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Tag: My Cup Of Liberty
This year marks several important global milestones in macro-economy and the energy sector. These include the coveted $100 billion/year of climate money starting 2020 as promised by the rich countries to poorer countries during the Paris Agreement in 2015, and steep decline in global GDP growth and energy demand because of the various lockdowns by many countries in response to the COVID-19 pandemic. The world hit an all-time high primary energy demand of 584 Exajoules (EJ, 1 EJ = 23.88 trillion tons oil equivalent, or 277.78 tera-watt hours, TWH) in 2019, up from 576 Exajoules in 2018.
There is a direct and close relationship between electricity consumption and GDP growth so the former with real-time data can be used as a proxy to estimate the latter which are often announced about six weeks after the end of the quarter.
The Philippines has perhaps the most draconian, most hysterical lockdown policies in East Asia and even in other countries in the world. From mid-March to end-May, all public transportation — planes, buses (provincial and Metro Manila), jeepneys, regular taxis and TNVS, tricycles and motorcycle taxis — were disallowed. Taxis were allowed to operate starting June 1, the rest were still prohibited.
The adverse impact of prolonged community quarantine (CQ) in Metro Manila and the rest of Luzon since mid-March is shown by the huge decline in electricity consumption. From the Independent Electricity Market Operator Philippines (IEMOP) data for Luzon-Visayas grids, I compared the April-May 2020 data to the same months in 2019 and the result is really bad.
The hard lockdown countries experienced deep economic contraction in their GDP in first quarter (Q1) of 2020: France -5.4%, Italy -4.8%, Spain -4.1%, Belgium -2.8%, Germany -2.3%, and UK -1.6%. In Asia, the hard lockdowners and their contractions are: Hong Kong -8.9%, China -6.8%, Singapore -2.2%, Thailand -1.8%, and the Philippines -0.2%.
As the COVID-19 global pandemic lingers, the search for new medicines and vaccines continues as existing treatments and medicines cannot cope with virus mutation. Public policies on the pricing of innovative, newly invented medicines and vaccines are among the important considerations, whether these new treatments will become available in certain countries or not.
On April 24, President Rodrigo Duterte announced in his address to the nation, “...the bright Filipinos who are there working day and night trying to find out how to combat COVID, I’m raising the bounty to 50 million... Baka ‘pag sa ligaya ko, another 50 million... So kung kailangan nila ng additional funding... kung hindi masyado malaki, I will readily give it to them.”
First, the health frontliners in hospitals, clinics, and laboratory centers; and their “support cast” -- the people in the groceries and fast food chains, the delivery boys on motorcycles like Grab Food and Delivery, Foodpanda, etc. For the doctors and nurses, patients and their caretakers who have no more time to cook or cannot buy from cheaper carinderias that are also closed, food delivery boys save the day.
The virus scare has become an opportunity for some people to advance their populist and socialist agenda like calling for free electricity and free water for poor households that already receive 4Ps cash transfer plus additional cash under the social amelioration program (SAP). Some also receive cash and goods from private individuals, companies and charities.
In an address to the nation last Monday, April 13, about government policies to fight the China virus, a.k.a. SARS-COV2 which causes COVID-19, President Rodrigo R. Duterte said that a new treatment, an “antibody” has been developed by a giant pharmaceutical company. Problem is that “we are on the last ladder. Ang mauna niyan ‘yung mga mayayaman” (the first to benefit are the rich).
In the ongoing Enhanced Community Quarantine (ECQ) in the Philippines, there are many prohibitions and closures -- office or shop work, many businesses, and public transportation have been shut, strolling around and long travel are prohibited, etc. Also among the weird bans is a liquor ban in many cities in Metro Manila and provinces, and cigarette and e-cigarette bans in some small municipalities like General Luna in Quezon province.
Before the China virus -- a.k.a. SARS-Cov-2 which causes Covid-19 -- scare, pneumococcal diseases caused by a bacteria called Streptococcus pneumonia and their treatment were in the news. The bacteria can affect people of all ages, from babies to senior citizens, and pneumococcal diseases are a leading cause of death among children below five years old. When the bacteria invade the lungs, they can cause pneumonia and death. They can also invade the bloodstream and cause bacteremia, or invade the tissues and fluids surrounding the brain and spinal cord and cause meningitis.
This column will briefly tackle two discoveries related to the Wuhan/China virus, a.k.a. SARS-CoV-2 which causes coronavirus disease 2019, better known as COVID-19. Take note that global deaths from regular flu, pandemics not included, is between 300,000 to 646,000 per year.
The Independent Electricity Market Operator Philippines (IEMOP) sent a media advisory about electricity supply-demand in weeks two and three of this month and the numbers are not good. There was a huge decline in average demand of 2.03 gigawatt (GW) from March 15, the start of Metro Manila quarantine or lockdown from the rest of Luzon. Consequently, prices at the Wholesale Electricity Spot Market (WESM) also declined.
During global health pandemics aided by hysteria, there is global economic slowdown, deep slowdown bordering on contraction (“negative growth”). Millions of jobs are lost as companies and shops either scale down operations or shut down. Some governments around the world adjusted to help the ailing and dying businesses and job creators via various forms of tax cut.
When President Rodrigo Duterte lashed out at Maynilad and Manila Water that hold concession agreements (CA) with the government via the MWSS on Dec. 3, 2019, the stock prices of both companies and their allied firms suffered significant declines starting Dec. 4, which continued until mid-December. I continued the series to last Monday, the last trading day of the Philippine Stock Exchange (PSE). The percentage decline of stock values until this week remains big, 49% and 32% for Manila Water Co. Inc. (MWC) and Metro Pacific Investment Corp. (MPI) respectively.
The bad news is that the Wuhan virus -- a.k.a. severe acute respiratory syndrome coronavirus 2 or SARS-CoV-2 which causes coronavirus disease 2019 or Covid-19 -- continues to expand worldwide. The good news is that humanity is a survivor of many deadly viruses in the past and modern and innovator medicines and vaccines keep coming.
One of the consequences of the COVID-19 scare is the huge decline in global oil demand and low oil prices because oil supply remains high, thanks to Trump’s policy of “energy dominance”: from only 5 million barrels per day (mbpd) at the end of Bush, Jr.’s term in 2008, to 8.8 mbpd at the end of Obama’s in 2016 (a 3.3 mbpd increase after eight years), and 13.1 mbpd by February 2020 (a 4.4 mbpd increase in just three years and two months).
In a speech before new appointees in Malacañang on Feb. 6, President Rodrigo Duterte blasted again the two Metro Manila water concessionaires. He said, “Where is the money of the average Filipino who are poor who pays his water bill and he has to pay because if (not) it will be cut off? Where is the money of that son of a b****? Give us back the money. Give it back to the people and maybe we can talk about solving your problem.”
Technology- and app-based transport network vehicle service (TNVS) is cool. It is transparent between the passengers and service providers. Passengers know the fare even before they book and confirm a ride. And after they confirmed the ride, they will know the plate number, driver’s name, etc. of the vehicle that will pick them up. On the part of the drivers, they know the names of their passengers, their cell phone numbers, where they are waiting and their destination, cool.
Last week I attended three lectures. First the talk of Fritz Ocampo, Chief Investment Officer of Banco de Oro (BDO), titled “The Philippines: back on track” on the evening of Feb. 20 sponsored by the Rotary Club of Rizal West (RCRW) and held at the Elks Club, Makati. I was invited by a former clubmate, Past President Patty Michener. Then, on Feb. 20 and 21, media briefings by the Independent Electricity Market Operator of the Philippines (IEMOP) and Department of Energy (DoE), respectively.
On Feb. 5, I attended the lecture by Dr. Dennis S. Mapa, National Statistician and head of the Philippine Statistics Authority (PSA), and Professor at the UP School of Statistics (UPSS). His talk was “Poverty in the Philippines: Evidence from the 2018 Official Poverty Statistics,” sponsored by the Department of Economics of the Ateneo de Manila University. I was invited by Dr. Majah Ravago who used to teach at UP School of Economics (UPSE) and recently migrated to Ateneo.
Recently there was a story on the huge debt of the Power Sector Assets and Liabilities Management Corp. (PSALM) because it could not collect P59 billion from independent power producers (IPPs) and electric cooperatives (ECs). That is a big amount and PSALM continues to collect various universal charges (UC) for the various stranded costs and debts of the National Power Corp. (NPC).
“How to make the fitting adjustment between individual independence and social control is a subject on which nearly everything remains to be done... To an ordinary man, however, his own preference... is not only a perfectly satisfactory reason, but the only one he generally has for any of his notions of morality, taste, or propriety...” -- John Stuart Mill, On Liberty (1859), Ch. 1 Introduction
The Philippines continues to be among the laggards in East Asia in attracting more foreign direct investments (FDI). Data from the UN Conference on Trade and Development (UNCTAD) World Investment Report (WIR) show that our FDI inward stock, an indicator of cumulative foreign investments, was still below $90 billion in 2018 and only about 55% of that in Vietnam and Malaysia, 37% of that in Thailand. The only neighbors that we can “beat” as having lower FDI stocks are Myanmar, Cambodia, Laos, and Brunei.
Consumers in the Philippines continue to be penalized by high inflation. In 2018 when the TRAIN law was implemented, the country was the “inflation valedictorian” among the big and stable economies in East Asia with 5.2%. Last year, six economies had inflation rates of below 1% and yet the Philippines had 2.5%. In January, our inflation rate spiked to 2.9%.
The good news about the Philippines’ GDP growth of 5.9% in 2019 is that it is high by global and regional trends. The bad news is that growth is decelerating since 2016 and our GDP size remains small. With a low economic base, if we keep growing by just 5-6% yearly, it will take us many decades to be at par with the per capita incomes of our neighbors Malaysia, Singapore, Hong Kong, and Thailand even if they grow only 2-3% yearly. (See Table 1).
Recently it was reported that the growth rate of Germany, Europe’s largest economy and the world’s fourth largest, fell to only 0.6% in 2019. This caught my attention because it is a significant drop from 1.5% in 2018 and 2.2% average for 2014-2017. The UK and France managed to grow 1.4% in Q1-Q3 2019 so far, while Italy has crawled to only 0.1% growth.
Philippine universities do not seem to fare well even compared to many of their ASEAN neighbors. The Quacquarelli Symonds (QS) world university ranking is a good annual report, its scoring is based on six indicators: Academic peer review, 40%; Faculty/Student ratio; 20%, Citations per faculty; 20%, Employer reputation; 10%, and International student ratio and International staff ratio, 5% each.
“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.” -- Friedrich Hayek, “The Pretence of Knowledge” -- Nobel Prize lecture Dec. 11, 1974
Volcanic areas are among the most beautiful places to see in the country -- Mayon, Pinatubo lake, Bulusan lake, Taal lake, etc. They are beautiful when the volcanoes are at rest, but when they rumble and erupt, they are among the worst places in the planet to be due to the many dangers they pose. Among the most active, most violent volcanoes in the Philippines and their explosions since 1600 are listed in Table 1.