress towards a society of privacy…” Then he discussed how India benefited from liberalization and competition in various sectors: automobile and land transporation, airline, telecommunication, etc., and the declining role and authority of public sector units (PSUs).

FNF has this good discussion set up that maximizes audience interaction with all speakers which I have not seen in any big forum in Manila. After the presentation by the five speakers in the ballroom, there was no Q&A. Instead, participants were divided into five separate meeting rooms, and the five speakers will be moving into those five rooms to answer questions for 15 minutes. Since I personally know three of the five speakers (Barun since 2004, Aco since 2005, Baagi since 2008), as well as some of the participants, it was relatively easy for me to facilitate the small group Q&A.

If there were no instant questions from the audience as soon as the speaker has entered the room, I have to ask the first question; if the speaker has already left after consuming the 15-18 (max) minutes allotted and the next speaker has not come yet, I asked the participants to continue the exchanges among themselves, to ensure there are no dull or idle moments. These were learning moments for me too as discussion host.

Today’s session will feature the official release of The Economic Freedom of the World (EFW) Report 2011, an annual study done by the Fraser Institute in Canada, then a talk from the Office of the Prime Minister of Malaysia, then a panel discussion on Competition Policy and Environment, a luncheon talk.

I am thankful to the FNF for giving me a travel grant to attend this conference, for giving me the opportunity to be one of the discussion hosts in two activities yesterday (morning and afternoon).

Competition is not a goal in itself. It is a means to a goal – to expand economic freedom and individual liberty. Even if the 2nd day of the conference is still not over (I wrote and submitted this article before breakfast), I can positively say that the conference is really educational and highly successful.
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See also:
EFN Asia 4: Migration and Freedom, Jakarta Conference, October 09, 2010

EFN Asia 5: MG Thinkers Now with EFN, October 19, 2010

EFN-Asia 6: Conference in Kuala Lumpur, Oct 10-12, October 09, 2011

EFN Asia 7: Conf, Dinner at German Ambassador, KL, October 11, 2011