Sunday, May 12, 2019

My Mama on Mother's day

Today is Mother's day, my other sister in Negros Occ. posted these old photos of our mother (she died more than 3 years ago at roughly 80 yo). Mama Consuelo is beautiful. Below left with Manang Bebeth (2nd child), below right with Neneng Marycris (3rd child). I'm the 4th in the family.


With Manang Bebeth's only child, Marvien. Mama with Guen Alas, Neneng's eldest child.


Mama, Manong Nestor (our eldest, he passed away about 14 years ago due to cancer), Papa (he died two years ago), Manang Bebeth, Marvien.


Manong, Mama, Papa, Neneng, me, and Marvien.


Thank you Ma. Thank you Pa....

Tuesday, May 07, 2019

BWorld 323, MORE smart cities… with sufficient water

* This is my article in BusinessWorld yesterday, May 06, 2019.


Metro Manila is expanding fast with 13+ million residents, plus an estimated 2+ million from surrounding provinces going to the big city for work, studies, other transactions. Big populations lead to big economic opportunities but also big problems like heavy traffic congestion and recently, insufficient potable water and power shortage.

Asia hosts among the biggest cities in the world, some of which show that having a big population does not automatically means big problems. Tokyo for instance has nearly 3x the population of Metro Manila but people there do not experience horrible daily traffic congestion or water and power shortage.

But most other big cities in Asia generally experience what people in Metro Manila experience – like Delhi and Mumbai, Dhaka and Chittagong, Karachi and Lahore, Jakarta and Bekasi.


Discussions of developing “smart cities” to distinguish developing an entire country have surfaced in recent years. The purpose is to narrow down policy reforms in smaller geographical areas so that program implementation will be faster and more customized.

On this subject, the Friedrich Naumann Foundation for Freedom (FNF) is participating and hosting a panel discussion on “Smart Cities and Startups — Opportunities for Business Innovation” at the huge, 3-day “Jeju Forum for Peace and Prosperity” conference this coming May 29-31, 2019, at the International Convention Center Jeju, South Korea.

The FNF panel will be on Day 2 (May 30) and its speakers will explore challenges and opportunities that startup companies are facing and discuss strategies to create enabling ecosystems where they can thrive. Policy reforms would cover national and local regulatory framework, role of city governments and policies or regulations to support business innovation of startups, and drawing a line between freedom to innovate and freedom to privacy in the use of open data.

Meanwhile a big group of local business organizations (MAP, MBC, PCCI, PhilExport, etc.) and foreign chambers of commerce (US, Canada, EU, Japan, Aus-NZ, Korea) have issued “Statement on Proposed Reforms for the Philippine Water Sector” last April 22, 2019.

They pointed out two things among others and I agree with them: (a) “The megacity’s overdependence on the sole Angat Dam for Metro Manila’s water supply requirements has proven to be folly”, and (b) 20 years water privatization has been successful. They proposed the following measures:

1. Fast-track the construction and development of new water sources for Metro Manila.

2. Introduce water conservation and promote water efficiency.

3. Develop a Water Security Masterplan for Metro Manila and the entire country based on sound science and strengthen the National Water Resources Board.

4. Rehabilitating the country’s wetlands, water bodies, and supporting ecosystems.

Good proposals. I want to emphasize that our big problem yearly is not lack of water but too much rain water, too much flood especially during the months of July to September. But we do not have enough dams and lakes to store the huge volume of water, they just go straight to the sea.

The private sector should be allowed and encouraged to own private dams and man-made lakes, like mined-out big open pit mines. They can use the raw water for their community and corporate needs, and sell water to private water utilities and hydro-electric power plants. This should be among the market-oriented reforms for efficiency (MORE) that can help “smart cities” and business start ups so that these smaller units can prosper further.
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China Watch 33, US' 25% tariff on $200 B of CN exports

The China communist government is reeling again, not just from Trump challenge at the WPS/SCS but this time at his announcement yesterday of 25% tariff on $200 B of China exports starting this Friday. The CN economic bubble will burst big time?


Related news reports:

1. Trade Deal Dead: Trump Says 10% China Tariff Rising To 25% On Friday, Another $325BN In Goods To Be Taxed
by Tyler Durden Sun, 05/05/2019 - 19:39

2. Markets slide after Trump threatens to dramatically increase China tariffs
Martin Farrer and Richard Partington    Mon 6 May 2019 18.04 BST

3. US accuses China of backtracking on trade deal
7 May 2019

I was expecting that many Trump-haters would jump on this. NOT because they have suddenly become free traders and zero tariff advocates, but because they want to further pacify the CN Communist- protectionists. And they wish that beloved Obama-Hillary team will do that continued pacification. Seems they were silent on this.

Only Trump can do this. His balls are a lot sturdier than the balls of Obama, Biden, Sanders, etc combined. He challenged Russia, Saudi and OPEC who want high world oil prices by cutting their combined output, Trump deregulated US energy policies to help jack up US oil and gas production. He challenged global ecological socialism by the UN and big environmentalists by pulling out of Paris Agreement. He challenged NATO countries that they should send their billions of $ yearly for their own protection in Europe. Now he's directly confronting China communist protectionists.

Yesterday, end-of-day stocks in AsPac, Shanghai -5.6%, Shenzhen -6.8%.


Then the censorship and media blackout by the Beijing government.

China's Bull Market Suddenly in Peril
May 6, 2019, 11:41 AM GMT+8 Updated on May 6, 2019, 3:45 PM GMT+8

"Posts and stories about Trump’s twin pronouncements were deleted from Weibo, according to Weiboscope, a project backed by the University of Hong Kong that tallies deleted posts and censored words on the Twitter-like service. And several users reported that attempts to post screenshots of the American leader’s tweets to Tencent’s WeChat were blocked."

Trump challenged the EU countries to a zero tariff deal including agriculture, EU said no, showing how protectionist they can be. Trump challenged CN for mutually low if not zero tariff, CN said no naturally, so this trade challenge.

Ultimately we should go to a world of zero tariff, very little non-tariff barriers.
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Saturday, May 04, 2019

BWorld 322, MORE transparency in China deals

* This is my column in BusinessWorld yesterday, May 03, 2019.


Three China-related business stories in BusinessWorld last week caught my attention, short quotes from them are shown:

1. PHL, Chinese firms sign $12-B in business deals (April 27):

“THE Philippine business delegation and Chinese companies on Friday signed 19 deals worth $12.165 billion… This included one contract agreement, three cooperation agreements, two purchase framework agreements, and 13 Memoranda of Agreement (MoA) or Understanding (MoU).”

2. ALI plans to develop country’s first Sino-PHL industrial park (April 29):

“AYALA LAND, Inc. (ALI) is riding on the influx of Chinese firms coming to the Philippines as it plans to acquire up to 200 hectares of land in Central Luzon.”

3. Udenna-China Telecom deal may prompt more Chinese firms to enter Philippines (April 29):

“THE $5.4-billion deal signed last week by Udenna Corp. and subsidiary Chelsea Logistics Holdings Corp. with China Telecommunications Corp. for a telecommunications joint venture may prompt more Chinese firms to pour investments in the Philippines.”

No details were given in story #1, the Ayala conglomerate is also cashing in on growing China investments in story #2, and Udenna seems to be the main entry point for more China investors.

Is the Philippines slowly being swamped by China capital, China imports, China tourism and visitors?

I checked relevant data to help me answer this question. On merchandise exports, China is the fourth market of the Philippines in 2018 while its dominance as #1 source of imports is further cemented in 2017-2018 (see table 1).


In foreign direct investments (FDIs), investors from China catapulted to #4 in 2018 with nearly $200 million, from below $30 million in 2016-2017. Investors from Singapore, Hong Kong and Japan remain the top sources of long-term capital in the Philippines (see table 2).


And in tourism, Chinese tourists are inching fast with nearly 1.3 million visitors in 2018, hoping to dislodge S. Korean visitors in a few years while visitors from the US including Filipino-American balikbayans have also breached the 1 million level (see table 3).


China is known for large-scale secrecy in business and political numbers, there is a tendency to understate or overstate certain figures. The imports from China figures, while already big, should be much bigger as it is common knowledge that large-scale smuggling occurs until now and most of the goods easily land in Divisoria, Quiapo, Baclaran, and other big mass-market areas.

The huge number of undocumented and un-permitted Chinese workers in the Philippines is another issue, especially in the Philippines overseas gaming operations (POGO).

The market-oriented reforms for efficiency (MORE) needed is to have more transparency in the actual number of workers, tourists, businesses, investments, imports from China. The DOF, DOLE, SEC, etc. are known to be strict with Filipino businesses but they seem to be grappling for regulations and taxation of these Chinese enterprises. President Duterte’s favoritism with China and Xi Jinping need not be followed by the line agencies. More on China later.
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Friday, May 03, 2019

Energy 124, US, Russia, Saudi oil production

US oil production keeps rising, now at 12.3 million barrels per day (mbpd); good job, Trump. Putin and Russia are angry since their main business is exporting oil and gas they hate more competition. From this angle alone, the Trump-as-Putin-puppet is an idiotic moronic proposition at the onset.


Russia oil production is 11.05 mbpd max, Saudi Arabia oil production is 11.1 mbpd max, now down to only 9.8 mbpd because of the OPEC + Russia collusion on oil output cut.

https://tradingeconomics.com/russia/crude-oil-production
https://tradingeconomics.com/saudi-arabia/crude-oil-production

Oil prices should go down, world oil production should go up, and governments should not over-tax oil production and trading.

Meanwhile among the recent stories, May 02, 2019:
https://www.cnbc.com/2019/05/02/oil-market-us-sanctions-on-iran-venezuela-crisis-in-focus.html

https://www.zerohedge.com/news/2019-05-02/trump-wins-oil-prices-plunge-opec-tweet-russia-production-surprises
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BWorld 321, IPR and MORE investments

* This is my article in BusinessWorld on May 1, 2019.


A report in BusinessWorld reiterated the value of IPR protection: “PHL remains out of US IPR watch list for 6th year’ (April 27, 2019)

“FOR the sixth straight year, the Philippines was not included in the US government’s watch list of countries with weak protection of intellectual property rights (IPR)… after being included from 1994 through 2013,” the report said in part.

The government’s Intellectual Property Office (IPOPHL) also announced in its website: “Finally, Philippines No Longer in the Notorious Markets List of the USTR” (April 25, 2019) — of which I quote in part, “After being on the list for the last six (6) years, the Philippines is completely gone in the list of Notorious Markets of the Office of the United States Trade Representatives (USTR) as reported in the Out-of-Cycle Review of Notorious Markets dated December 13, 2012.”

Good news then. Last week, April 26, was World Intellectual Property Day as declared by WIPO with the theme, “Reach for Gold: IP and Sports.”

Also that day, 77 independent think tanks and institutes (including Minimal Government Thinkers) from 39 countries signed the “Open Letter to WIPO Director General Francis Gurry,” initiated by the Property Rights Alliance (PRA, USA). The letter said:

“When IPRs are protected, markets are formed that encourage innovators to compete to make the next breakthrough product consumers demand — be it training equipment, a smart sensor, or a new media platform. In this way, athletes and innovative markets are sure to always go faster, stronger, higher! Neither innovation nor sport can exist without enforceable property rights.”

More IPR protection indeed facilitates and encourages more investments. Table below is constructed from three different sources: (1) International Property Rights Index (IPRI) rank: PRA’s IPRI 2018 Report, (2) Foreign direct investment (FDI) inward stock 2017: UNCTAD, World Investment Report 2018, and (3) Population 2017: IMF, World Economic Outlook 2019. The last column is derived by this paper.

Global ranking in IPR protection and innovation in East Asia


More property rights protection, more investments. Japan is the exception here because Japan is the main source, not destination, of FDIs in many countries abroad. On May 15, the Geneva Network (UK) will hold a one-day seminar and meeting of Asian free market think tanks, institutes and academics doing work on IPR protection and trade to be held in Kuala Lumpur.

And on May 24 or 25, PRA (US) will hold a side event on IPR and investment promotion in Sydney during the 17th meeting of the World Taxpayers Association (WTA) conference and the 7th Friedman conference by the Australia Taxpayers Alliance.

From the IPRI report, the per-capita income in countries with robust property rights protection is 20 times greater than those in countries with weak protections. The market-oriented reforms for efficiency (MORE) are to further strengthen private property protection, physical or intellectual — by legislation or executive action.
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Wednesday, May 01, 2019

On PH's ratings upgrade by S&P

In 2018, PH taxpayers paid P349 billion interest payment alone (principal amortization not included yet) for the huge government debt stock of P7.78 trillion. Now S&P has given the PH a ratings upgrade and many people are applauding. https://business.inquirer.net/269573/surging-economy-earns-ph-highest-credit-rating-in-history

What S&P signals to lenders and creditors is that it is ok to keep lending big time to the PH (around P 0.5 trillion a year) because in place are new taxes and tax hikes to make sure that lenders will be fully paid tomorrow.

Meanwhile, a lot of ratings upgrade occurred in the previous admin. Duterte inherited the momentum.
  


Whether high or low interest rates for PH borrowings, can we just control and reduce public borrowings? Enough of huge interest payment alone.


The big decline in debt/GDP ratio, from 52% in 2010 to 42% in 2016, occurred in the previous admin. Duterte team just inherited the wisdom of control-thy-borrowings of the previous admin, now they spend and borrow big time because there are many new taxes and tax hikes in place.

S&P perhaps did not say that the previous admin set the healthier economy, average GDP growth of about 6.5% for six years, debt/GDP ratio declined by 10% in just six years. Now GDP growth is decelerating: 6.9% 2016, 6.7% 2017, 6.3% 2018. Inflation rate is highest in whole East Asia 2018 to present.

In ordinary household, social enterprises and private enterprises, people learn to save. Emergencies like a family member is terribly sick, heavy borrowing is justified, on top of selling and disposing some household assets and properties. When things normalize, people save and pay back their loans, and things move on.

In government, it's different. With or without emergencies, just borrow-borrow-borrow, no exception. And people clap and applaud government for its 'fiscal prudence.' Lousy.

Meanwhile, should the upgrade be rescinded?

I say Yes. I don't think Dutertenomics deserves that upgrade. See the moral hazards problem -- even with same old ratings, even with high interest rates, Dutertenomics will borrow around P500 B a year. With such upgrade, perhaps they will borrow P550 B, anyway interest rates are lower.

Credit grabbing goes to DOF. Because of Duterte daw, hahaha. Erap, Gloria periods, lots of negative outlook. Previous administration, series of upgrades. Dutertenomics simply inherited the momentum. The data are right in front of S&P and everyone else to see the trend -- decelerating GDP growth, highest inflation rate in E Asia 2018 to present, deteriorating current account, high domestic interest rates, etc.

BWorld 320, Good news, MORE power plants coming

* This is my article in BusinessWorld last Monday, April 29, 2019.


After several power plants that experienced unplanned or forced shutdown went back online, a strong earthquake hit Central Luzon on April 22 and four power plants with combined dependable capacity of 932 MW were isolated, with the Luzon grid going back to yellow and red alerts last week.

A huge problem in the Philippines power sector is that many big power plants are old, above 20 years old, and require frequent or prolonged maintenance shutdowns or experience frequent unscheduled shutdowns (see table 1).


There were also four new plants (below 5 years old) that suffered unplanned outage: Pagbilao U3 by Team (420 MW), Limay U2 by San Miguel (150 MW), SLGPC U2 by DMCI (150 MW), and SLTEC U1 by Ayala (135 MW). And two new plants that experienced derating: Pagbilao U3 by Team (420 to 315 MW) and SLGPC U2 by DMCI (150 to 100 MW).
  
Now the good news: Six big coal power plants and one gas plant are expected to start commercial operation this year and next year (see table 2).


The Senate Committee on Energy held a public hearing about the Luzon grid last Friday, April 26. IEMOP presentation showed that electricity spot prices at WESM have been declining: P5,176/MWH in 2014 to P3,830 in 2015, P2,947 in 2016, P3,349 in 2017, P3,618 in 2018. That’s another good news.

And so private distribution utilities (DUs) and electric cooperatives would purchase their peak hours electricity demand from WESM and not from peaking power plants. There is also price control a.k.a. primary and secondary price caps at WESM.

One result is that no one would invest in peaking power plants. And when those unscheduled outages by old plants come, plus earthquake shaking big plants, WESM cannot produce extra power, nada.

The market-oriented reforms for efficiency (MORE) needed are to (1) encourage investment in new peaking plants aside from more baseload and mid-merit plants, and (2) revise upwards if not abolish price control and price cap at WESM. Let a peaking plant that has zero revenue for 10-11 months straight, yet has fixed operating costs, makes money on a few days in April-May, hot months with high prices. People will be willing to pay high prices for a few days in exchange for zero yellow-red alerts and they can do business regularly without fear of blackouts. This reform will also make the DUs rethink their contracting strategies to possibly include peaking power, for a more stable and reliable power supply.

Blackouts are messy, ugly and costly. The costs are several times higher than increased prices at WESM for few days and hours.
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