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Price controls on medicines: The zombie is back!

On Nov. 15, the technical working group organized by the Senate Committee on Trade, Commerce and Entrepreneurship chaired by Senator Pimentel met on the proposed Senate bill that would create the drug price regulatory board or DPRB.
The proposed law would empower the DPRB to cap prices of drugs and medicines, and to sanction non-compliant pharmaceutical companies and medicine retail outlets.
Its purpose is to “effectively reduce the cost of drugs or medicines.” Now who could be against that?
But “tales as old as time” tell us that price capping could not deliver sustained affordability and accessibility of medicines to the poor, or of any basic necessity for that matter subject to price caps.
Price capping may be helpful for a limited duration, as in times following natural calamities when markets are temporarily dysfunctional and lacking adequate competition to bring prices back to their normal levels. Once markets recover, those controls are lifted.
But when price capping is permanent as in having a DPRB to chop off prices of medicines, suppliers would skip the local market.
Price-capped medicines become increasingly scarcer, pushing their prices to increase. Moreover, the medicines purchased could be of questionable quality, as some of them may be obtained in informal markets.
That price controls are incapable of achieving their good objectives in the longer term have been shown in several countries and in several other markets like low-cost housing, food, petroleum, credit, and other essential commodities.
Senator Zubiri authored the DPRB bill, a counterpart bill to the House of Representatives, which Congressman Biron introduced.
Price capping of medicines is not new. Congressman Biron proposed it in 2009, but his bill did not make it, because it was a non-starter for promoting medicines access.
With these bills in both Houses of Congress, their authors are trying to resuscitate a zombie. With their bills, both authors would reduce rather than expand access to medicines in our country in the long run.
The proposed laws are motivated by the claim that local medicine prices are higher than those paid in other countries. That may be so. But we don’t know why they may be so. While the World Health Organization had compiled country and international benchmark prices of medicines in doing the price comparisons, it did not make adjustments for differences in time, exchange rate, policies, and other factors between countries.
Without knowing if we are comparing correctly medicine prices and why external prices are lower, resort to price capping risks is like giving the wrong medicine to the patient.
But suppose the comparisons were correct. Competition, not price capping, turns out to be more effective in reducing medicine prices. In 2009, the DoH price capped five medicines under its Maximum Drug Retail Price (MDRP) program and several other medicines under its Government Mediated Access Prices program.
Competition, not price capping. Figure 1 charts the weighted average price of medicines by type of manufacturer. Even before MDRP in 2009, prices of originator medicines controlled by multinational companies had already been going down. The sharp drop of originator medicines can be attributed to the MDRP. But their weighted average medicines prices of originator medicines continued to slide down because of the shifting market shares in favor of generic medicines (see chart).
drugs
Competition would just force those multinational companies to bring down their prices once generic drugs and medicines enter the local market.
Generics firms benefit from the R&D of originator companies. After their medicines go off patent, generic companies produce their own versions of these medicines, which compete with their parent originator medicines. This competition causes medicine prices to go down.
If the DPRB focuses its price axing powers on originator medicines, it risks originator companies deciding against introducing price capped medicines in our country. This would deprive generic firms opportunities for diversifying their medicines portfolio, keep medicines supply high, and offer competition to originator companies to bring medicine prices down.
We all aspire for universal access to medicines. Strengthening competition in the local medicines market rather than controlling the prices of drugs and medicines is the way forward. We had seen it work and it could be made to work more effectively.
Expanded pooled procurement. Making the local medicine market larger is crucial to make the competition more effective in lowering prices. Not only should the government pool procurement of medicines by several public sector entities in our country, it should also allocate more budget for medicines. The deeper and expanded public sector would attract more suppliers in the market and give it leverage in negotiating medicine prices to go down further.
The expanded competition as more suppliers are attracted to bid in expanded public sector markets makes medicines more affordable to the general population. More importantly, the public sector is now in a better position to give drugs and medicines to the poor at no cost to them.
It is noted that despite the drop in the prices of medicines in 2009 because of MDRP, the “poor still find it difficult to buy the number and quality of drugs they need to cure or control their illnesses,” according to one study.
But we have two problems: the DoH has still to learn to fully absorb its budget, and secondly its procurement planning and distribution capacity is weak. Even at current levels of budget for medicines and drugs, we already hear procured drugs that remain unused in public health centers. So if Congress gives more taxpayer money to the DoH for this, this waste can only grow larger.
Hybrid PPP. Thus pooled procurement needs to be complemented with a hybrid PPP. The DoH outsources procurement planning and distribution of medicines. There could be two PPPs: one for planning and another for distribution. The private sector has relatively the experience in undertaking these functions more efficiently.
 
Ramon L. Clarete is a professor at the University of the Philippines School of Economics.

The rainbow after the rain

“At the end of the rainbow, you’ll find a pot of gold,” the old song goes. The rainbow points to where, in folklore, the leprechauns buried their riches.
But in the rural areas of the Philippines, as in most of Asia, little children entranced by the beautiful colors of the rainbow are told not to point at the rainbow. Your point finger will be cut off, the grandmas say. Pointing at the rainbow is taunting the gods because the rainbow is said to be an irascible deity in early cultures. In pagan-Christian syncretism, the rainbow is a symbol of God’s infinite power as He promised He will not destroy the world by floods again, as He did in Noah’s time. But you do not point to the rainbow and “collect” on God’s benevolence.
So, what did Chinese President Xi Jinping mean, exactly, when he described ties with the Philippines as “rainbow after the rain,” even before his state visit November 20-21 (2018) to Manila? Did he allude to the metaphoric gold of the leprechauns at the end of the rainbow, with near-exclusive trade and business offered in adulation by his professed admirer President Rodrigo Duterte? Indeed, it had been “raining” antagonism in the administration previous to Duterte, which initiated the arbitral case that led to the Hague ruling of July 12, 2016, awarding certain areas in the disputed South China Sea to the Philippines, based on the incompatibility of the Chinese claims with the 1982 UN Convention on the Law of the Sea (UNCLOS). Rain: that nasty arbitral ruling against China; rainbow: new, improved China-Philippines economic (and maybe political/military) relations.
That was two years ago, when Duterte had just started his six-year term as president, and thereafter he visited China, where his host, Xi, promised him some $24 billion in Chinese projects and financing (nytimes, Nov. 19, 2018). A few weeks before that, Duterte had publicly said that “the Philippines (was) being treated like a dog by Washington and would be better off with China” (abs-cbnnews.com Nov. 19 2018). Perhaps feeling reinforced by the “pot of gold” (promises) from China, Duterte was emboldened to antagonize the US further by openly saying, “Bye, bye America. We do not need you. Prepare to leave the Philippines. Prepare for the eventual repeal or abrogation of the Visiting Forces Agreement (VFA)” (newsweek.com, June 30, 2017). Duterte also hinted at a move toward China as retaliation for continued US criticism of the country’s human rights record under his leadership (Ibid.).
“I simply love Xi Jinping,” Pres. Duterte said in April. “He understands my problem and is willing to help, so I would say, ‘Thank you, China’” (nytimes.com, Nov. 19, 2018). But Xi Jinping, President for life of the People’s Republic of China, General Secretary of the Communist Party and Chairman of the Central Military Commission (CMC) with no term limits, has been wooing not only Duterte. “China has dispersed tens of billions of dollars in loans since 2013 as it expands its political influence globally, countering the American hegemony that characterized the post-World War II order, especially in Asia,” one report pointed out (AFP News Nov. 20, 2018).
“President Trump didn’t start a trade war with China — he’s trying to end and win the trade war that China launched against the US,” Fox News said (July 28, 2018). “America’s trade deficit with China is so large it almost defies comprehension. Since 2012, our yearly deficit in the trade of goods with China has consistently topped $300 billion. Last year, it was over $375.5 billion. In the first five months of this year it topped $150 billion,” the news report lamented (Ibid.). It seems Xi Jinping has found and helped himself and China to that pot of gold that America has squirreled away, since the postwar rehabilitation and boom, at the end of the proverbial rainbow of prosperity.
Nations are now being pressured to choose sides in the US-China trade war, it would seem, with economic-need levels as tempting near-term bases for long-term alliance. At the 2018 Asia-Pacific Economic Cooperation (APEC) summit in Papua, New Guinea, US Vice-President Mike Pence cautioned countries in the Indo-Pacific region, “Do not accept foreign debt that could compromise your sovereignty. Protect your interest. Preserve your independence. And just like America, always put your country first” (straitstimes.com, Nov. 18, 2018). Pence warned against falling into the Chinese debt trap and pitched for leaning to America: “We don’t drown our partners in a sea of debt. We don’t coerce or compromise your independence. We do not offer a constricting belt or a one-way road,” he said, in a ‘clear swipe at China’s Belt and Road Initiative, a Beijing-backed trillion-dollar infrastructure spending drive’ (Ibid.).
And in the Philippines, barely any projects have materialized on China’s $24 billion in investment pledges two years ago, prompting deepening concerns that Pres. Duterte has undermined the country’s sovereignty with little to show in return, analysts say (bworldonline.com, July 26, 2018). Only one loan agreement worth $73 million to fund an irrigation project north of Manila, and two bridges funded with Chinese grants worth up to $75 million were started, according to Economic Planning Secretary Ernesto Pernia (Ibid.). From both sides, the common excuse is the long and tedious bureaucratic processing of the grants/ loans, and the implementing sub-contracts.
At Xi Jinping’s official visit to Manila last week, he and Pres. Duterte witnessed the signing of 29 memoranda of understanding (MoUs), ranging from trade and finance to agriculture and infrastructure, culture and people-to-people exchanges, as well as oil and gas development (China Global Television Network [cgtn] Nov 21, 2018). “If the MoU on the oil and gas cooperation can introduce real results, that will set an example for other countries in solving the South China Sea dispute,” Professor Dai Fan of the Jinan University said (Ibid.). “Under Duterte, the Philippines has forward-deployed its geopolitical concessions…We have been used by China” Richard Heydarian, non-resident fellow at ADR-Stratbase Institute, a think tank, said in an interview (bworldonline.com, July 26, 2018). “Duterte will need the Chinese president to put his money where his mouth is, and help him justify his concessions to a historic rival,” Heydarian added (abs-cbnnews.com, Nov. 19, 2018).
A historic rival, China, is Pres. Duterte’s new rainbow of hope to achieve his legacy and honor as an achieving president in the likes of his admired former dictator Ferdinand Marcos (martial law 1972-1986). But Chinese committed investments in the Philippines in the first half of this year were just $33 million, about 40% of that of the United States and about a seventh of Japan’s, according to the Philippine Statistics Authority, a similar trend the previous year. Chinese exports to the Philippines grew 26% in 2017 from a year earlier, outpacing its imports from Manila, which grew 9.8% (abs-cbnnews.com, Nov. 19 2018). True, net foreign direct investment from China surged to $181 million for the first eight months of this year, from $28.8 million for all of 2017, according to the Bangko Sentral ng Pilipinas (BSP) — but again, these benefit the Chinese investors more for the attractive returns for them vis-à-vis the Filipinos’ temporary enjoyment of these funds.
Then, what rainbow was Duterte pointing at? In our culture, one does not point at the rainbow and dictate on the gods to give you your pot of gold.
“Duterte’s naivety with China has been a slam dunk strategic coup for China, no doubt about it,” Prof. Heydarian says (Ibid.). Indeed, the “rainbow after the rain” belongs to Xi Jinping, not to Duterte.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Should we be worried about the fiscal deficit?

My fears were put to rest after I spoke to DTI Secretary Ramon Lopez during the monthly meeting of the Spanish Chamber of Commerce.
As my regular readers know, I have expressed my concern about the state of the country’s finances, particularly, our rising debt levels and fiscal deficit on numerous occasions.
For those unaware, a fiscal deficit occurs when the total revenues of government are less than its expenditures. As of the end of September, our fiscal deficit widened by a whopping 78% to P378.2 billion from just P213.1 billion last year. This is equivalent to 3% of GDP, which is the ceiling set by government.
There is still one quarter to go and if the current trend continues, we will likely overshoot the maximum tolerable fiscal deficit by a whole percentage point. Why is this alarming? Because the deficits will have to be financed by more debt.
As of the end of July, public debt already stood at P7,043 billion, representing approximately 41% of GDP. To increase our load of debt will erode this ratio.
There is nothing wrong with amassing debt, so long as you can pay it. Problem is, our Gross International Reserves (GIR) have been deteriorating too. GIR is the amount of foreign currency deposits, bonds, gold and special drawing rights held by a country. It serves as our buffer to pay for our imports and maturing obligations. From a high of $86.12 billion in September 2016, it plummeted to just $74.8 billion last October, the lowest in seven years.
At the heart of the problem is our trade deficit. Data covering January to September shows that imports rose by 16.2 % to $80.66 billion while exports slipped by 2.1% to $50.75 billion. This brought about a trade deficit of $29.91 billion, nearly twice the deficit registered last year.
The noxious combination of declining exports, ballooning imports, rising public debt and declining gross international reserves can be seen as a general weakening of the economy. It makes us more vulnerable to external shocks. This is the reason for my unease.
NECESSARY AND TEMPORARY
If anything, Secretary Lopez put things in perspective and this helped assuage my doubts about the economy’s health.
On spiking imports and consequent widening of the trade deficit, Sec. Lopez assured us that this is not only necessary, it is also temporary.
It is necessary because a large chunk of our imports are steel and cement, both vital components to government’s infrastructure program. Demand for cement is now at some 28 million tons a year, nearly twice the level between 2000 and 2010. Demand for steel has tripled to 9.82 tons per year. This just goes to show that infrastructure projects are well under way and that capital formation is on the rise.
Import statistics also show an influx of capital equipment. This indicates that more factories are being built, all of which will contribute to the economy’s productivity and export earnings.
The gaping trade deficit is also temporary. It will begin to ease once the US-China trade war cools off and new factories presently under construction come on line and begin their export operations.
On foreign direct investments, last year, the country realized $10.2 billion worth of FDIs, the highest intake ever recorded. In the first eight months of 2018, FDIs already stood at $7.4 billion, 31% higher than the same period last year. The Secretary is confident that $12 billion in FDIs can be realized in 2018. Exports are bound to catch up given the number brick and mortar factories presently being built.
While the Philippines has largely been dependent on electronics to drive its exports, the mix is becoming increasingly diverse. Emerging industries are auto parts, aerospace components, design-based furniture and garments and chemicals, said the Secretary.
It is not likely that we will realize a balance of trade surplus in the medium term. The deficit will persist for as long as the catch-up in infrastructure continues. What we can reasonably count on is its gradual narrowing.
As for the fiscal deficit that has already hit its ceiling last September, DBM Secretary Ben Diokno is of the opinion that it will not deteriorate further in the 4th quarter but will in fact improve. He sees importation and expenditures easing as government has already front-loaded spending in the first nine months of the year. I still have my doubts, but time will tell if Sec. Diokno is right.
REASONS TO BE OPTIMISTIC
If there is anything to be optimistic about, it is the manufacturing sector, declared the Secretary. The country is in the midst of a manufacturing resurgence after a deceleration that lasted three decades. From 2010 to 2017, manufacturing clocked in an average growth rate of 7.6%, outpacing the growth of the service sector. This shows that we are on track towards industrialization.
No surprise, food and beverage manufacturing lead the charge in both size and growth rates. This is due to our enormous domestic market and to a smaller degree, international demand. Also on the fast track are domestic appliances, chemical products, auto parts and mineral products.
Tourism is another bright spot. Sec. Lopez and I both agree that tourism will play an increasingly important role in the economy for its ability to generate foreign exchange instantaneously. It is unlike manufacturing plants that require a two year gestational period. Revenues from tourism can offset the fiscal deficit.
There is no denying the pent-up demand for inbound travel to the Philippines. What has held us back is the lack of provincial airports and lack of roads to connect tourist destinations.
The good news is that these impediments are slowly being addressed. Soon to join the newly inaugurated airports in Mactan, Lagundian, Puerto Princesa and Iloilo are new gateways in Panglao (to be inaugurated this week), Clark and Bacolod. In terms of road connectivity, the DPWH is now constructing 6,480 kilometers of roads within 49 tourism clusters across the country.
Tourism arrivals from January to August this year registered an 8.5% growth to 4.9 million visitors, despite the closure of Boracay. The country will likely surpass its target of 7.2 million visitors and will generate some $9.4 billion in revenues. The goal is to generate $17.7 billion on the back of 12 million visitors within three years.
As far as the BPO industry goes, Sec. Lopez assures the group that the BPO industry will continue to expand despite the widespread adoption of artificial intelligence. The thrust for the Philippines is to be the operator and maintenance provider of artificial intelligence across the globe.
As far as inflation goes, we should see some improvement this November, assures the Secretary. Inflation should ease to between 5 to 6%, from a high of 6.7%. With the tariffication of rice fully implemented and money supply restricted with successive interest rates hikes, our economic managers believe that the worse is over. Inflation for next year is seen to hover between 3.5 to 4.3 percent.
MISSING PIECE
If Sec. Lopez’ statements are anything to go by, it can be said that the economy is on an even keel, notwithstanding fiscal deficit pressures.
Still, I argue, the economy is not running on all cylinders. While the economy is growing apace driven by domestic consumption and government spending, the equation is not complete without exports driving the economy too. Only with the three components in place can we truly generate wealth.
The fact that we are in the midst of a manufacturing resurgence is a good sign. It means that merchandise exports will grow in step. However, the 7.6% growth of manufacturing is not enough. Growth needs to reach 15 to 20% if we are to approximate the export levels of our ASEAN neighbors.
Consider the difference. Philippine merchandise exports amounted to $68.71 billion last year. Compare this to Thailand’s $237 billion, Vietnam’s $214 billion, Malaysia’s $176 billion and Indonesia’s $169 billion. The Philippines has a lot of catching up to do.
The fly to the proverbial ointment is the restrictive provisions of our Constitution in as far as foreign investors are concerned. The Philippines has the most restrictive investment environment in ASEAN — no surprise, it also has the lowest shares of FDIs among the ASEAN 6.
A more liberal investment climate translates to more FDIs to build plants and factories. This redounds to higher export earnings.
Earlier this month, five investments areas were released from the foreign investment negative list. They consist of businesses related to Internet services, higher education, training centers, adjustments and lending companies and investment houses. While welcome, I don’t think this will make a significant dent in our FDI performance.
What we need is to liberalize such industries as land development (when land is owned), Build-Operate & Transfer deals, and retail operations above $200,000 capitalization. The 40% equity restriction on Filipino companies and land ownership must be rationalized too. Only then can we be regionally competitive.
These restrictions are embedded in the massively flawed 1987 Constitution and it would take an act of Congress to undo.
The story of the Philippines is still being written. While the economy is fraught with defects, we can rest in the fact that organizations like the Spanish Chamber of Commerce stay vigilant and keep our economic managers on their toes. We can also be assured that there are competent technocrats like Sec. Lopez who champion reforms.
 
Andrew J. Masigan is an economist

Upsilon’s progressive legacy (or why Upsilon should not be associated with Marcos)

The University of the Philippines (UP) is again in the news.
The good news: Its underdog varsity team, the Fighting Maroons, is having a winning streak and has a good chance of playing in the UAAP (University Athletic Association of the Philippines) finals. UP edged Adamson, thanks to teamwork in which the league’s most valuable player, Bright Akhuetie, a Nigerian, scored the winning basket in the dying seconds. One more win versus Adamson brings UP to the finals, enough reason for UP, usually a cellar dweller in the basketball league, to celebrate.
Akhuetie’s performance was all the more extraordinary, in light of his condition wherein he suffered from flu before the game. Worse, he suffered discrimination from some fellow students belonging to the Upsilon Sigma Phi fraternity. One scurrilously called him UP’s “pet gorilla.”
Which brings us to the bad news: Exposed to the public was the online conversation of the fraternity members that contained a lot of slanderous, misogynistic, hateful, intolerant, inflammatory statements. These fraternity members assaulted women, gays, blacks, Moros, Leftists, and others.
It is right and just for the public to condemn the statements and actions of these fraternity members. Even Upsilonians have expressed their disapproval and anger.
UP President Danilo Concepcion, an Upsilonian himself, issued a strong statement, and I quote part of what he said:
“Let me now speak as an Upsilonian.
“It personally pains me for my fraternity, which is celebrating its Centennial, to have been associated with these posts. They do not represent what we have stood for all those years, as they bring us back to the darkness rather than the light.
“But my pain cannot be compared to that of those maligned by their posts, and I assure the University community that I will do all I can, both as President and as a fellow of the fraternity, to root out this problem and to instill or reaffirm a culture of respect, tolerance, and decency within Upsilon and our entire fraternity system.”
Indeed, this notorious behavior of some Upsilonians is a disservice of unfathomable depths to the fraternity. It comes at a time that the fraternity is celebrating its 100th year. It also comes at a time it is seeking to revise its image of being a fraternity of villains, a fraternity of Marcos.
During the course of its centennial celebration, the fraternity, which takes pride in striving for leadership, has not given any public recognition to Marcos, the only Philippine president it can claim. Wenceslao Q. Vinzons, a fighter for independence, and a true war hero (unlike Marcos who had to burnish his reputation with fake medals), has become Upsilon’s model. The fraternity has likewise honored fellows — the living and the dead — for their significant contributions in different fields and disciplines. But Marcos is excluded. (Other Upsilonian politicians, even the good ones like Ninoy Aquino, have likewise been excluded from receiving recognition during the centennial celebration. Perhaps, this is the tradeoff to prevent Marcos from being recognized.)
That Upsilon was Marcos’s fraternity does not mean that Upsilon is a Marcosian fraternity. Yet the perception that Upsilon is a bad fraternity because of its association with Marcos refuses to die. The bad behavior of some fraternity members as exemplified by the malicious, defamatory online chats reinforces this view.
The post from someone with an assumed name “Tita Maroon” is a typical sentiment: “I won’t be surprised kung brod ninyo si Satanas. Oh wait brod nyo nga pala si Marcos.”
Any large organization, be it a fraternity, a political party, the Catholic Church, a revolutionary organization, or a civic club, cannot predict the goodness (or badness) of its recruits. In Upsilon’s case, it was a misfortune (in hindsight) that Marcos became a member of the fraternity.
It is inaccurate to say that Upsilon is packed with pro-Marcos (or for that matter pro-Duterte) fellows. Upsilon is likewise the fraternity of anti-Marcos fellows — Ninoy Aquino, Jake Almeda Lopez, Senseng Suarez, Armando Malay and son Ricardo, the Laurels, the Yabuts, Behn Cervantes and his communist comrades like Mel Glor and Mer Arce, among many others.
Also worth noting is the decency of some of Marcos’s classmates and fraternity cohorts. The respected journalist RenatoTayag, was Marcos’s law classmate and fraternity brother, but he was never part of the Marcos shenanigans. Another Marcos cohort, now 104 years old, is Delfin Gonzales. At his age, he is still capable of posting intelligent Facebook messages. And he is anti-Marcos and anti-Duterte!
During my days at UP Diliman, I was witness to how Upsilon residents engaged in the anti-dictatorship struggle. Some of them were my close friends — the late Juanito Yabut and the late Luis Taylor.
And so, Upsilon must take pains to restore the honor of the fraternity. Here, history is a guide.
Upsilon was founded by a group of masons who were at the forefront of the struggle for Philippine independence. Freemasonry was a progressive force throughout the world, which sought enlightenment, freedom, and liberty. The Filipino revolutionaries and reformists of the 19th century drew inspiration from Freemasonry. Masons composed the leadership and membership of the Propaganda Movement and the Katipunan
I recall the late Al Simbulan’s view (discussed in a still unpublished manuscript) that Rizal had the intention of using the Masonic Lodges as his organization to launch the Philippine revolution. Upon the defeat of the Philippine revolution, the struggle for freedom and independence took various forms. Philippine masons, for one, continued the struggle through legal means.
This then is the background of Upsilon’s founding. The Upsilon credo is heavily influenced by the principles of Freemasonry. The emphasis is on attaining “the ideals of peace and freedom for all peoples,” on upholding the “spirit of self-negation for the greater good,” on promoting “mutual aid and affection.”
Returning to its progressive roots should be its key message, as Upsilon Sigma Phi celebrates its centennial.
And such transformation will be good news and a cause for celebration for the whole of UP. Winning the UAAP championship will merely be a bonus.
The author is not a fraternity member. He is a barbarian.
 
Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.
www.aer.ph

Setting up a debate with Mr. Coal

By Eddie O’Connor
MR. Bienvenido S. Oplas, Jr. writes in his Oct. 10 column, “Corrupted science to justify renewables cronyism,” “if wind-solar are indeed that cheap, then will the lobby agree to (a) abolish the priority and mandatory dispatch of wind-solar to the grid, and (b) abolish the feed-in-tariff (FIT) scheme of guaranteed high price for wind-solar, other variable REs for 20 years?”
Of course, the developers of wind and solar agree to abolish mandatory dispatch. So long as the system dispatchers continue with the practice of dispatching the next batch of electricity at the lowest marginal price, wind and solar will always be dispatched first. The marginal price of wind and solar is zero. Every system dispatcher in the world dispatches the lowest marginal cost first. Remember that once plants are built every marginal unit of coal costs circa $3.5+ cents depending on efficiency. A unit of electricity from a wind and solar plant, once built, costs 0.
Regarding abolishing the feed-in-tariff. It is not hard to agree to this, as it is already abolished. Thank God. Now perhaps we will get a chance to compete head to head with dirty coal. We can then do what has been done in South Africa, Chile, Mexico, and everywhere auctions are run and hammer coal into oblivion.
Mr. Oplas seems to be unaware that in an experiment conducted in the Royal Institution in London in 1861, the great Irish scientist, John Tyndell, passed radiation through a series of gases and observed that CO2 CH4 and H2O, absorbed radiation while oxygen and nitrogen did not. This experiment is easy to replicate, and any university to which Mr. Oplas has access, can replicate it.
I apologize to non-technical readers for the following but it is the real science which has driven the world to sign the Paris accord.
All radiation is quantized. These quanta, or packages of solar radiation, only interact with certain molecules, whose electrons can be jumped to a more energetic orbital. They then fall back releasing an increment of heat.
The chart here shows the heat buildup due to the absorption of radiation by greenhouse gases (see chart).

heat content
The slope of the global heat accumulation graph tells us how rapidly the Earth’s climate is building up heat. Over the past decade, the rate is 8 x 1021 Joules per year, or 2.5 x 1014 Joules per second. The yield of the Hiroshima atomic bomb was 6.3 x 1013 Joules, hence the rate of global heat accumulation is equivalent to about 4 Hiroshima bomb detonations per second.

The data comes from peer-reviewed research (Church et al. 2011) and has also been confirmed by more recent research (i.e. Balmaseda et al. 2013).
The slope of the global heat accumulation graph tells us how rapidly the Earth’s climate is building up heat. Over the past decade, the rate is 8 x 1021 Joules per year, or 2.5 x 1014 Joules per second. The yield of the Hiroshima atomic bomb was 6.3 x 1013 Joules, hence the rate of global heat accumulation is equivalent to about 4 Hiroshima bomb detonations per second. That’s nearly 2.7 billion atomic bomb detonations worth of heat accumulating in the Earth’s climate system since 1998, when we’re told global warming supposedly “paused.” That has to be the worst pause ever.
Again let me reiterate. I am alarmed, indeed, devastated by the disappearance of some 60% of species by 2020 due to global warming. I am similarly saddened to observe that even if we can limit the temperature increase to 1.5 degrees we lose 90% of all the corals in the oceans.
There were those who persisted in believing that the earth was flat for hundreds of years after it was demonstrated by Ferdinand Magellan to be round. I am afraid that Mr. Oplas is a latter day flat earther for denying climate science. Delighted to debate on my next visit in May 2019.
 
Eddie O’Connor is chairman of global renewable energy company Mainstream Renewable Power.

Sison rejects proposal on draft peace agreement

By Arjay L. Balinbin
Reporter
EXILED COMMUNIST leader Jose Maria C. Sison said the National Democratic Front of the Philippines (NDFP) will ignore President Rodrigo R. Duterte’s request to submit a final draft peace agreement to the government, saying the President was “simply joking, stupid or crazy” when he announced his proposal last week.
“Duterte is simply joking, stupid or crazy when he publicly proposes that the NDFP submit to him a draft peace agreement for him to approve, subject to the further approval of the AFP (Armed Forces of the Philippines) and PNP (Philippine National Police),” Mr. Sison said in a statement as posted on the NDFP Web site last Saturday, Nov. 24.
Sought for comment, Presidential Adviser on the Peace Process Jesus G. Dureza told BusinessWorld on Sunday afternoon, Nov. 25, that he had yet to relay the matter to the NDFP. “We will find that out tomorrow (Monday),” he said in a phone message.
In a separate phone message, he said: “We take guidance from what the President just said: to relay to the NDFP his call for the submission of a draft of a final peace agreement so the President can consult members of his official family like the AFP & police or security sector and other members of the cabinet….We will still officially relay this to the NDFP.”
Mr. Dureza said as well there was “no meeting agreed yet.”
Also in his statement, Mr. Sison maintained that both the NDFP and the Philippine government negotiating panels, before the President suspended the peace negotiations last June, “had already made their respective drafts of the comprehensive agreements on social and economic reforms (CASER) and on political and constitutional reforms (CAPCR) and had made substantial progress in reconciling their drafts of CASER.”
“Duterte seems to imagine that the NDFP is like China which has enough money to bribe him to let it draft a major document for his consent and approval. But he exposes further his inane mind by admitting that he would still need the ultimate approval of the military and police,” he added.
For its part, Malacañang said its lines remain open to the NDFP despite the cancelled “informal talks” in Manila this week between NDFP leaders Fidel V. Agcaoili and Luis G. Jalandoni and the government, which was supposed to be represented by Mr. Dureza and Presidential Spokesperson & Chief Presidential Legal Counsel Salvador S. Panelo.
In a phone message to BusinessWorld on Saturday night, Nov. 24, Mr. Panelo said: “Peace, no matter how elusive, must be pursued for the sake of the generations to come. They must not suffer what ours have.”
He noted that the reason for the cancellation of the planned trip to Manila of Messrs. Agcaoili and Jalandoni “is grounded on their fear of arrest.”
“As we said, the President is open to ending the internecine among Filipinos. Enough bloodshed has been shed…. Such apprehension is misplaced. No arrest shall be effected during the informal talks. We await their communication to us. Our lines are open,” he said.

Health, public works, social welfare budgets to face Senate scrutiny

By Camille A. Aguinaldo
Reporter
THE SENATE will examine closely the proposed budget of three government agencies once the proposed P3.757 billion national budget is transmitted to the chamber by the House of Representatives this week, Senate President Vicente C. Sotto III said on Sunday.
“DoH (Department of Health), DPWH (Department of Public Works and Highways), DSWD (Department of Social Welfare and Development) budgets,” Mr. Sotto told BusinessWorld in a text message, when asked which items of the proposed budget the Senate will scrutinize.
The Department of Budget and Management (DBM) slashed the budget of the DoH to P71 billion under the National Expenditure Program (NEP) from the P107.3 billion last year.
The 2019 budget allocation for the Health Facilities Enhancement Programs (HFEP) also fell to P50 million from the P30.26 billion previously.
Senators have raised concerns over the budget cut, saying this may affect the implementation of the universal health care program next year and may lead to job losses among government health workers.
Unsettled road right of way issues also hound the proposed budget of the DPWH for 2019. Senator Panfilo M. Lacson has said he may propose the deletion of the P16 billion right of way appropriations in the 2019 budget if the DPWH fails to explain and address the unsettled claims.
The total proposed budget of the DPWH is P555.7 billion for 2019, lower than the P637 billion previously.
As for the DSWD budget, Mr. Sotto said senators are expected to scrutinize the “proper disposition of the PPP (Pantawid Pamilyang Pilipino) programs” under the agency.
It was revealed during the Senate budget hearing of the DSWD last October that two million Filipino families had not received their monthly allowances under the agency’s PPP program in December 2017. Unclaimed cash grants were also raised.
A total of P173.3 billion has been allocated to the DSWD in the 2019 budget, higher than the P141 billion previously.
For his part, Mr. Lacson on Sunday said he may repeat his previous actions during last year’s budget deliberations and pursue the deletion of items in the proposed 2019 budget, which, as he claimed, remains “pork”-riddled.
“We will study it and let’s see if (it’s) just like before with the P8 billion parked in DPWH, then it was implemented for ARMM (Autonomous Region in Muslim Mindanao). I questioned that on the floor because that was not allowed because it is an organic act….What the Senate did, we removed it and placed it in the free tuition,” he said in a radio interview.
The House of Representatives has yet to transmit to the Senate the proposed national budget, which the chamber passed on third reading last Nov. 20.
The Senate has only nine session days left to scrutinize the proposed budget before it goes on break on Dec. 14. Senate Majority Leader Juan Miguel F. Zubiri said they targeting to pass the crucial measure on Dec. 12, but he also raised the possibility that deliberations may extend to January.
Mr. Lacson said he received initial information, which he has yet to validate, that representatives in the lower chamber received P60 million, which was sourced from the P51 billion originally allocated to the DPWH but was realigned to other agencies.
“Even if they say there is no pork, it’s clear that there is pork. The initial information, subject to validation, is that all congressmen were given P60 million,” he said.
“But that would have to pass by the Senate for us to find. Although I have initial figures that the House of Representatives changed, so we will validate this,” he added.

World Bank cites need to improve Listahanan database

By Elijah Joseph C. Tubayan
Reporter
THE WORLD BANK (WB) said the Philippine government needs to modernize the database on poor Filipinos qualified to receive social protection programs and speed up its response to their needs.
“To stay relevant, Listahanan operations need to catch up with technological innovations to adapt to the increasing need for faster response. After two rounds of implementation, the Listahanan system is mature enough to undergo big and necessary changes in order to adapt to the changing needs of the clients it serves,” the World Bank said in a policy note.
The Listahanan is a national household targeting system created by the Department of Social Welfare and Development (DSWD) in 2007 that identifies poor Filipinos who avail themselves of government social assistance programs such as the Pantawid Pamilyang Pilipino Program conditional cash transfer and the Philippine Health Insurance Corporation’s universal health care program.
WB noted that more government agencies have been using the Listahanan to reach the poorest communities in new social development projects.
“This, in turn, increases the demand for better and faster updating of the Listahanan registry. The system has to adapt to the need for more dynamic information, wider use of computer-assisted or mobile-based technologies for faster data collection and processing, more secure data storage and sharing facilities and protocols that balance protecting information and faster sharing in times of actual need,” the Washington-based multilateral lender said.
“In addition, the Listahanan has to start planning to link up with the Philippines national identification system, which is another new and big reform that is expected to drive big changes in the landscape of service delivery in the country,” the policy note read.
However, the lender described the program as “a story of success,” adding that “multiple programs have been introduced over many decades across various agencies and programs but none has been as effective as when the Listahanan was introduced.”
Moreover, the World Bank said in a separate implementation status and results report that the Philippines National Community Driven Development Program has already achieved some key performance indicators.
The projects seeks to “empower communities in targeted municipalities to achieve improved access to services and to participate in more inclusive local planning, budgeting and implementation.”
It provides planning grants to the community, investment grants to support local projects such as roads, bridges, schools, day care centers, and capacity building support for municipal local government units, and facilitate the overall implementation of the projects
The report said that the access and utilization of major investments in covered municipalities have reached an average of 8% across different community sub-projects, near the 10% target.
It also said that the participation of households in the barangay level is at 80%, exceeding the 70% target.
“The Project continued to make progress in achieving its development objectives.”
The project provides a $479-million loan, and 83% or $399.22 million has already been disbursed.

House panel OKs bill on waiving job requirement fees for graduates

By Charmaine A. Tadalan
Reporter
THE HOUSE Committee on Labor and Employment has approved the bill seeking to provide assistance to new graduates by waiving government fees charged from pre-employment requirements.
“Kapag new graduate ka, may fees na hinihingi ang government, within one year dapat free,” Committee Chair Randolph S. Ting of the 3rd district of Cagayan told BusinessWorld over phone interview on Sunday. (When you’re a new graduate, there are fees charged by the government, which through this bill should be free within one year).
House Bill No. 172 proposes to waive said fees, provided that documents are filed in connection with job applications and must be within one year from graduation from high school, college or any vocational or technical course.
This will cover government issued documents such as police clearance, National Bureau of Investigation clearance, and Social Security System ID, among others.
The benefit, however, will not be waived if the application is for the issuance of a Philippine passport or for the purpose of taking professional licensure examinations conducted by the Professional Regulation Commission.
Sought for comment, the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) said it supports the measure, which is seen to open “wider opportunities” for new graduates.
“The bill removes sheets of major layers that encumbers and discourages fresh graduates, particularly those who spring from poor but striving families and highly skilled from entering the workforce and become productive citizens,” ALU-TUCP Spokesperson Alan A. Tanjusay told BusinessWorld over phone message, Sunday.
“In the past decades, maraming fresh graduates na magagaling at highly qualified to work in the formal economy pero hindi natanggap at first few instances dahil walang pambayad at walang pambili ng government IDs and documents,” he also said. (In the past decades, there were a number of fresh graduates who were good and highly qualified to work in the formal economy but were not accepted in the first few instances because they couldn’t afford government IDs and documents).

DENR open to amendments to Minahang Bayan program

THE DEPARTMENT of Environment and Natural Resources (DENR) said it is open to amendments on the Minahang Bayan program, as proposed by the Philippine Mine Safety and Environment Association (PMSEA).
DENR Secretary Roy A. Cimatu said: “Of course, kasi hindi pa masyado nai-implement properly. Tulad ng processing, may nakalagay na things na mahihirapan din sila gawin, especially pag-process. Titignan namin lahat. They have to sell the gold to the government, hindi naman nila ginagawa. They have to pay taxes, hindi naman.” (Of course, it’s not yet properly implemented. Like in processing, there are things they will find difficult to [implement] especially in processing. We’ll look at everything. They have to sell the gold to the government, but they’re not doing it. They have to pay taxes, which they’re not).
The Minahang Bayan is an area dedicated to serve small-scale miners, subject to government regulation.
“As we go along, we have to make some changes,” Mr. Cimatu said.
PMSEA president Walter B. Brown earlier said the association believes that all Minahang Bayan in the country should be closed down because it would be disadvantageous to the industry.
“They should close all existing Minahang Bayan and institute a program which we propose, what we call the big brother approach where we get the established big mining company that’s working in the area that would work in coordination with the government and with the small-scale miners,” Mr. Brown said.
“You have to take a unified approach. Some of them you can integrate into mines but deal with the established mining companies because the small also have small capital to comply. In the mining industry now, the first thing we do before we begin to mine is to look where we can build a new acceptable tailing span,” Mr. Brown said, adding that a big brother approach has already been started in Compostela Valley which is working well for the sector.
Mr. Cimatu said adaptation of the big brother approach is a case-to-case basis.
“It is case-to-case. Some instances na nahihirapan sila mag-process (Some instances, the small-scale minders have difficulty processing). They can sell their ore to the big mine. Bayaran lang nila (They just pay the large-scale miners). Mas mabuti nga iyon para ma-count (That’s better so it counts). Kasi ngayon (For now), they process it then wala na (that’s it), they will just sell it outside. Pero ‘pag ilagay sa big brother, babayaran lang nila ‘yung ore then ‘yung big mine, i-report nila (But under big brother, the big mine pays the ore and reports it),” Mr. Cimatu said. — R.J.N. Ignacio

PECO rebukes Razon claims as ‘exaggerated, misleading’

THE CLAIMS of businessman Enrique K. Razon Jr. against Panay Electric Co., Inc. (PECO) are “exaggerated and misleading,” and based on false data, the Iloilo City distribution utility yesterday said in response to his assertions Friday.
Mr. Razon, in Nov. 23 statement, enumerated the alleged shortcomings of the utility, including subjecting four generations of Ilonggos to high power rates, poor service, and constant power failure.
“Our company stands out among over 140 distribution utilities in the Philippines, a fact duly recognized by the Energy Regulatory Commission (ERC) when we were awarded 100% Fully Compliant in securing and insuring reliability of power supply in our franchise area,” PECO said, noting that only four other distribution utilities have received such award.
PECO also said that it has been providing the needs of Iloilo City’s households and business establishments for nearly a century, and Mr. Razon’s mining company is simply attempting to take over PECO’s franchise through questionable means.
Mr. Razon earlier said his company, Monte Oro Resources & Energy, Inc., has a track record of success in start-ups and large-scale projects not only in the Philippines but globally.
PECO also questioned the businessman’s claim of 1,800 registered customer complaints lodged against it.
«In fact, there were only 194 validated complaints with the ERC out of 64,000 customers, or .003% of total subscribers. To-date, only 25 are pending ERC decisions with some involving power pilferage,» it said.
It cited ERC records indicating that as of 2017, PECO’s retail rates without value-added tax per kilowatt-hour was P8.2079, much lower than Siquijor Electric Coop. Inc.’s P14.0763, which it said was the most expensive in the Visayas, and just slightly higher than Visayan Electric Co. (VECO) of Cebu at P8.1387
“Mr. Razon can easily check data from the Distribution Management Committee of the ERC regarding the electric reliability figures of the country,” PECO said.
ERC data show, PECO said, that the country’s system average interruption duration index (SAIDI) is 5,135.43 minutes, contrary to Mr. Razon’s claims of 54 minutes. It also said the system average interruption frequency index (SAIFI) at 40.31 incidents is contrary to his figure of 2.18 incidents.
The figure puts Iloilo City’s total SAIDI of 1552.86 minutes and SAIFI of 31.71 far below the national averages, PECO said.
Also, PECO said its system’s loss for 2017 was at 8.37%, below the ERC cap of 8.5%.
The company also countered Mr. Razon’s claim that it uses 95-year-old equipment, saying that it had fitted out 450 kilometers of electrical lines, 20,000 poles, and 1,300 distribution transformers that serve over 64,000 homes and businesses of Iloilo City.
It said the assets are regularly upgraded, replaced, and added to, as system needs change.
“Mr, Razon is now resorting to feeding the public wrong information to justify his railroading in congress that could lead to the illegal take-over,” it said.
It said what the public does not see is the apparent disregard of the law by some legislators who rushed the approval of MORE’s franchise application, “without consultation with stakeholders, banking on false statements by some local politicians.”
PECO said despite its compliance with the House committee’s requirements for the franchise renewal, legislators sat on the company’s application.
It added that in contrast, MORE applied for a franchise only on Aug. 22, 2018 and was approved by the House of Representatives on Oct. 8, 2018, or less than two months after filing. — Victor V. Saulon

23 soldiers honored for battles vs Abu Sayyaf

PRESIDENT RODRIGO R. Duterte on Saturday, Nov. 24, conferred the Order of Lapu-Lapu with the rank of Kampilan on 23 soldiers who were seriously wounded in recent clashes with the kidnap-for-ranson Abu Sayyaf Group in Jolo, Sulu. These medals are awarded to both government personnel and private individuals for bravery and exceptional contributions. The soldiers who received the recognition during Mr. Duterte’s visit to Camp Navarro General Hospital in Zamboanga City were: 2Lt. Michael Vincent Benito, SSg. Rex Cureg, Sgt. Romeo Barbon, Sgt. Jerson Barasi, Sgt. Reynante Ruma, Cpl. Geneus Calamlam, Cpl. Bingbong Salvador, Cpl. Felix Jay Castillo, Cpl. Denver Lambino, Cpl. Eugene Corpuz, Pfc. London Longawis, Pfc. Aldrin Paj-Dio, Pfc. Kriel Manaligod, Pfc. Jordan Magundayao, Pfc. Ruben Bulayang, Pfc. Harvie Soriano, Pfc. Marnel Piduana, Pfc. Sandoval Ludivico, Pfc. John Paul Layugan, Pfc. Gevil Lorenzo, Pvt. Jayferson Balac, Pvt. Jaime Boco, Jr., and Pvt. Rizalde Tierro. “Another soldier, Pvt. Murphy Cuntapay, was flown from Mindanao and currently confined at the AFP Medical Center in Quezon City,” the Presidential Communications Operations Office (PCOO) said in a statement on Sunday. The President also pledged P300 million for the construction of a new two-storey hospital inside the camp. “He told the hospital management that it could use the P27 million remaining fund initially earmarked for the new Camp Navarro General Hospital to buy medical equipment,” the PCOO said. — Arjay L. Balinbin
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