BWorld 202, Tourism, casinos, and Boracay

* This is my article in BusinessWorld last April 5, 2018.

“Every man has a property in his own person. This nobody has a right to, but himself.”

— John Locke (1632-1704, considered the father of classical liberalism)

The forced closure for several months by the Duterte government of all resorts, hotels, restaurants and shops in Boracay, both errant and compliant enterprises, raises the question of private property protection and compensation for the affected private owners.

NEDA has announced that the closure of the entire island from tourism is “very insignificant, only 0.1% of GDP.”

On Twitter, I asked NEDA, DoT, DENR, and Malacañang if they will compensate the losses of the environment-compliant enterprises, especially since the amount is “very insignificant” anyway. Or would the Duterte government not care because this is just tourism in Boracay and not in Davao? As expected, the response I got from the government was the sound of silence.

In 2017, at least 3.7 million people visited the island, less than a million of which came from abroad.

There was also a surge in tourist arrivals in the first quarter of 2018 partly due to cruise ships that visited Boracay. For this year, 27 cruise ships were set to visit the island and some have already canceled.

Tourism is an important revenue earner for an economy or a country. The Philippines being an archipelago with lots of beautiful islands and white sand beaches is unable to optimize this potential yet. For instance, tourism receipts in 2016 was only one-third (⅓) that of Malaysia and Singapore and one-eighth (⅛) that of Thailand.

In terms of visitor arrivals, the nearly six million visitors in 2016 was good enough but at the rate Cambodia is attracting visitors, it might overtake the Philippines in about three years (see table 1).

A rising tourism earner in the Philippines is the gaming sector. Huge hotels and casino resorts have sprouted in Metro Manila and more are poised to come in.

A friend who works in one of the big hotels at the Entertainment City told me that the minimum bet at the casino is P2,000; the maximum bet of course is the stratosphere. Only rich locals and foreigners would have the resources to make that kind of bet. The extent of job creation in the casino is very high with lots of workers and security officers being employed.

Revenues for the big hotels and the government-owned gaming regulator and operator at the same time, PAGCOR, are huge (see table 2).

Based on these numbers, one thing is noticeable — revenues from Philippine Offshore Gaming Operations (POGO). These are Philippines-based online gaming outfits that exclusively serve foreign markets and players (which means people in the Philippines cannot access their games). The same friend told me that the bulk of gamers in this new trend are from China.

In terms of installed capacity, Pagcor has the biggest number of electronic gaming machines with 9,751 in 2017 vs. Okada’s 2,914, Solaire’s 1,926, City of Dream’s 1,781, and Resorts World’s 1,381.

Two big hotel-casinos are coming to Boracay soon. The timing of their planned entry has added suspicion to the wholesale closure of the island from tourism. It is possible that the forced closure with no government compensation will drive many resorts to bankruptcy and this will open up new space for new players like these two big hotel-casinos.

The Duterte administration’s wholesale closure of Boracay for months is tantamount to indirect expropriation of private businesses. This sends bad economic signals to local and foreign investors. It also sends a bad political signal to the federalism push. The central government purports to give more power to the provinces and regions then it moves to totally disempower them. However you look at it, the move is bad for Philippine business, bad for ordinary Filipinos.

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See also:
BWorld 199, Charity and giving should not be legislated, March 27, 2018 
BWorld 200, IPR in the ASEAN and plain packaging in the West, April 03, 2018 
BWorld 201, Expanded environmental rights and anti-coal drama, April 05, 2018

BWorld 165, Airport transfers and tourism

* This is my article in BusinessWorld last November 10, 2017.

Is there a connection between tourism and the travel time to and from the international airport and the city proper?

I asked myself this question while I was reading Eva Air’s inflight magazine en route to Houston, Texas.

I spent a total of 17 hours traveling — two hours from Manila to Taiwan, a layover of one hour, and another 14 hours from Taiwan to Houston.

The good news is that all three airports mentioned have free Wi-Fi, especially in Taiwan, which offers fast Internet connections without requiring registrations. The bad news is that free Wi-Fi does not reach some gates at the NAIA.

I paid a visit to Houston to attend the “America First Energy Conference,” set for Nov. 9 at JW Marriott Houston, sponsored by the Heartland Institute, which also provided me a travel scholarship.

The airline’s En Voyage inflight magazine has one table that shows the list of the global airports they serve, distance from airport to downtown, the estimated travel time by train, bus and car/taxi (C), and cost in local currencies. I reconstructed the table and chose only major cities in East Asia, computed the average speed by car/taxi travel, then added data on each country’s international tourist arrivals and tourism receipts in 2016 (see table).

From the above numbers, these preliminary analysis would show:

1. Economies that have quick and convenient transport systems between their airports and city centers have higher tourism arrivals, even if their airports are far away from the cities. These examples include: China, Hong Kong, Japan, Malaysia, Thailand, South Korea, and Singapore.

2. Airports near their city centers have fewer visitors, if transport systems between locations are slow. These examples include: Vietnam (especially Ho Chi Minh airport) and Philippines, both NAIA/Manila and Mactan-Cebu airports.

There are many factors of course why some countries have very high tourist arrivals while others have fewer visitors. These factors are convenience of the airport itself, overall peace and order situation of the country, dominance of the rule of law, proximity of that city/country to other important tourism areas in other cities and countries.

If one lands in Bangkok, one can go to Cambodia, Laos, and Vietnam by land, without the need to take other flights.

Preliminary data show that yes, there seems to have a positive connection or correlation between fast airport transfer and tourism arrivals.

The data on Manila airport is a bit outdated because (1) there are now convenient and fast bus transportaion from NAIA/Manila airport to city centers of Makati City, Pasay City, and Manila and vice-versa, and (b) newly opened NAIA Expressway (PPP project by San Miguel) has significantly cut the travel time by car from the airport’s three terminals to city centers.

Some implications for the Philippines and its infrastructure and tourism policies.

One, NAIAEx tollway is doing good and should contribute to attracting more visitors into the country; thus, further extension of this tollway to BGC and other areas as planned by the project proponents and O&M operators should be facilitated by the government and not subjected to various cumbersome and costly regulations and permitting procedures.

Two, moving the Philippine international airport to a farther but bigger space (Clark in Pampanga, or Sangley Point in Cavite, or currently rice lands in Bulacan, etc.) complemented by fast train and/or buses to city centers will be a win-win situation.

Three, allow more integrated PPP (builders and O&M operation functions are assigned to only one winning bid player or consortium of players) for big, new airports, not hybrid PPP.

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See also:
BWorld 162, Open pit mines and open economy, November 05, 2017 

BWorld 163, US energy policies and implications in Asia and Philippines, November 19, 2017 

BWorld 164, PES conference amidst reduced risk and uncertainty, November 21, 2017

BWorld 130, Mobility of goods, capital, and people in Asia

* This is my article in BusinessWorld on May 09, 2017.

One big issue that failed to land on front pages during the ASEAN Prosperity Summit last week is the creeping protectionism, not through rising tariffs but rising non-tariff barriers (NTBs).

  

Malaysian Prime Minister Najib Razak pointed out during the Summit that NTBs and non-tariff measures (NTMs) from 2000 to 2015 have surged by nearly four times to 5,975 from 1,634. This despite the zero tariff regime for intra-regional trade and the creation of the ASEAN Economic Community (AEC) or the regional single market.

While ASEAN was created initially for defense cooperation against regional communist revolutions in the ’60s and ’70s, it has evolved into a platform for freer movement of goods, people and services, and capital or investment. It was a good development and it should be pursued.

This coming November, the Philippines will host the ASEAN partners’ meeting composed of ASEAN + 6 (China, Japan, South Korea, India, Australia, and New Zealand) + Russia and US. Mr. Putin, Mr. Xi, and Mr. Trump and other leaders will be coming to Manila.

The US exit from the Trans Pacific Partnership Agreement (TPPA) and China-Japan leadership in the Regional Comprehensive Economic Partnership (RCEP) are important developments.

By how much have Asian economies improved based on freer mobility of goods, services, investments, and tourism? Here are some basic data (see table).

Those that have expanded by more than seven times in just 15 years are the following:

1. Vietnam: 11.2x in exports, 10.6x in imports, 9.1x in investments, and 10.6x in tourism receipts.

2. Myanmar: 7.2x in imports, 12.1x in investments, 12.9x in tourist arrivals; also high expansion in tourism receipts.

3. Cambodia: 14.2x in investments, 10.3x in tourist arrivals, and 24x in tourism receipts.

4. Laos: 9.3x in imports, 10.4x in tourist arrivals and 36x in tourism receipts.

5. China: 9x in exports, 7.5x in imports, almost 6x in investments, and 7 to 7.5x in tourist arrivals and receipts.

6. Japan: 7.4x expansion in international tourist arrivals.

7. India: 7.5x in exports, 12.3% in imports, and 7.8x in exports.

The Philippines also experienced modest growth in all the above indicators but not fast enough to create more jobs and businesses to its 104 million people. We should take hard lessons from our two small neighbors with huge economic achievements, Singapore and Hong Kong.

Singapore with only 5+ million people and just 3 1/2 hours by plane south of Manila, has 6x more exports, 11x more FDIs, attracts more than 3x foreign tourists and more than 4x in tourism receipts than the Philippines.

Hong Kong with only 7+ million people and less than 2 hours by plane north of Manila, has 8x more exports, 32x more FDIs, attracts nearly 7x foreign tourists, and nearly 8x in tourism revenues.

What small economies Singapore and Hong Kong have that the Philippines lacks are two important policies: free trade (zero tariff, minimal NTBs) and stricter rule of law (the law applies equally to both rulers and ruled, applies equally to unequal people).

So while we have improved our GDP size and material wealth via freer trade, freer movement of people and capital, we need to free up more.

We should allow more islands and provinces to have their own industrial zones to attract more investments and foreign trade. To have their own international airports and seaports to attract more investments and more tourism.

More modern infrastructure, simpler rules, and freer trade will help the Philippines attain what our developed neighbors have already achieved. Drastic reduction in NTBs and the removal of rice quantitative restriction (QR) and protectionism for instance. And less politics, taxes and bureaucracies, more respect for the law by politicians and bureaucrats.

Bienvenido Oplas, Jr. heads Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of the Economic Freedom Network (EFN) Asia.

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See also: 

BWorld 121, The PH tax reform bill and tax policies in East Asia, April 10, 2017

BWorld 127, Economic freedom in Asia means faster growth, lower prices, May 07, 2017 

BWorld 128, The quest for more stable and cheaper electricity in the ASEAN, May 08, 2017 

BWorld 129, Open pit mines and the DENR Secretary, May 12, 2017

BWorld 30, Tourism and airport transfer at NAIA

* This is my article in BusinessWorld last December 03, 2015.

Tourism provides income and creates jobs for many economies in the world. Singapore, for instance, attracts foreign visitors two times its population size while Hong Kong gets visitors four times the number of its residents.

The Philippines, being detached from the Asian mainland and an archipelago, does not get enough foreign visitors compared to its neighbors in the region. Thus, while one can take land transportation from Thailand to Cambodia, Laos, and Vietnam, or from Malaysia to Singapore, it cannot be done in the Philippines. One needs to fly from Manila to other exotic islands and famous beach resorts like Boracay, Bohol, Cebu, Palawan, Davao and so on.

Nonetheless, there is consistent growth in the Philippine tourism industry, attracting nearly 5 million foreign visitors in 2014. (See Table 1)

In terms of spending by foreign visitors and returning Filipinos already based abroad, the Philippines received nearly $4.8 billion in 2014. It is not as big as what Malaysia, Thailand, Singapore and other neighbors receive but it is twice what the country earned a decade ago. (See Table 2)

Since we aim to attract more foreign visitors and guests, it is important that infrastructure and logistical support are simple and provide convenience to our visitors and returning Filipinos, especially frequent travellers.

The airport transfer at the Ninoy Aquino International Airport (NAIA) to different destinations is generally very inconvenient and time consuming, especially with the on-going construction of skyways near and around the four terminals.

Take the case of VJ, a Filipino expat for most of his professional life who has been living in Singapore for three years now. His work takes him to the entire Southeast Asian region, traveling at least 25% of his time. He can fill one passport with stamps in an average of 1.5-2 years.

VJ flies from Singapore to Manila once or twice a month, both for work and personal travel. At NAIA, he would normally take the yellow airport taxi, whose rate is higher than regular taxis. Despite forking out extra for the same service, VJ prefers the yellow cabs since the cars are in better shape and the drivers are more professional.

Recently, the queue for the yellow cab has been longer than usual, taking passengers one and a half hours before they get a ride.

Another option is to take the “Bayan ko” flat rate white cabs. They cost more but at least the queue is more manageable, that is, if cars are around. Typically, a trip from NAIA3 to Ortigas for a yellow cab is around P275 and around double that amount for the white, flat rate taxi.

With the frequent heavy traffic around the airport, even queueing to get white cabs takes 30-45 minutes.

Last Nov. 6 when VJ flew back home, he was ready to take the white cab but saw that the line was extended, thinking that it would take him one and a half hours to get a ride.

One lady asked him if he wanted a quick ride to Ortigas, it would cost him P1,550, triple the price of the more expensive white, flat-rate cabs.

Another lady approached him and offered a ride to the same destination for P1,250. Because he was very tired, he took the bait.

The lady took him to Bay 1 of Terminal 3 and a white sport utility vehicle hurriedly picked him up. An airport policeman or traffic enforcer later hailed the vehicle but they were let go after a quick conversation with the driver. The driver told VJ that the policeman is the father of one of the female barkers. The driver then stopped and talked to one of the barkers, telling her that he will “take care” of the enforcer later or words to that effect.

Expensive rides, bad experiences at airport transfer

VJ is familiar with all the other airports in Southeast Asia and swears that they are devoid of this kind of taxi scam. He tried Uber before with good experience but for some reason, its signal is weak in NAIA3, or they may have been blocked, or Uber cars refuse to ply NAIA3.

Among the quick and convenient airport transfer for passengers would be different aircon buses or vans that will take passengers from terminals 1-3 to Makati, Ortigas, Cubao, Manila, Alabang, and so on. Passengers can get off at major hotels or take the ordinary taxi from those business districts. This will significantly reduce the number of cars that go in and out of the airport and hence, smoothen traffic flow.

If complicated, politicized, and bureaucratic franchising system is not a factor, private players can easily field these buses or vans and give faster and cheaper transportation for the passengers. But there could be heavy politics and opposition lobbying at the Land Transport and Franchising Regulatory Board and the Manila International Airport Authority as this new scheme will adversely affect the taxi duopoly (yellow and white/flat rate) and the third, “taxidap” scheme at the airport.

If this taxi duopoly plus taxidap scheme are kept for a long time, then the Philippines will not get more foreign visitors as these horrendous experience will be factored in by the tourists. It is safe to assume that Cambodia and Myanmar will overtake the Philippines in attracting more tourists by 2016 (see Table 1 again), if not this year.

Bienvenido S. Oplas, Jr. heads Minimal Government Thinkers, Inc., and is a Fellow of the South East Asia Network for Development (SEANET).

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See also:
BWorld 26, IPRI 2015 in APEC economies, November 19, 2015 

BWorld 27, The rich getting richer, the poor getting middle class, November 21, 2015

BWorld 28, Economic freedom in Asia, November 28, 2015 

BWorld 29, Paris COP's emission cut targets vs. energy needs, December 06, 2015

ASEAN Voices 3: Gaming and Casino Tourism in Asia

* This is my article for ASEAN Voices, a new Jakarta-based magazine, February 2015 issue.

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Tourism is a major economic player and job creator in many developing countries including in Southeast Asia. The region places next to China as being the most dynamic and fastest-growing area in  the  world, as it offers thousands of beach resorts, mountain resorts, and city centers that cater to visitors from other countries.

The main destinations for foreigners visiting East Asia are  China, Thailand, Malaysia, Hong Kong, and Macau, which is especially interesting because while its visitor-arrivals in 2013 was only one-quarter of that seen on mainland China, its tourism receipts were similar to those from the entire country.

Table 1.

source: http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf

What explains for such enormous tourism receipts from Macau? It is, of course gaming and casino tourism. Macau is No 1 on the planet in gaming revenues. In 2013 it reaped US$45.1 billion, followed by Las Vegas with US$6.5 billion; Singapore with US$6.1 billion; Atlantic City at US$2.9 billion; and the Philippines, which took in US$2.2 billion.

It is only logical then, that other Asian economies seek to duplicate the fantastic performance of gaming and casino tourism in Macau, and have launched various casino projects. Among them, according to Asia Awakens: The Growth of Casino Tourism, are the following:

·         Singapore’s integrated resorts in Marina Bay and Sentosa Island, with a combined value of approximately US$9 billion.

·         Philippines’integrated resort project, Entertainment City at Manila Bay, with a projected value of US$15 billion.

·         Vietnam’s integrated resort projects in Ho Tram, Danang and Phu Quoc, each involving investments of more than US$4.5 billion.

·         Cambodia’s projects in Koh Rong island, costing some US$2 billion, along with an integrated resort at Angkor Wat.

·          Malaysia’s Resorts World.

·         South Korea’s integrated resort development in Jejuisland, valued at some US$3.6 billion.

These casino developments are evidence of the dynamic and growing competition among countries in the Asean region, as well as in the gaming tourism sector.

However, one only has to look at the Las Vegas model, being a once-derelict patch of dry land that has become a multi-faceted entertainment venue centered upon frivolity. It is crucial to note that Las Vegas has never depended entirely upon casinos to bring the cash in.

According to the World Trade and Tourism Council, the city’s Disney-style hotels, boasting some 133.000 rooms, along with attractions, shows and recreational activities, account for half of the casinos’ revenue streams, meaning that wider tourism development and casino construction merely go hand-in-hand with one another.

Meanwhile, in the Philippines, the biggest player is the government-owned Philippine Amusement and Gaming Corporation with its dozen-plus casinos in Metro Manila and other major cities throughout the country.

But the country’s much-recognized and largest project is “Entertainment City” in Manila Bay, a huge 120 hectare development built on reclaimed land and hosting four huge licensees.

Table 2. 

Resorts World Manila is the sister company of Resorts World Genting, Malaysia, and Resorts World Sentosa, Singapore. From 2009 to 2013, it was the only casino resort in Metro Manila, until the opening of Solaire Resort and Casino.

Solaire is a new and large project by billionaire Enrique Razon, owner of International Container Terminal Services, Inc, which moves ships and cargo to 19 countries throughout the world. The resort includes a five-star hotel with 500 rooms and 1,000-seat ballroom.

City of Dreams casino held a soft opening last December, then a grand opening on Feb 2. The casino is a joint venture between Henry Sy, the Philippines’ richest family, Australian billionaire James Packer, and Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, and son of Macau casino mogul Stanley Ho.

Melco Crown Philippines Resorts Corporation President Clarence Chung said the new casino will provide additional choices for their customer base in Macau.

COD has three hotels: Crown Towers, Nobu and Hyatt. It is said to have attracted some 60,000 visitors during its soft opening last December, and since then has averaged 15,000 daily visitors.

The Manila Bay Resorts is owned by Japanese billionaire Kazuo Okada.

With these four resorts and casinos, the Philippines’ gaming sector is projected

to earn big, increasing from US$2 billion in 2012 to US$4 billion by 2016.

Table 3.

Sources: 2009-2013 actual, PAGCOR; 2014-2017 Forecast, The Innovation Group.

Regarding area infrastructure, there is ongoing large-scale skyway construction that connects Manila’s four airport terminals to Entertainment City. When this project is completed in 2016, it will drastically cut the travel time for visitors, local and foreign, from the airport to the resort-casinos.

But how do most Filipinos view these foreign gamblers and visitors? Generally, their opinions range from neutral to positive. Foreign gamblers do nothing to harm local residents, instead they just spend and spend, winning money if they are lucky, and in the process they provide lots of jobs and lots of tips to Filipino resort employees, officers and entertainers. Direct hires are about 5,000 jobs per casino; hotel rooms supply are expanded.

Other sectors, of course, will complain that the gambling and casino culture could permeate many Filipinos’ lives, as people seek to get rich-quick. Yet, this is not a strong argument because there are many types of gambling that Filipinos are now engaged in, from ordinary card games to bingo for charity, as well as the lotto and sweepstakes, and even cockfighting.

On the other hand, the government should see the enormous opportunities in the resorts-hotels-casino sector. There is no doubt that casinos need to always be considered in the wider tourism context—as better infrastructure leading into a casino will inevitably allow the casino to have a more positive impact on a region.

It is also a large job creator, from airlines to hotels, restaurants and entertainment, and can even evolve into medical tourism.

The government, in the meantime, collects taxes from 5%-17% based on GGR. Staring last year, casinos also pay corporate income tax.

It is therefore commended that the high taxes that actually also hound many other local businesses is slashed. At the end of the day, when people have high-paying and stable jobs, they become less dependent upon various government welfare and subsidy programs.

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See also: 
ASEAN Voices 2: PH Multinationals in the Region, February 01, 2015 

Privatization 9: PAGCOR and Casino Operations, May 16, 2012

Fat-Free Econ 12: Privatizing PAGCOR, June 08, 2012

Privatization 10: More on Selling PAGCOR, June 12, 2012

Hong Kong's Corporate and Forest Jungle

Among the things that fascinate me about Hong Kong capitalism is that they have both corporate jungle and forest jungle, and both jungles deliver money and utility or satisfaction for its people and foreign visitors. The three photos below I got from the web, none from my camera.

Well almost all developed economies have clean and green environment. Their economies create big surplus, economic and social surplus. So they can afford to retain some areas for non-commercial development and environmental conservation because they have a huge surplus.

This disproves the impression that capitalism destroys the environment. Poor countries need more capitalism and market exchange, not less. Then they can develop economically, and have more green environment.

The previously forested areas of the Philippines and other countries that became commercial, it's the same for HK What we see now as commercial jungle used to be forest jungle many decades ago.

HK and other developed economies have properly delineated their areas. Corporate jungle here, forest jungle there, open parks somewhere. If there are pockets of forested area in the corporate jungle side, they are few and small. It is a good model. It reduces the need for people to travel very far from house to work and school as they are concentrated in the same area.

Some people enjoy tourism capitalism of HK but they do not want tourism capitalism to develop in other areas, like the mountainous municipalities in Negros island, Salvador Benedicto and Canlaon. Such opposition is unjustified. There is demand for mountain resort facilities, there are people looking for work in the tourism-related industries, and there are investors willing to put their money (and lose it if they make bad decisions). Allowing such development will be a win-win scenario for many sectors.

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See also:

John Cowperthwaite, Statistics and Central Planning, January 23, 2014 

Free Trade 32: Hong Kong's Unilateral Trade Liberalization and John Cowperthwaite, February 12, 2014

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Free Market Environmentalism, June 07, 2014

Fat Free Econ 49: Growth Amid Storms

* This is my article yesterday in interaksyon.com, TV5's news portal.
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MANILA - By storms, we refer not only to natural typhoons and widespread flooding, but also to political storms that hounded both the Legislative and Executive branches due to the prolonged pork barrel scandal in the third quarter this year. It remains surprising therefore that the Philippine economy was able to grow by seven percent in the third quarter. 

In the first three quarters of this year, the Philippines' gross domestic product (GDP) has grown so far by 7.4 percent. Gross national income (GNI) -- previously called gross national product (GNP) and includes income by Filipino nationals abroad minus income by foreigners in the country -- grew by 7.3. Net primary income (NPI) or net factor income from abroad (NFIA) grew by 6.7 percent.

Growth in per capita GDP, GNI and household final consumption expenditure (HFCE) are also shown below. All tables were taken from the National Statistical Coordination Board (NSCB) presentation titled Performance of the Philippine Economy, Third Quarter 2013, except the table from The Economist.

Compared to the growth of other emerging economies, Philippine growth figures are indeed high, next only to China.

And if compared to the industrialized countries, the Philippines’ GDP growth figures should be an object of envy of many European economies. The Euro area is projected to sustain its economic contraction by an estimated 0.4 percent this year, according to The Economist’s poll. Japan and the US are expected to have modest growth of 1.9 and 1.6 percent, respectively.

Source: The Economist, November 23, 2013

Where did fast growth come from? 

Computation of GDP or flow of goods and services yearly is made through the supply side (major industries) and the demand side (major consumers) of the economy. Let us take the supply side growth contributors first.

Agriculture, hunting, fishery and forestry (AHFF) showed a near-flat performance with just 0.3 percent growth last quarter over its year ago level. Huge growth was contributed by the industry and services sectors, growing by 8.2 and 7.5 percent, respectively.

But in terms of share to total GDP, the services sector is the biggest, followed by industry. So that in terms of percentage contribution to the seven percent GDP growth, more than half of it, 4.4 percent, came from the services sector.

Criminals 4: Hostage-taking of HK Tourists in Luneta

(This is my article last week for thelobbyist.biz, Killers, the Police and the State)

The main function of the State is to protect the citizens’ right to life, right to private property, and right to liberty. When people have peace of mind that they can work until midnight if they have to, and worry little that muggers will accost them on the roads as they go home, or thieves will boldly enter their house at night, then people will become more productive. The economy will be dynamic, lots of jobs will be created, and poverty will be cut. Only the lazy and irresponsible will remain poor.

It is very important, therefore, that the justice system, from the courts to the armed forces like the police, are well-disciplined, well-motivated, and well-respected. If any of those pillars of the justice system are corrupt, then people’s respect for the system will decline if the rule of law – law against killing, against stealing, against kidnapping and hostage-taking, etc. – is not promulgated, people will be less productive as they have little peace of mind that the State can protect them and their family members from the bad guys.

The handling of the hostage-taking by the Philippine National Police (PNP) was so bad, many people think that everyone was a loser.

Hong Kong lost eight of its citizens who came to Manila as tourists and visitors, and ended up as dead hostages. The others were wounded and hospitalized.

The Philippine tourism and investment industries lost thousands of potential foreign tourists and businessmen who were either scared to come or were discouraged by their governments to come to the country. From airlines to hotels, restaurants, travel agencies, travel guides, souvenir shops, to domestic investment, everyone was a loser.

The Filipino taxpayers who pay for the salaries, training, travels, guns and cars, pension and other perks of the PNP, are losers too. We taxpayers expect competent troopers who can deal with killers and hostage-takers quickly.

We taxpayers who are unskilled and scared to face people with guns, have to trust some guys who said they are brave enough to face armed killers, armed robbers, armed kidnappers, armed hostage takers. That is why they joined the PNP.

When those troops took so long to end a hostage taking involving many persons, much worse resulted in death of many hostages, we feel we are paying for incompetent troopers.

If the PNP sent a Rambo-type of policemen, they may have been wounded or killed while doing their job, the image of the PNP would have been different. The PNP would be seen as uncompromising brave heroes who kept their words in protecting the citizens’ right to life, even at the cost of their own lives.

But the PNP sent cops who were nervous even in breaking the bus door, in breaking the front glass. The cops who smashed those two doors lost grip of the ax they were using, most likely because they were nervous. If the hostage taker totally flipped his mind, he could have killed all the remaining hostages as it took several minutes more before the police resumed their assault.

A friend from Hong Kong asked, "what turned this ex-police officer to become a murderer? Is the system so corrupt that he had to do crazy thing to put the whole system into trial?"

Yes, the police system is corrupted. That ex-police official turned criminal was dismissed because of some extortion cases. Perhaps he felt bad being singled out and dismissed from the ranks, knowing that there are many other crooks in the police hierarchy but were not dismissed, some were even promoted to higher positions.

This was another instance where corruption causes more disappointment, triggering hostage-taking and caused national shame before millions of eyes around the world.
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See also: Criminals 3 Kidnappers in Government, August 24, 2010

Criminals 3 Kidnappers in Government

(Note: the original title of this paper was "When government is breeding ground of criminals". I changed the title to reflect a new discussion series on "Crime and Rule of Men".)

The hostage-taker-criminal in the tourist bus incident yesterday, Rolando Mendoza, was a former police captain. He was dismissed last year because of charges of robbery, extortion and grave threats filed against him and 4 other police officials by an employee of one hotel in Manila.

He was angry, so he has to resort to terrorism, by taking a bus full of tourists from Hong Kong, used the foreign visitors as his hostages to impose his demand -- that he should get back his past position as a police official. Whether he was unjustly charged or not, hostage taking is never a sensible solution to assert one's demand, personal or political.

After aboout 12 hours of negotiations, watching, monitoring, drama, 8 HK visitors were dead, the hostage taker was also dead.

The focus of public discussions was how the Philippine National Police (PNP) handled the crisis -- why it took them 12 hours to end the crisis, why so many dead hostages, why a lot of questionable, if not idiotic actions were commited prior to the storming of the bus, etc.

As expected, many potential foreign tourists, especially from Hong Kong and mainland China, cancelled their trip to the Philippines. The HK government even issued a "black" travel advisory to their citizens not to visit the Philippines.

A number of blogs in China had some angry and satirical comments against the Philippine police. Some negative comments were directed at the "monkey" Filipinos. See this popular blog about China and Chinese people for non-Chinese-speaker readers, http://www.chinasmack.com/2010/stories/philippines-hostage-crisis-ends-many-dead-chinese-netizen-reactions.html

The big issue is that the criminal, the hostage-taker-killer, is a former government personnel, armed and dangerous. He's got government-issued armalite and ammunitions, government-conducted training. Such deadly combinations when used to threaten ordinary civilians is very dangerous.

I think the criminal was angry that while he was charged (convicted?) as a police extortionist, he knew that many PNP officials are also extortionists. But those guys kept their positions, some were even promoted, so why was he singled out? To get back his position and to become a future criminal in police uniform, he has to do a criminal act of using foreign visitors as his hostages to pursue his personal agenda.

And true to being a criminal, he killed some of his hostages and fought it out with policemen in active duty.

His death though, will not end a bigger danger: the government as breeding ground of criminals in uniforms. Those criminals are not many, they may be few, but even one criminal -- an extortionist, a murderer, a kidnapper, a carnapper, etc. -- is enough to taint the image of the PNP as an institution.

So long as government people do not fully appreciate 100 percent, the importance and value of the "rule of law", the temptation to use their position to perpetuate the "rule of men" will always be there.
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See also:
Criminals 1: Killings in Thailand and Military Crackdown, April 16, 2009
Criminals 2: Pakistan, the Criminal state, August 17, 2010

China Watch 2: China's Tourism

China is not only the world's 2nd largest economy in terms of GDP size (by PPP valuation) today. It is also the world's 2nd largest source of foreign tourists. And in the perspective of advancing free market, this is a good development. Why?

The Chinese's increasing wealth, tourism, business travels, and even migration, will spur more private enterprise development and expansion in the rest of the world. You buy cheap products from China, you sell it elsewhere at a good margin, or you use it as raw materials or intermediate inputs in your manufacturing processes, sell at a good price, you make money. Rich Chinese engaged in exports and trading also visit your country, spend their money there, the hotels, restaurants, tourist spots, tour guides and travel agencies, airlines/shipping lines/bus lines in your country are happy.

When tens of millions of Chinese (including Chinese politicians and government bureaucrats) are able to travel abroad and see the culture and economies of other countries, more and more of them will realize the value of people mobility, the beauty of individual liberty, and the efficiency of assigning more personal responsibility, away from centralized and state responsibilities and high taxation.

See related news below.

http://www.iht.com/articles/2006/05/16/news/tourism.php

Chinese travel is taking off
By Howard W. French
The New York Times, MAY 16, 2006

...In 1995, only 4.5 million Chinese traveled overseas. By 2005, that figure had increased to 31 million, and if expectations for future growth are met or approached, even this gargantuan growth will be quickly dwarfed. Both Chinese and international travel industry experts forecast that at least 50 million Chinese tourists will travel overseas annually by 2010 and 100 million by 2020.

In 2004, the last year for which there is complete information, 61.7 million Americans traveled abroad...

The last nation to burst on the world travel scene with similar speed and force was Japan, which was enjoying an explosion of prosperity in the 1980s. Suddenly, Japanese could be seen everywhere, especially groups of middle-aged tourists wearing caps and brandishing the latest camera gear, and led, inevitably, by a Japanese tour guide hoisting a flag so that people would not get lost... roughly 17 million overseas visits.

As recently as the late 1980s, all but the Chinese elite were expressly forbidden from traveling overseas. But by 2003, China's overseas travelers had already surpassed Japan's, placing it squarely among the world's leading travel nations....

The six most popular destinations for the Chinese are Japan, Vietnam, South Korea, Russia, Thailand and the United States. Patterns that took years to develop during the Japanese wave are already falling into place in many of these countries, with hotels, restaurants, airports and shops beginning to cater to their needs with special Chinese language services, bank ATMs and menus oriented toward Chinese tastes...

* See also: China Watch 1: World's Largest Economies, Population, 2005, April 20, 2006