Four important economic and trade developments happened last week and I want to comment on them.
1. Philippines Economic Briefing, Singapore
On Wednesday, September 7, President Ferdinand Marcos, Jr. and his economic and infrastructure teams held the Philippine Economic Briefing (PEB) in Singapore, which was attended by many investors.
In Panel 1, the speakers were Finance Secretary Benjamin Diokno, Socio-Economic Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, Central Bank Governor Felipe Medalla and Vice President of SM Investment Corp. (SMIC), Teresita Sy-Coson. The four officials spoke clearly about the country’s macroeconomic and fiscal stability. And it was a great idea to have another speaker from the Filipino business world. Singapore businessmen are familiar with the Sy and SM conglomerate, and Ms. Coson spoke positively about the economic team and the economic outlook for the Philippines. At the end of the panel, there was loud applause in the conference room.
Group 2 included Commerce Secretary Alfredo Pascual, Public Works Secretary Manuel Bonoan, Transportation Secretary Jaime Bautista, Tourism Secretary Maria Esperanza Christina Garcia Frasco and Information and Communications Technology Secretary Ivan John Uy . I would say it was another slam dunk – with a “come and invest in the Philippines” message that was delivered in a clear and compelling way. And since Singapore is the regional headquarters of many Western multinationals, the message must have been well heard.
A report in Business world about the Singapore event noted that “electric tricycle, floating solar projects are leading investment deals in Singapore from Marcos’s visit” (September 8).
Investment pledges after Singapore PEB amounted to $6.5 billion. Of this amount, $5 billion would be for the manufacture of electric tricycles and $1.2 billion for floating solar. That doesn’t seem right. More electric tricycles mean more electricity demand and our electricity production is low – only 108 terawatt hours (TWH) in 2021, less than half of Vietnam’s 245 TWH. Solar or wind are not basic energy sources, their production and storage are intermittent and very unstable.
The Philippines should aim for an increase of at least 7 TWH/year in electricity production from 2023-2025 compared to an increase of only 3.5 TWH/year in 2016-2021, then at least 10 TWH/year more from 2026- 2028, to avoid the frequent yellow-red alerts that we have experienced until this year. Vietnam has increased its electricity production over the past 10 years from 14 to 15 TWH/year. Large commercial and industrial projects won’t get in if they see they will face occasional outages and have to buy and run huge, expensive generator sets on a regular basis.
Major industrial countries such as Germany, the United Kingdom, France and Japan have entered a phase of deindustrialization and low growth by closing many of their fossil fuel and nuclear power plants and relying more on electricity. intermittent wind-solar power. In contrast, Southeast Asian countries continue to buzz with their conventional energy sources and are experiencing rapid growth (see table 1).
2. The BOT law and the new head of the PPP Center
Last week, the Center for Public-Private Partnership (PPP) announced a “Public Consultation on Amendments to the Build-Operate-Transfer (BOT) Act 2022 Implementing Rules and Regulations (IRR) (RA 7718) “. People can submit their comments in writing or they can also attend the consultation in person tomorrow, September 13.
President Ferdinand Marcos, Jr. has named a new PPP Center Executive Director, Cynthia Hernandez. The lady is very cerebral: she graduated from Philippine Science High School, passed the UP College Admissions Test (UPCAT) and landed in the top 50 out of approximately 80,000+ applicants nationwide, earned her BS Metallurgical Engineering degree from UP as an Oblation Scholar, completed a Masters in Development Economics (MDE) from UP School of Economics (UPSE), currently pursuing a Masters in Business Administration at the Berlin Professional School. She has worked in some of the major energy, infrastructure and consulting companies in the country: Meralco, Philippine National Oil Company (PNOC), Power Sector Assets and Liabilities Management Corp. (PSALM), AES, Aboitiz Power, SGV/EY, and KPMG.
Meanwhile, Marilou “Louie” Mendoza has been reappointed as Chair of the Tariff Commission (TC). Louie is another cerebral civil servant: she graduated with an AB Economics (cum laude) then an MDE (university scholarship) from UPSE, and with a master’s degree in development management (with honors), and the National Government Career Executive Service Development Program.
Cynthia, Louie, Secretary of the Department of Budget and Management (DBM), Pangandaman, and Under Secretary of State for Budget Policy and Strategy, Joselito Basilio, were classmates at MDE in Lot 33 of the UPSE’s Development Economics Program (PDE). Mr. Basilio has another Masters in Applied Economics from the University of Michigan-Ann Arbor and then a Ph.D. in Economics from the University of Illinois at Chicago, USA.
The director of the PDE program at the time and teacher for two semesters was Professor Ruperto “Ruping” Alonzo. Professor Ruping (RIP) shaped these four brilliant minds along with their other batch mates.
3. Transport inflation and Grab-MOVE IT partnership
Last week, the Philippine Statistics Authority (PSA) said August inflation was 6.3%, stable from July’s inflation rate of 6.4%. Among commodity groups, transport inflation was 14.6% in August, including “Operating personal transport equipment” at 34.7%. Inflation in the first eight months of 2022 is now 4.9% and transport inflation is 12.9% (see table 2).
With gasoline and diesel prices still high, driving a personal car remains expensive and people would like to find cheaper but safe alternative means of transportation. Motorcycle taxis (MCTs) should belong in this category – fast, cheap, no need for parking. But MCT remains a virtual duopoly by Angkas and Joyride. So when Grab teamed up with the third smallest and weakest player, MOVE IT, the duopoly was thrown off balance. See this report in Business world: “The acquisition of MOVE IT by Grab Philippines contested by 4 groups” (Sept. 9).
Commuters and the public have a “learned” interest: more choices, more options. Transport companies, especially if they are a duopoly or an oligopoly, have the opposite interest: reducing options for commuters, getting more money and power for themselves. This is exactly what the four transport groups and the duopoly demand.
Real commuter and consumer groups are asking for more options and competition. Fake commuter groups call for more bureaucratization and less competition. Last month, this column’s article, “Motorcycle Taxis, Illicit Tobacco and Electric Co-ops” (August 8), stated that “Secretary of Transportation Jaime J. Bautista and Chairman of the LTFRB (Land Transportation Franchising and Regulatory Board) Cheloy Velicaria-Garafil should consider removing two caps – remove the maximum number of MCT players to just three and remove the maximum of 15,000 drivers per player At a maximum of 45,000 legal drivers, it is very likely that the number of “unregistered”habal habal“drivers may be twice or more than that number nationwide. Since they already exist, they should be integrated via legal MCT companies, for better regulatory transparency and better passenger safety.
At PEB Singapore, Secretary Bautista discussed major planned rail projects that will move people and goods much faster. These should continue. But many people don’t live near train stations, they live several kilometers away. More MCTs will transport people from their homes to stations, then to their destinations, and back.
Grab-MOVE IT as the third player is a good move. A better move is to have four, five or more players. And no maximum number of runners per player. More competition, more options and more protection for the cycling public. The LTFRB should throw out the lobby of the four groups and think about the needs of the constituency public.
4. IPRI 2022
Finally, the International Property Rights Index (IPRI) 2022 was launched on September 7 by the Property Rights Alliance (PRA, Washington DC).
The IPRI index is a composite of three sub-indices: legal and political environment, physical property and protection of intellectual property. The Philippines posted a deterioration in the world ranking, falling from 70e in 2018 at 83rd in 2022, penalized by low scores in the legal and policy sections due to poor performance in rule of law and anti-corruption (see table 3).
The Marcos Jr. administration must do more to strengthen the rule of law and control corruption in the country.
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.