ALF 12, Conference 2019 at Hilton Colombo, Sri Lanka

The Asia Liberty Forum (ALF) started yesterday at Hilton Colombo, Sri Lanka. Packed ballroom at the opening ceremony. 

Some tweets below, lifted from #AsiaLF19:

“In a short space of time @advocatalk has established itself as THE liberal voice on economic affairs in Sri Lanka.” .@razeensally, an advisor to Advocata Institute, discusses the role of ideas in 

“No one has benefited from ideas of economic liberty as much as the asian region” - @razeensally delivers welcome remarks kicking off.

Tom Palmer - how economic freedom created wealth ... and dramatically reduced poverty.

“Poverty is what you get when you fail to produce wealth. In contrast wealth is not what you get when you fail to produce poverty.”- @tomgpalmer during his cornerstone talk.

“Capitalism has problems. But it also is the greatest idea that humanity has ever had. It allows people to escape poverty.” -Roy Spencer of @ConsciousCP during his cornerstone talk.

“We all know the saying of whether you give a man a fish or teach him to fish. But what happens if the government says fishing is illegal? Before you can teach to fish you have to be allowed to fish.” -@dhananath of @advocatalk during his cornerstone talk.

Laurence Todd of @IDEASMalaysia discussing enforcement of contracts in MY and Asean.

“Think Tanks can lead the conversation and act as a middle person between the small businesses and government, since their voices aren’t alway heard.” -@AiraAriana of @IDEASMalaysia during a concurrent session on Removing Barriers to Entrepreneurship.

Last night, below. We were batch mates in the Mackinac Leadership Conference in Midland, Michigan, early April 2004. Then we also attended the Atlas Liberty Forum in Chicago a week after, nearly 15 years ago. Lisa Roberts and Parth J Shah. Lawrence Reed is not here in Colombo so I asked Brad Lips to join us.

Rainer Heufers of @cips_id speaking, "Charting a course of Economic Freedom in Asia".

More pics to follow...

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See also:

ALF 9, Conference 2017 in Mumbai, India, February19, 2017 

ALF 10, Conference 2018 in Jakarta, Indonesia, February 16, 2018 

ALF 11, Conference 2019 in Colombo, Sri Lanka, January 22, 2019

BWorld 295, Growth and electric cooperatives

* This is my column in BusinessWorld last February 19, 2019.

On the Philippines’ GDP growth rates, the good news is that from 2010 to 2018, the Philippines has been growing above 6% yearly except in 2011. High growth was experienced in 2010 with 7.6% (recovery from 2008-2009 global financial turmoil) and 2013 (election year) with 7.1%.

The bad news is that these growth rates are not enough. The Philippines, with 106 million people, has a GDP size in 2017 of only $314 billion while neighbors with their smaller populations had similar or larger GDP sizes: Malaysia (32M) has $312B, Singapore (5.8M) has $324B, Thailand (69M) has $490B. We need to grow 7-10% per year for many years before we can even catch up with Thailand or Malaysia (Source: IMF, World Economic Outlook [WEO] October 2018).

Among the important factors to have high and sustained growth is to have high and rising supply of cheaper and stable electricity. There are numbers that show a correlation between GDP growth and electricity consumption growth especially for developing countries like the Philippines (see Figure 1).

Among the ASEAN 6, a similar pattern can be observed, also with China and Japan. The Philippines’ low GDP size is reflected in its low electricity consumption in tera-watt hours (TWH) (see figure 2).

There are many factors why our electricity supply and consumption is low compared to our neighbors, like the thick, expansive bureaucracies and permits required before one can explore and develop new power plants.

We focus on the role and “mis-role” of electric cooperatives (ECs). Since they are geographical monopolies granted with congressional franchise to distribute electricity, they can help expand or restrict power demand. If an EC for instance is mismanaged and does not pay the power generation company (genco), even if the genco has big plans to expand power capacity, it cannot do so.

The Department of Energy (DoE) has issued two media releases related to problematic ECs dated February 01 and February 06. It noted that many ECs are failures in expanding rural electrification because of “inefficient management, corruption, unnecessary political interference, institutional conflicts.”

So DoE will conduct a performance review of ECs, especially those that burden their communities with persistent and unresolved brownouts, because they have heavy debts and do not pay their power supply. Underperforming ones will be assisted while non-performing ones will be recommended for cancellation of their franchises.

DOE has identified 17 ECs that are chronic failures to provide satisfactory services to their customers as stipulated in their congressional franchise. Seven are from Regions IV-B and V — ALECO (Albay), CASURECO III (Camarines Sur), FICELCO (Catanduanes), MASELCO (Masbate), OMECO (Occidental Mindoro), ORMECO (Oriental Mindoro), and PALECO (Palawan). Other problematic ECs are PELCO (Pampanga), BASELCO (Basilan), LASURECO (Lanao), SULECO (Sulu), ZAMCELCO (Zamboanga), and DANECO (Davao del Norte).

Then certain islands have rising missionary subsidies — which are then passed on to all electricity consumers nationwide via high universal charges.

In three previous articles in this column, “Unstable power supply due to problematic electric cooperatives” (February 08, 2017), “How the bureaucracy works against cheap and stable electricity (March 08, 2017), and “Corporatization of electric cooperatives can reduce system loss” (September 29, 2017), it is argued that ultimately all ECs should be corporatized and depoliticized, be registered as corporations with SEC, and not with NEA.

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See also: 

BWorld 292, Inflation and the Transportation sector, February 08, 2019 

BWorld 293, Solar para sa pulitika, Rice Tariffication para sa masa, February 13, 2019 

BWorld 294, The freedom to fly, February 23, 2019

Plunderers are above the law

Senators Jinggoy Estrada, Juan Ponce Enrile, and Ramon "Bong" Revilla Jr. are convicted plunderers in connection with the Napoles pork barrel scam, were put to jail in the previous administration. Enrile was freed "due to health reasons" while Estrada and Revilla were later freed under the present administration. See https://newsinfo.inquirer.net/1044283/3-ex-senators-in-pork-scam-running-again.

Former President and now House Speaker Gloria Arroyo was also a convicted plunderer and was on hospital arrest but was later acquitted by the Supreme Court. See https://www.rappler.com/newsbreak/iq/140221-timeline-gloria-arroyo-plunder-acquittal.

And former First Lady Imelda Marcos was also convicted of graft and corruption. See https://www.philstar.com/headlines/2018/11/10/1867352/imelda-marcos-found-guilty-graft-faces-arrest.

The Ressa arrest is due to a cyber libel filed by businessman Keng. A case between two private individuals. While the Duterte administration may be correct in saying that they just want to follow the rule of law in the Ressa arrest, they cannot say they also followed the rule of law for indirectly sponsoring the release of the convicted Senators.

Energy 121, US oil and natgas production

US crude oil production: 

(1) End of Bush Jr's term 5.0 million barrels per day (mbpd), 

(2) End of Obama 1st term 7.0 mbpd, 

(3) End of Obama 2nd term 8.8 mbpd, 

(4) Trump 2+ years 12.0 mbpd. 

Or an increase of 3.8 mbpd after 8 years of Obama, and increase of 3.2 mbpd after 2 years and 2 months.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

Saudi and Russia oil production about 11.5 mbpd each and they are cutting their output to force higher oil prices while US is raising output to lower oil prices.

And US natural gas production. 

(1) End of Bush Jr. 1st term 2004, 1.63 trillion cubic feet (tcf), 

(2) End of Bush Jr. 2nd term 2008, 1.83 tcf, 

(3) End of Obama 1st term 2012, 2.15 tcf, 

(4) End of Obama 2nd term 2016, 2.36 tcf, 

(5) Trump 1 year 11 months, 2.84 tcf. 

Or increase of 0.53 tcf after Obama 8 years, increase of 0.48 tcf after Trump 1 year and 11 months.

https://www.eia.gov/dnav/ng/hist/n9050us2m.htm

Reduce energy prices by expanding production, continuously. Debureaucratize energy exploration,  extraction and transportation.

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See also:

Energy 118, Climate lies to justify RE subsidies, December 04, 2018 

Energy 119, US oil output now almost 12 mbpd, January 20, 2019 

Energy 120, US-Russia rivalry in oil-gas dominance, February 04, 2019

BWorld 294, The freedom to fly

* This is my article in BusinessWorld last February 15, 2019. 

“Once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return.”

— Leonardo da Vinci (Italian polymath, 1452 — 1519)

While I have been to many ASEAN countries, it was only recently that I have visited some South Asian countries like India (Mumbai only), Nepal, and Bhutan, all related to attending the Asia Liberty Forum (ALF) or the Economic Freedom Network (EFN) Asia conferences.

The big cities in our ASEAN neighbors are modern and developed, starting from their big and modern international airports. Flying from Manila is also easy because of (a.) the short distance, maximum four hours direct flight; (b.) lower fares due to many competing airlines; and, (c.) visa-free entry for ASEAN visits of less than 30 days.

The South Asians have a different environment. Bhutan and Nepal are very cold as they are up in the high Himalayan mountains — Mt. Everest can be seen from a distance when flying to Paro or Kathmandu. There are also no direct flights from Manila so the cost of travel is high, and there is a visa fee to pay.

All of my past trips to attend ALF and/or EFN conferences were sponsored by EFN Asia and the Friedrich Naumann Foundation for Freedom (FNF), except for the Nepal trip in 2015 where I was sponsored by Media 9 and Business 360 magazine, where I was a contributor for free market topics.

  

I will attend the ALF 2019 in another South Asian country, Sri Lanka, from Feb. 28 to March 1. One thing that is weird going there is that almost all airlines from East Asia — Malaysia, Singapore, Thailand, Hong Kong, South Korea, etc. — arrive in Colombo airport in the late evening to early morning. Only the Sri Lankan airline flying from these countries arrives in Colombo at day time. For me this is indirect local airline protectionism.

I checked the tourism numbers — South Asia is not exactly a favorite destination for many international visitors, unlike many ASEAN countries. India, with its population of 1.3 billion, attracted only 15.5 million foreign visitors in 2017, nearly comparable with Singapore’s (population 5.7 million) 13.9 million visitors (See Table 1). I did not include in the list countries with very small numbers of foreign visitors in 2017 like Brunei (0.26 M), Bhutan (also 0.26 M) and Nepal (0.94 M).

Next, I wanted to know how many of those international visitors in the Philippines and its neighbors are from the ASEAN. The numbers are a bit surprising — less than half a million of the Philippine’s international visitors are from our neighbors in the ASEAN. We are not attractive to our neighbors, like Myanmar (See Table 2).

Malaysia, Laos, and Cambodia are attractive to their neighbors — partly because one can travel from Singapore to Kuala Lumpur by car or bus in five hours or less, with no need to fly; and partly because Malaysia has huge competing airlines that cater to all visitors, from the rich to poor travellers seeking budget airlines and landing in budget airport terminals.

Thus, the Malaysia experience can be a model for the Philippines in attracting more foreign travelers. Indonesia too — it is expanding its airports to be bigger, more modern. I saw the new Soekarno Hatta Airport last year when I attended ALF 2018 in Jakarta and I was surprised by its modernity. The airport’s passenger traffic rose from 57.8 million in 2012 to 65.7 million in 2018.

More big domestic airlines, more regional airline competition, more budget terminals alongside main terminals to attract more budget airlines local and foreign — we need them. The freedom to fly for more Filipinos and more foreigners seeing the Philippines should increase.

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See also: 

BWorld 291, Mining, tobacco tax hikes, MACR and PSA liberalization, February 07, 2019 

BWorld 292, Inflation and the Transportation sector, February 08, 2019 

BWorld 293, Solar para sa pulitika, Rice Tariffication para sa masa, February 13, 2019

Trump-Kim 2, the second summit in Vietnam

Vietnam as venue of the second Trump-Kim summit next week is perfect, good model for N.Korea transition: (1) VN is politically socialist but economically capitalist, (2) VN has no nukes yet politically secure, (3) VN was a former US enemy and later embraced the US as economic and military partner, (4) VN is an ASEAN member, the association is 3rd biggest consumer bloc in the world (about 650 M consumers) with many friends all over the world.

Go Mr. Kim, you may remain politically socialist but embrace capitalism and globalization, embrace America and its huge entrepreneurial talent and resources. No more nukes, more billions of $ of commerce instead.

Can North Korea copy Vietnam’s economic miracle?

John Power   Lam Le   Updated: Monday, 18 Feb, 2019 7:31am

https://www.scmp.com/week-asia/economics/article/2186206/can-north-korea-copy-vietnams-economic-miracle

North Korea Predicts ‘Major Breakthrough’ at Second Trump-Kim Summit

18 Feb 2019

https://www.breitbart.com/national-security/2019/02/18/north-korea-predicts-major-breakthrough-second-trump-kim-summit/

“Kim will reportedly arrive for the summit early, on February 25, for scheduled talks with Vietnamese officials. Vietnam is a communist country but maintains friendly relations with the United States and has managed to sustain a functional economy, something that has eluded North Korea for decades. Kim’s visit will be the first by a North Korean communist dictator since grandfather Kim Il-song visited in 1964.”

Kim Jong-un expected in Vietnam early ahead of summit with Trump

Nicola Smith, asia correspondent

18 FEBRUARY 2019 • 4:24AM

https://www.telegraph.co.uk/news/2019/02/18/kim-jong-un-expected-vietnam-early-ahead-summit-trump/

“But the focus of Kim’s trip would likely be the economy. Vietnam’s reforms, which have propelled it to become of one of the fast-growing economies in the world, have been widely touted as a road map for the impoverished hermit kingdom to follow.”

Second Trump-Kim summit propels Vietnam to geopolitical center stage

The Southeast Asian nation has friendly relations with all the key players.

By Ben GittlesonFeb 13, 2019 2:54 AM ET

https://abcnews.go.com/International/trump-kim-summit-propels-vietnam-geopolitical-center-stage/story?id=60861050

"The United States and Vietnam normalized ties in 1995, decades after the end of the Vietnam War. Over the ensuing quarter century, their economic and trade relations have grown stronger. From 1995 to 2016, bilateral trade grew from $451 million to nearly $52 billion, according to the State Department.

President Barack Obama visited Vietnam in 2016 and Trump attended an international summit there in 2017. Vietnam’s Prime Minister Nguyen Xuan Phuc visited the White House in 2017, too."

How Vietnam Went From Cold War Foe to a Host for Trump and Kim’s Summit

By Jihye Lee

February 7, 2019, 6:33 PM GMT+8 Updated on February 9, 2019, 9:29 AM GMT+8

https://www.bloomberg.com/news/articles/2019-02-07/how-vietnam-went-from-cold-war-foe-to-trump-kim-summit-host

"Both Trump and Kim, whose regime has been locked in hostilities with the U.S. for almost 70 years, have intense security demands. Vietnam has been building military ties with the U.S. to balance a rising China and -- like Singapore, the host of the first Trump-Kim summit in June -- is among four dozen countries with a North Korean embassy. Moreover, Kim, who must rely on Chinese loaner aircraft and aging Russian-built passenger jets, can reach the communist country by flying over friendly territory."

Good outcomes expected for Trump-Kim summit

Update: February, 18/2019 - 21:00

Viet Nam News  By Paul Kennedy

https://vietnamnews.vn/politics-laws/505556/good-outcomes-expected-for-trump-kim-summit.html#kjFEBJ5oOZS0Ogze.97

“Nearly 3,000 journalists are expected to descend on Hà Nội next week for the biggest political event of the year…

It’s only the second time the political heavyweights have ever met, but analysts predict this meeting has more significance than last year’s summit in Singapore.”

N. Korea will learn a lot from VN -- from privatization of many state-owned enterprises to large-scale exports to (and imports from) the rest of the world, to being a member of a regional (ASEAN) free trade, zero tariff area. Note also that the two Trump-Kim summit are held in the ASEAN, SG last June and VN this month. So a NKorea-ASEAN FTA will not be far fetched.

This will be a new growth opportunities in East Asia, no doubt. N. Korea has about 26 M people and consumers, and S. Korea (51 M consumers) can then reduce its defense spending and use more public resources for N. Korea industrialization and development.

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See also: 

The Trump-Kim summit, more capitalism and commerce, less communism and missiles, June 16, 2018 

BWorld 219, The US-North Korea summit and the global economy, June 10, 2018

LGU bureaucratism, Guimaras restrictions on mango harvest and selling

An Iloilo-based American friend, Bruce Hall, posted this photo in my fb wall the other day with this note:

"Nonoy, as I departed Guimaras yesterday, I saw this sign at the ferry terminal, very prominently displayed. One cannot harvest one's own mangoes without government approval, even if they are damaged from a typhoon!

Even with government approval, you are forbidden to harvest your mangoes when you want and in the quantity you want. Do you think that you can see 600kgs of pickled mangos? Too bad, the government forbids you!

Were the mangos damaged in some way? Too bad you can only harvest damaged mangos if caused by a typhoon and only with government permission.

Do you think that mango taste better if harvested early? Or do you need money and so need to pick early? Too bad. The government forbids you!

So much for freedom. So much for owning and controlling your own destiny. The government forbids it!"

I thanked Bruce for this info. National government bureaucratism has permeated local governments. This is inviting extortion left and right. The barangay officials can now decide who can harvest, who cannot, from their own mango trees. Lousy. Big government pa more.

BWorld 293, Solar para sa pulitika, Rice Tariffication para sa masa

* This is my column in BusinessWorld yesterday, February 12, 2019.

The cronyist “Solar para sa Bayan Corporation” (SPBC) franchise bill (HB 8179) was magically passed by the House of Representatives despite opposition by many groups in the energy sector. Among the oppositors is the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM), the umbrella organization of all RE associations in the Philippines.

As I did in my letter to Sen. Grace Poe, arguing for the junking of HB 8179, DREAM said the bill is unconstitutional and should not be passed. In particular, (1) it violates the equal protection clause under Article III, Section 1 of the 1987 Constitution. The proposed SPBC franchise has no substantial distinction with other generators that will not be granted a similar franchise. (2) It violates the fundamental right to due process of law under the Constitution. And (3) it violates the proscription against unfair competition.

Nonetheless, a Senate Committee Report 659 was passed last week, February 7, 2019, and some outlandish provisions from the original bill have been tamed. Among the changes is that the operational coverage “in any… areas throughout the Philippines” has been limited to only 13 provinces.

Note three things here: (1) SPBC claims it is competitive yet it requires a Congressional franchise and a franchise by nature is a monopoly, (2) EPIRA law of 2001 has unbundled energy components and players are classified as transmission, generation, distribution, supply companies; SPBC is a generation, distribution and supply company rolled into one, and (3) first time that a franchise will have implementing rules and regulations (IRR).

BusinessWorld reported (“Court challenge looms for Solar Para Sa Bayan franchise,” February 08, 2019) that the Coalition for Rural Electrification (CoRE) warned that such a franchise bill may not hold up to a court challenge. Good. It is shameless that this bill was rushed at the House and the Senate where a member is the mother of the company owner as we all know. If it becomes law, the measure should be called as Solar para sa Pulitika Corp.

Meanwhile, on another front, there is a last-minute lobby by various protectionist groups who insist that expensive rice is good for the country and the poor. They oppose SB 1998 or the Rice Tariffication bill, removing quantitative restrictions (QR) and replacing it with a 35% tariff rate on imported rice from ASEAN, and 40% or higher on imported rice outside of ASEAN.

The protectionists’ main argument is that rice liberalization will lead to the demise of the local rice industry as there will be a huge influx of imported rice from our neighbors.

This is outright disinformation, deception and lie. Even if we wanted to import one-half or even one-fourth of our domestic rice consumption, it is not possible, it is not going to happen.

Data from the UN Food and Agriculture Organization (FAO) show that Philippine rice production has been steadily rising and the average productivity per hectare has also been rising, from only 2.2 tons per hectare in 1980 to 4.0 in 2017.

The two big rice exporters in the world, Thailand and Vietnam, have actually experienced a declining or low expansion in rice output. Thailand’s output declined from 35.7 M tons in 2010 to 33.4 M tons in 2017. Over the same period, Vietnam’s output increased a little from 40 to 42.8 M tons.

Myanmar and Cambodia can be the next group of rice exporters but they also have a rising demand and population (see table).

So the Philippines’ rice importation will be limited and restricted even if it wants to import more and there will be no such demise in the local rice industry. Rice trade liberalization should proceed, and NFA’s distortionist monopoly of power to regulate rice imports should be removed.

The 35% tariff is actually high. Why should a P30/kilo potential landed price of rice from ASEAN neighbors be made P40.50/kilo to many poor Philippine households? That 35% should go down through time, down to zero for rice imports from ASEAN.

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See also: 

BWorld 290, Universal charges and Solar sa Bayan franchise bill, February 4, 2019 

BWorld 291, Mining, tobacco tax hikes, MACR and PSA liberalization, February 07, 2019 

BWorld 292, Inflation and the Transportation sector, February 08, 2019