Sunday, November 19, 2017

BWorld 163, US energy policies and implications in Asia and Philippines

* This is my article in BusinessWorld last October 31, 2017.


Energy means development. It is not possible to have fast growth in all sectors — agriculture, manufacturing and services — and sustain it without ample supply of affordable and stable energy and electricity.

The US remains the world’s biggest economy in terms of nominal or current values of gross domestic product (GDP). But in purchasing power parity (PPP) valuation of GDP, China has tied the US economic size in 2013, both with $16.7 trillion, and in 2014, China ($18.2T) overtook the US ($17.4T).

US ENERGY POLICIES UNDER EX-PRESIDENT OBAMA
The energy policies of the previous administration can be summarized as follows: (1) drastic reduction of coal use, (2) steady use and consumption of nuclear and hydroelectricity, (3) relative encouragement of natural gas and oil, and (4) massive support and subsidies for variable renewable energies (VREs) especially wind-solar.

In contrast, other giant economies in the world have the following energy policies:

Germany: (1) mild reduction in coal, oil and nuclear, (2) relative encouragement of natural gas, and (3) massive support and subsidies for VREs.

Japan: (1) increased use of coal and natural gas, (2) decreased use of oil and nuclear, and (3) big support for solar.

China and India: uniform increase in coal, oil, natural gas and VRE. Which is the right thing to do, to improve energy capacity as big and as stable as possible to hasten their economic development (see table).


The US energy transition from coal to VREs like wind-solar has affected its long-term energy stability and competitiveness and punch some holes on the budget and ordinary consumers’ pockets.

US ENERGY POLICIES UNDER PRESIDENT TRUMP
Recognizing the long-term threat of this trend, President Donald Trump issued a series of policies reversing the Obama policy. Among them are the following:

(1) Appointed an Anthropogenic global warming (AGW) skeptic, Scott Pruitt as head of the Environmental Protection Agency (EPA). EPA in the previous administration has issued lots of regulations that explicitly or implicitly restrict new coal power plants while putting existing coal plants.

(2) Issued America Energy Independence policy in March 2017, targeting to reverse among others, the Clean Power Plan (CPP) projected to cost the US economy up to $39 billion a year and increase electricity prices in 41 States by at least 10%. A follow up Executive Order (EO) “Implementing an America-First Offshore Energy Strategy” was issued in April 2017.

(3) Exit from the Paris Agreement and the multi-trillion dollars possible liabilities in legal and environmental challenges.

These policies will reverberate to Asia and the rest of the world in terms of higher US production of coal, oil and gas. Higher supply means lower or stable prices for these energy sources.

On a related note, an America First Energy Conference (http://americafirstenergy.org/) will be held in Houston, Texas this coming Nov. 9, to be sponsored by the Heartland Institute. Being organized by an NGO, speakers and moderators (41 so far) are all from nongovernment entities except one, from the US Department of Interior.

HUGE COAL POWER IN SOUTHEAST ASIA (SEA)
Last week, the International Energy Agency (IEA) reported that about 100 GW of new coal-fired power generation capacity is expected to come online in SEA alone by 2040, increasing the region’s installed capacity to about 160 GW and more than doubling the region’s current coal power capacity. Global coal-fired generation capacity to grow by nearly 50% over today’s levels.

Coal as fuel is preferred because it is cheaper than natural gas and coal plants are in many cases less costly than the capex needs of gas plants, the IEA admits.

The Philippines will be among the big SEA nations that is investing big amount of resources in expanding its coal capacity. And rightly so. In 2016, coal constituted 34% of PH total installed power capacity but contributed 48% of actual electricity production.

Cheap, stable, and dispatchable electricity upon demand, that is the kind of power sources that people the developing world need. Governments must step back from climate and renewables alarmism and cronyism and go for least-cost, reliable energy.
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See also:
BWorld 160, A high carbon tax is irrational, October 25, 2017 

On the PH's GDP growth of 6.9% in Q3 2017

A friend, Ateneo de Manila's Economics Professor, Ser Pena-Reyes, made and posted this chart in his fb wall yesterday. I like it.


My immediate reaction -- see in the Expenditures side, Q3 2016 vs Q3 2017, Household consumption is declining this year while Government consumption is rising fast. The Du30 government is spending big time this year, funded by lots of borrowings, to be followed by tax-tax-tax in 2018 and beyond. Magaleeeng.

Another economist friend, Jun Neri, BPI's chief economist, posted their chart analysis of the Q3 growth, their version on the spending side. Jun said "It factors in the weight of each sector. Notice how Net Exports (X - M) helped compensate for the slowdown in HFCE (household consumption)." Good chart, Jun/BPI.



Ser made another chart, below, on the demand side of the GDP growth. Ser noted that "HFCE, GFCE, and capital formation appear to be the main drivers of the deceleration—an observation that raises some concern regarding growth sustainability. There is a need to accelerate capital formation in particular, if we are to shift from consumption-led to investment-led growth."



Growthwise, the slow growth in year 1 of PNoy Aquino government was momentum from the lousy Gloria Arroyo economy. Likewise, the fast growth in year 1 of the Du30 administration is momentum from PNoy fast growth era. Besides, while PNoy budget deficit was around P300 B/yr or less, Du30 deficit in year 1, this year, is p600B+. No crisis year yet it borrowed heavily, hence the high jump in Government consumption growth.

Fiscal responsibility means in financial turmoil or crisis years, government borrows big time to help propel an economy then have fiscal surplus in non crisis years to pay some debt. This administration  displays big time fiscal irresponsibility of spend-spend-spend, ramp up the deficit and borrowings in non crisis, already fast growth period.



Sunday, November 05, 2017

BWorld 162, Open pit mines and open economy

* This is my article in BusinessWorld on October 27, 2017.


Open pit mining (OPM) is not as scary and draconian as many activists would paint it to be. Thus the ban on OPM by the CA-rejected ex-DENR secretary Gina Lopez has little or zero technical basis, only emotional outburst.

The Mining Industry Coordinating Council (MICC), the multi-stakeholder body on the sector has finally decided that the ban on OPM should be abandoned and new DENR Secretary Roy Cimatu has said that he will soon issue a new department order for this.

OPM is done and practiced in many countries including developed ones like the US, Australia, Germany, Sweden and Canada. Mining firms and their stockholders get good income, governments get huge tax revenues, many workers get long-term high-paying jobs, and consumers worldwide enjoy continued supply of electricity, gadgets, appliances, cars, steel bars and numerous other products of mining. (See table)


Now that the uncertainty of OPM banning has been removed, existing mines should be able to continue their production without fear of policy reversals. The image of the country as having fickle, atras-abante investment policies should be somehow corrected.

New, big prospective mining projects in the Philippines will hopefully see the green light for their operations. Two of those big potential projects are (1) the $2-billion MVP-led Silangan gold mine in Surigao del Norte, and (2) the $5.9-billion Tampakan gold-copper project in South Cotabato. The latter is actually the Philippines’ single biggest foreign investment project and is expected to bring huge income for the locals and the government, national and local.

Many local anti-mining groups vehemently oppose the Tampakan project citing thousands of hectares of land that will soon be wasted. That is an outright exaggeration. The copper-gold ore extraction in just one area is projected to be about 2.5 kms. wide, 3 kms. long and about 0.8 km deep, after 17 years of operation. This is significantly smaller than the Hibbing and Bingham Canyon in the US, among other big OPMs in the world.

Government should simply set the parameters and criteria for business to follow based on existing laws, like the Mining Act of 1995. Once government has given its permit and approval for a mining project, it should simply monitor the players that they comply with the laws and penalize violators, not change rules midway and in the process, violate the laws that it is bound to follow and implement in the first place.

The rule of law applies not only to businesses and regulated entities but also to the government. The rule of law applies to both governors and governed, both administrators and administered, both regulators and regulated. If governors and regulators want to exempt themselves from the law and make their own instant rules, that is the rule of men with arbitrary powers circumventing the rule of law.
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See also:
BWorld 151, Mining taxes per hectare of land, September 22, 2017
BWorld 159, Electoral reforms and the President, October 19, 2017 

IPR and Innovation 39, Recent IP developments in CN, TW, KR, ID

Reposting these news stories collated by PRA, enjoy.
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China.org.cn, September 19, 2017

The Chinese government has begun a campaign to protect the intellectual property rights (IPR) of foreign companies.

The campaign will focus on malicious trademark registration and imitation of foreign brands, the Ministry of Commerce said Monday, citing a joint action plan by 12 government departments.
From September to December, the campaign will also target infringement of online IPRs, patent rights and plant variety rights, as well as industrial espionage, according to the plan.

Lexology, October 20, 2017

China is in the middle of a rapid shift towards cloud technologies. Execution of the 13th Five Year Plan will deliver substantial investment into cloud computing and the sector is undergoing unprecedented growth. Meanwhile, organisations operating in this digital economy face an increasingly complex intellectual property (IP) environment, as China becomes a global IP center and scales up IP protection, enforcement and penalties for infringement. Indeed, the number of cloud-related IP lawsuits in China grew 158% between 2011 and 2016. Against this backdrop, organisations face an important question: how can they take advantage of the enormous opportunities presented by the cloud in a way that manages this complex IP landscape? In this post, Matt Pollins and Nick Beckett from CMS look at the practical steps organisations can take to protect themselves and succeed in the cloud. 

World Trademark Review, September 26, 2017

A major amendment in Taiwan to the regulations governing customs border measures will play a key part in protecting trademarks. The measures allow the owner of a trademark registered in Taiwan to file an application with Customs to have the trademark recorded on its database enabling Customs to seize counterfeits when it inspects imported or exported goods ex officio. The legal basis for this mechanism is rooted in the Regulations Governing Customs Measures in Protecting the Rights and Interests of Trademark, which is enacted pursuant to Paragraph 2 of Article 78 of the Trademark Act.

XinhuaNet, October 10, 2017

South Korea's unification ministry on Tuesday urged the Democratic People's Republic of Korea (DPRK) not to violate property rights owned by South Korean companies which had operated factories in the currently closed inter-Korean industrial complex.

The Economic Times, October 27, 2017

Seeking to achieve a "more balanced" trade relationship, the Trump administration has pressed India on key issues like market access, lifting of trade barriers and intellectual property protection. During the first US-India bilateral Trade Policy Forum (TPF) under the Trump administration which was attended by US Trade Representative Robert Lighthizer and Union Minister of Commerce and Industry Suresh Prabhu, India strongly differed with the American position on many of the contentious issues.


PRA

During a meeting in New Delhi last week, Indian Commerce & Industry Minister Suresh Prabhu announced how "extremely important" it is for India to protect intellectual property rights. Minister Prabhu noted that the Indian economy has undergone robust changes during recent decades and is now a leader in innovation and developing technologies.
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See also:

Thursday, November 02, 2017

BWorld 161, The sin of smuggling and corruption in the Sin tax law

* This is my article in BusinessWorld last October 23, 2017.


The intent or purpose of higher taxation is to further penalize an act, work, or consumption, hoping to discourage them by making their prices higher while giving government and lobbyists more freebies and more money.

The unintended result of higher taxation is to encourage illicit trade, production of cheaper but lower quality goods and services while giving the corrupt and extortionists in government more money.

Such may be the experience of the Sin Tax law of 2012 or RA 10351. It has raised lots of money for government, benefitted the universal health care program of DoH-PhilHealth while enriching the smugglers, illicit traders and their government protectors.

Revenues from sin tax has significantly increased in 2013, the first year of implementation of the law. Tobacco tax in particular has more than doubled from P32B in 2012 to P70B in 2013. Meanwhile, estimates of cigarettes smuggling have also increased from 35 million packs in 2012 to 40 million packs in 2013 (see table).


The CRC estimates are partly derived from the Oxford Economics report in 2016, “Asia: Illicit Tobacco Indicators 2015.”

The rise in smuggling and illicit trade of cigarettes is also shown by the haul of the BoC and BIR in raids in November 2016 in Bulacan, Pampanga and Pangasinan where more than P1 billion worth of illegally produced cigarettes and counterfeits were discovered. In Pangasinan alone, an illegal factory was raided, which led to the discovery of fake stamps and cigarette making/packing machines that can produce up to 3.6B cigarettes a year.

So claims by the government and advocates of RA 10351 that “8 million Filipinos have stopped smoking since the passage of the law” or “at least 70,000 smoking-related deaths have been averted since 2013” and similar pronouncements may not be true after all? Or are these numbers exaggerated?

The numbers in the table and the huge number of discovered smuggled cigarettes by government raids mean one thing — demand and consumption for tobacco products remained high despite the tax hike. Consumers simply shifted from higher-price to lower-price products, and from legal to illegal or informal sources of tobacco and alcohol products. Like lambanog and tuba.

I made an informal, verbal survey of some small sari-sari stores in a rice farming village in Bugallon, Pangasinan when I went there last month, accompanied by a local. I asked the store owners, “Has smoking and drinking incidence by the people declined, stayed about the same, or increased?”

They replied that they do not have the numbers but they observe that smoking and drinking incidence did not drop or decline. Poor people simply shifted to cheaper brands as new brands with cheap products like Mighty sprouted. The well-off continued patronizing the established higher-price brands despite the rise in prices, they simply reduced their smoking by several sticks a day.

For alcohol products, San Miguel beer is literally wiped out in poorer villages because of its higher price but the consumption of Ginebra, Emperador, Red Horse, and other products has remained the same if not increased. Drinkers usually start with the high alcohol drinks and before going home or elsewhere, they wind down to Red Horse.

Sen. Manny Pacquiao introduced Senate Bill 1599 that aims to increase the unitary excise tax on tobacco products from P30 to P60 per pack, and the annual increase be raised from 4% to 9%. His goal is to parrot the goals of the Sin tax law of 2012 — more money for government, less smoking incidence by the people.

Given the above numbers and facts on the ground, what the boxer-Senator would achieve if his bill becomes a law would be more illicit trade and more corruption in government while gaining more political pogi points for his political plans in 2022.

Instead of introducing another round of higher sin tax, legislators and executive agencies should focus on strictly implementing the existing law and plug loopholes. The proliferation of counterfeit products and stamps mean there is proliferation of corruption in government that allowed such things to happen for several years.

There is a limit to state nannyism and government intervention on how people should run their own lives. Government should limit its unlimited itch to tax-tax-tax, regulate-regulate-regulate, spend-spend-spend.
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See also:
BWorld 158, Why a carbon tax is wrong, October 16, 2017 

Tuesday, October 31, 2017

Energy 102, Germany's CDU/CSU and FDP rejecting the Greens' anti-coal agenda

I like the development in the new German government. #1 CDU getting closer with #4 FDP (Free Democratic Party) in climate and energy policies while potential partner #5 Greens go more idiotic and watermelon-ic (green outside, red inside) in demanding zero coal power. The Greens have more commonality with #2 SDP and #6 Linke (commies). CDU is correct -- if they follow the Greens for the sake of coalition-majority, #3 AfD will greatly benefit and further expand as AfD is explicitly anti-renewables alarmism and cronyism. Germany having 3rd highest electricity prices in the world might move to 2nd or 1st if the Greens-SDP agenda will prevail.

https://www.thegwpf.com/climate-policy-threatens-to-crash-german-coalition-negotiations/


“If coal plants are closed down in Eastern Germany and thousands of workers are made redundant, very soon 30% of voters will support the Alternative für Deutschland (AfD),” Laschet warned. ... Prime Minister Laschet announced that he would not make substantial concessions: “If push comes to shove we will have to crash the talks.” He said that environmental policy was a bigger hurdle for the negotiations than immigration policy: “The latter is easier to settle than the closure of power stations.”
(translated to English by The GWPF)

"Kellner reiterated the Greens’ position that Germany should quickly close coal-fired power stations to help fight climate change, a position resisted by the other parties." 
October 26, 2017.
https://www.reuters.com/article/us-germany-politics/german-coalition-talks-stumble-on-migration-climate-idUSKBN1CV1FZ

"While all parties agreed in principle this week that they want to uphold the Paris climate accord, the FDP is pressing for a commitment to curb government measures to promote renewable energy, which help make German power prices the second-highest in the European Union after Denmark’s.

“We certainly have to reduce carbon dioxide,” the FDP’s Suding said. “In Germany, this is much more expensive than in other countries and we have to find a way to reduce CO2 emissions more cheaply. Of course, there won’t be a complete phase-out of coal by 2030.”
October 27, 2017.


"According to Lindner (FDP):
The project of the century Energiewende [transition to green energies] has failed. None of the agreed targets will be reached. Climate protection is stalled, energy prices are rising and they are burdening us as electricity consumers, just as they are the industry and middle class. And not least of all it is becoming increasingly difficult to guarantee a secure power supply during the winter months.” 
http://notrickszone.com/2017/09/29/germanys-green-energy-project-close-to-death-eeg-feed-in-act-has-failed-has-to-go/#sthash.ZAheNnnr.RsV59Dyz.dpbs

It is good that both CDU/CSU and FDP are jointly resisting the deindustrialization goal of the Greens. One reason why AfD rocketed high to nearly 13% of the votes despite being created only 4 years ago is on the energy mini-suicide of the watermelon groups.
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See also:

Saturday, October 28, 2017

US economic growth of 3%, due to deregulation?

If we exclude the years 2008-09 because they were outliers (global financial upheaval), the Obama years seem to be the weakest since 1990. Never experienced growth of 3% or higher.


Early peek of the Trump admin first 3 Quarters of 2017, experienced 3% growth in the last 2 quarters (Q2 and Q3). 


Fastest 6-months growth since 2014, because of Trump or Yellen or something else? One of Financial Times' headlines today.

If the 3%+ is retained in Q4, it will be called the "fastest 9-months growth since ____".

This chart below could be one explanation -- US stocks growth the past year was rather fast compared to other major markets (China/Shanghai, Japan/Nikkei, Germany/DAX). 


The 2008-09 crash was a product of multi-decades of moral hazards problem in housing finance, not just 8 years of the Bush Jr. era.

A friend noted that "an institutional collapse like 2008 is followed by many years of slow growth and stagnation. The Philippines had the same experience from 1983 through the 90's. From 1991, Japan nearly had two decades of below-average growth."

Good points, he was arguing the slow growth momentum, which actually applied also to the rest of  G7 economies. But not to China, India, other Asian economies.

My hypothesis for the rather fast growth of the US economy in the last 2 quarters -- somehow a growth momentum due to some of his deregulation, de-bureaucratism policies. And the big tax cut plan, it's seeping into business decisions, big investments may be coming to the US from abroad and big investments in the US won't migrate to other countries anymore.
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See also: 
US and China stockmarkets, huge divergence, June 20, 2017 

Wednesday, October 25, 2017

BWorld 160, A high carbon tax is irrational

* This is my article in BusinessWorld last October 19, 2017.


Political science masquerading as climate science insist that the gas that we humans and our animals exhale, the gas that is used by trees, flowers, fruits and other crops to grow and feed the world — carbon dioxide or CO2 — is a pollutant that must be over-taxed and over-regulated.

Far from the truth. CO2 is a useful gas, not a pollutant.

Since it is useful, the optimal carbon tax for coal in particular is not P10/ton, not P20, not P600, but zero. However, a zero tax on coal is unpopular from the world of climate alarmism, so we classify these tax rates as follows: P0 tax is optimal, P10/ton is rational, P20/ton is compromise, P600 is irrational.

Recently, eminent economist Dr. Ciel Habito made a follow-up paper, “The case for the carbon tax” and insist that the carbon tax for coal should be raised from the current P10/ton to P600/ton.

To support his claim, he used some ridiculous numbers that are peddled by the watermelon (green outside, red inside) movement. Here are two:

(1) “Dominated by CO2 (72%), GHGs trap heat… .”

Wrong. CO2 is 400 ppm or only 0.04% of all greenhouse gases (GHGs). About 95% of GHGs is water vapor — the clouds, evaporation from the seas, oceans, lakes, rivers, stomata of leaves, etc. The remaining 4%+ are methane, nitrous oxide, others.

(2) “CO2 averaged about 280 parts per million (ppm) for the last 10,000 years…In 2015… 400 ppm for the first time…. now triggering much more frequent extreme weather events.”

This is perhaps 5% geological science and 95% politics.

The Minoan, Roman, and Medieval Warm Periods (when there were no SUVs, no coal plants, no airplanes) were much warmer than the Modern Warm Period (mid-1800s to roughly 2000). There were wild swings in global warming and global cooling cycles regardless of the CO2 level. How would one call this — “much less frequent extreme weather events than today?” Garbage.

Climate change (CC) is true. All skeptics recognize climate change, recognize global warming. Planet Earth is 4.6 billion years old and there were climate change all those years because climate change is cyclical (warming-cooling-warming-cooling…) and natural. Global warming is true, and so is global cooling.

It is political science that masquerades as climate science to say that there is no climate cycle, that there is no global cooling that takes place after global warming.

BACK TO COAL POWER.
From the recent energy and economic experience of our neighbors in Asia and some industrial countries in the world, the hard lessons are these: (a) Countries that have coal consumption of at least 2.1x expansion over the past two decades are also those that experienced fast GDP growth of at least 3x expansion.

Prominent examples are China, India, South Korea, Indonesia, Vietnam, Malaysia, Philippines, and even Pakistan. And (b) Philippines’ coal consumption is small compared to its neighbors; its 2016 use is just nearly 1/2 of Malaysia and Vietnam’s, just 1/3 of Taiwan’s and almost 1/5 of Indonesia’s, 1/6 of South Korea’s, 1/9 of Japan’s. (see table)


A high carbon tax is irrationalI have repeatedly argued that CO2 is a useful gas. For those who insist that CO2 is a pollutant, they can certainly help curb further CO2 emission even without legislation and carbon taxation through the following:

• Stop breathing too often; more exhalation means more CO2 emission.

• Stop adopting pets (if any), stop eating chicken, pork, meat because these animals exhale CO2.

• Stop using their cars, not even jeepneys or buses, they emit CO2; skateboards and bicycles only.

• Stop riding airplanes and motorized boats, they emit CO2; solar planes or big kites and sailboats only.

• Stop connecting from the grid and from Meralco because 48% of nationwide electricity generation comes from coal; no gensets either. Use only solar-wind-biomass + candles at home.

• Tell their friends, business associates, family members, to do the same so that there will be more people emitting less CO2.

The Habito proposal of more expensive electricity via P600/ton carbon tax on coal is dangerous because while the Senate version of TRAIN adopts a P20/ton excise tax, the P600 can spring up somewhere during the final and Bicameral Committee meeting. The proposal should be exposed as based on political science, not geological or climate science.
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See also:
BWorld 148, Energy Trilemma Index 2016, September 16, 2017 

Tuesday, October 24, 2017

IPR and Innovation 38, Recent IP developments in some ASEAN countries

Property rights protection of both physical and non-physical/intellectual -- trademark/logo, copyright, patent, etc. -- is among the cornerstones of dynamic, mature and market-friendly economies. Individuals and enterprises develop new products and services via innovation and they create new value, new wealth for society.

I am reposting some developments on IPR in the ASEAN. Thanks to the Property Rights Alliance (PRA) for the bi-weekly IP updates.
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The Nation, October 02, 2017 

There's a role for intellectual property protection in the Thailand 4.0 vision and initiative, and the national government's Intellectual Property Department sees a role for itself promoting innovation through offering increased knowledge sharing and more convenient services.

"We are a key mechanism in protecting new technology and innovation vital to economic development, and we do this by motivating new developments," said Thosapone Dansuputra, director-general of the department.

Lexology, October 04, 2017

As of November 2017, Thailand will accede to the so-called Madrid Protocol as member no. 99. This entails cost savings compared to previously when trademark proprietors are to register their trademarks in Thailand. The Madrid Protocol is an international system through which trademark proprietors may apply for protection in several countries through one basic registration.

The Edge Markets, October 10, 2017 

Website blocking in Malaysia has significantly reduced online piracy, with a 74% fall in traffic to pirate websites recorded in the six months after the government initiated its sixth effort to block such sites in June 2016, says the Motion Picture Association (MPA). As pirate websites generate income through advertising revenue, a disruption to their business model can help stop online piracy, said Oliver Walsh, regional director at the Asia-Pacific hub for Motion Picture Association International (MPA-I).

XinhuaNet, September 19, 2017

The number of trademark registrations is lagging in Laos as many businesses lack understanding of their rights and fail to register to protect their intellectual property, according to the Intellectual Property (IP) Department under Ministry of Science and Technology on Monday.

PRA, October 6, 2017 

According to a study by the Intellectual Property (IP) Department of the Ministry of Science and Technology, only about 40,500 trademark applications have been filed in the Southeast Asian country since 1991. This is a relatively low number of applications for trademark protections for a country of 7 million and an economy with a GDP of $37.3 billion.

Lexology, October 11, 2017

On August 28, 2017, the Brunei Intellectual Property Office (BruIPO) signed an agreement to introduce a new patent examination initiative - the Patent Prosecution Highway Plus (PPH+) - with the Japan Patent Office (JPO), which commenced on October 1, 2017. Using this PPH+ system, patent prosecution procedures in Brunei are accelerated by allowing BruIPO to reuse the search and examination results of corresponding patent applications filed in Japan - thus reducing examination workload and time, minimizing costs, and improving patent quality.
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Lion Rock 22, Hong Kong's early policies on free trade, zero income tax

I like this article by a friend since 2004, Andrew Pak Man Shuen, Director and Co-Founder of the Lion Rock Institute in Hong Kong. I thought it was Sir John Cowperthwaite who was the first engineer of HK free trade policy. Reposting, did not include the first four paragraphs. Photo I got from wiki.
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13/09/2017
THE CONSERVATIVE | June 2017 | Issue 4 | Andrew Pak Man Shuen

… Sir Henry Pottinger was our first colonial governor. After the Opium War, he turned Hong Kong into an outpost of the British Empire so distant that Victorian parents would threaten to send unruly children there as a punishment.

He laid out the three basic governing tenets of Hong Kong. The first was that there must be no direct taxes: government revenue would come from land leases, licensing fees etc. The second was to “respect local customs”. Finally, Hong Kong would allow free trade, including with the enemies of the British Empire.

From the perspective of the 21st century, it is easy to conclude that Potting must have been a liberal. No direct taxes. Multiculturalism. Free trade. And all for a city built on commerce.

But, before celebrating, we must bear in mind that Pottinger was a hard-nosed colonialist. He and his colleagues had no qualms about butchering the “yellow peril” as they barrelled into Qing-dynasty China.

So why those three seemingly enlightened tenets? Remember that this was before the telegraph and the Suez Canal. Britain was not all that keen to hold a colony that was not only far away but surrounded by hostile powers. London sent the message to Potting that he would not be receiving much in the way of manpower or budget.

Hence it was out of realpolitik that Potting embraced those principles. First, the collection of direct taxes is extremely labour-intensive; without them, he could manage with a much smaller civil service. Second, although the Chinese of that era engaged in polygamy, female pedal mutilation and (perhaps most objectionable to the British) eating dogs, Pottinger knew that he was in no position to engage in mass behaviour-modification. If everything the Chinese were doing was allowed to stay legal, the police force could remain small and still be effective in the protection of property rights.

The decision to make Hong Kong a true free port where even the enemies of the British Empire could trade was a master-stroke. Pottinger understood that the colony would be hard to defend with military force.

To sail from Plymouth, the home port of the South China Sea fleet, round the Cape of Good Hope, across the Indian Ocean, through the Malacca Straits and then up the South China Sea was a logistical nightmare even in peacetime.

However, Pottinger also knew that, as Hong Kong possessed no natural resources to be pillaged, together with the fact that attacking any part of the British Empire would incur a cost for the invader, any assault must be part of a grander strategy for an invader in search of a prize other than this colonial outpost. If the would-be invader discovered that they could purchase whatever they coveted from Hong Kong, it was not worth the effort.

This explains what happened during the Korean War. The British colonial administration must have known about the smuggling activities of Henry Fok, who was transporting massive resources to Communist China. The latter had been placed by the United Nations under a total trade embargo. This meant that free-trade colony under British control was a lifeline for Mao, and far more useful than a Chinese-ruled Hong Kong.

As a result, Hong Kong remained British until 1997 – that is, 50 years longer than India. Its sovereignty was preserved because the power most likely to invade was protecting it. This makes Pottinger look like a geopolitical genius.

Of course, Hong Kong’s sovereignty did change hands once before 1997. In 1941, Japan invaded as it simultaneously rained bombs on Pearl Harbour, and we surrendered in three weeks. If Pottinger’s adoption of free trade was such a master-stroke, how come Hong Kong fell to the Imperial Japanese?

Next to the Yasukuni Shrine in Tokyo, which commemorates the war dead, there is a museum that is basically an attempt by the Japanese to explain what they did. One word is crucial: oil.

According to Pottinger’s theory, if the Japanese could have bought oil through Hong Kong, the Pacific War with the Allied forces might have been averted. Of course, this also means that Hitler would have never declared war on America. And that was not what Churchill wanted. That raises the question of why Hong Kong uncharacteristically participated in the oil embargo and suffered invasion – but we can leave that discussion for another day.

To conclude, the logic of “when goods don’t cross borders, soldiers will” that underpinned the Treaty of Rome was on full display in Hong Kong. Peace and sovereignty flow from the fountain of authentic free trade, even in the absence of soldiers and Ian Fleming’s secret agents. And, of course, there is another consequence of authentic free trade, which is massive and widely shared prosperity. That is also on full display in Hong Kong.
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See also: 
Lion Rock 19, Not enough capitalism in Hong Kong, May 12, 2016 

Lion Rock 20, Hong Kong's labor welfarism and rising unemployment, July 08, 2016 

Lion Rock 21, Dangers of Universal basic income (UBI) philosophy, August 11, 2017 
Hong Kong and John Cowperthwaite, Part 2, October 09, 2017

Sunday, October 22, 2017

Energy 101, Disinformation and fake stories by the watermelon movement

Fake stories and disinformation can be rampant in the energy sector because of the climate alarmism drama and renewables cronyism agenda. A recent example is one published in BWorld last Thursday, The Philippines’ Ill-Advised P1 Trillion New Coal Gamble, October 20, 2017 By Sara Jane Ahmed.

The lady seems to be ignorant of many data before writing their anti-coal drama. Some things she wrote:

1. “High electricity prices are driven by imported fuel and subsidies; electricity surcharges…”

à Wrong. Check Meralco website for customer charges, http://www.meralco.com.ph/consumer-information/rates-archive. Here, October 2017 charges, if one consumes up to 300 kWh, he would pay a total of P2,880, one-half of which is for generation charges and the other half for 11 other charges including taxes and FIT subsidy for mostly wind-solar. 


From the generation charge, about half of which are from Malampaya natgas-using plants in Batangas; there are hydr0, geothermal, coal could be about 40% of Meralco energy mix.

2. “Diesel dependence, much like our growing national coal dependence, is a result of subsidies…”

à Wrong, diesel has no subsidy, or maybe she refers to the current zero excise tax for diesel but under Duterte TRAIN, it will soon be slapped with P6/liter excise tax.

3. “Coal subsidies assure the private sector guaranteed returns…”

à Wrong. Currently coal excise tax is P10/ton but under TRAIN, to rise to P20/ton. Now Dr. Ciel Habito proposes a P600/ton excise and carbon tax for coal. I criticized his proposal here, http://bworldonline.com/carbon-tax-wrong/

4. “Meralco is currently underwriting a solar power supply deal for 85 megawatts (MW) at P2.99 per kWh.”

à True, and that’s the exception, from Solar Philippines of Leandro Leviste, son of Sen. Loren Legarda. Many solar farms here are given the cronyist FIT or guaranteed price for 20 years of P8.69 to P10+/kWh.

5. “Philippine’s financial sector as massively exposed now to the eventual stranding proposed new coal fleet to the tune of more than 10,000 MW in overcapacity and P1.05 trillion in financial risk”.

-> See this: “Countries that have coal consumption of at least 2.1x expansion over the past two decades are also those that experienced fast GDP growth of at least 3x expansion. Prominent examples are China, India, South Korea, Indonesia, Vietnam, Malaysia, Philippines, and even Pakistan.” http://bworldonline.com/high-carbon-tax-irrational/

Finally, the lady is highly disoriented, talking about diesel and coal subsidies when there is none. Yet silent on renewables subsidies, haha. P10B in 2015, P18.5B in 2016, P24.4B this 2017, and P26B next year. The main recipients of this renewables cronyism are the wind farms of the Lopezes/EDC, Ayalas' Caparispisan and Bangui, Phinma, Alternergy/Vince Perez, etc. http://www.bworldonline.com/content.php?section=Opinion&title=why-the-fit-all-is-a-burden-to-consumers&id=145326

The "planet saviours", the renewable cronyism lobbyists, they want more government intervention -- in arm-twisting consumers to pay higher electricity to subsidize renewables; in coercing the grid to prioritize the intermittent, unstable, unreliable, non-dispatchable energy sources; in choking and even killing stable, reliable, dispatchable 24/7 sources like coal, gas and nuke. Watermelons -- green outside, red inside.
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Thursday, October 19, 2017

BWorld 159, Electoral reforms and the President

* This is my article in BusinessWorld last Monday.


President Rodrigo Duterte has been on a rampage recently, repeating his warnings about declaring a “revolutionary government,” as if he has the authority to issue laws and orders without consideration or fear of opposition from independent-minded legislators.

Among his previous rants include his order to his loyal leaders in Congress to (a) impeach the Commission on Elections (Comelec) Chairman Andres D. Bautista, (b) impeach Chief Justice Maria Lourdes P. A. Sereno, (c) impeach Ombudsman Conchita Carpio-Morales, and (d) create new rules in electoral exercises such as postponing and resetting the barangay elections.

Speaking of electoral reforms, some things are better retained and while others should be changed. Among these are the following.

1. Retain automation and do not entertain the proposal by certain sectors to go back to manual counting of the votes. The number of voters in the country is rising and machines should take care of the counting and processing of results (see table).


The lobbying of the son of a former dictator, Ferdinand “Bongbong” R. Marcos, Jr., to discredit the results of the 2016 national elections and canvassing for vice-president has been rejected by the Supreme Court — good riddance. It was a dangerous attempt by Mr. Marcos to unseat the elected VP so that he can be the second highest official in the country, a position that is just heartbeat away from the Presidency, a position held by his father for 20 years (1965-1985) via deception and large-scale military coercion.

2. Elections of barangay officials should be as scheduled and not subject to postponement by the President or Congress.

Elections should held at regular and predictable intervals to give space and opportunity for the people to directly demand accountability from their elected leaders. Existing laws mandate fixed terms of office for elected national and local leaders.

3. No to state subsidy to political parties as proposed by certain sectors. This is a wasteful use of taxpayers money. Politicians and political parties have resources of their own or have access to a network that allows them to solicit big donations from their friends and supporters. Keep the tax money for direct subsidy to the poor, or cut taxes instead so that people can enjoy the fruits of their labor.

Meanwhile, if the proposed charter change (cha-cha) should materialize, the following reforms should be considered.

4. Abolish the party list system. This is wrong in both theory and practice. In theory, there are no marginalized sectors, only marginalized individuals. Women are not a marginalized sector. The country had two women Presidents already, a number of senators and House members are women. Youth is not a marginalized sector as many young leaders are occupying very high political and corporate positions. Farmers are not marginalized as there are many rich farmers and agri-business entrepreneurs, although many farmers are indeed poor. Electric cooperatives do not belong to the marginalized sector.

In practice, many non-poor individuals and groups have entered the legislature through the backdoor afforded by the party-list system.

5. Abolish the Sangguniang Kabataan (SK). Young people should not be encouraged to enter the world of politics early because government, by nature, is force and coercion. Young people should focus instead on voluntary and civil society action and learn the arts of entrepreneurship early.

6. Elect only the political party, not candidates, should the Philippines become parliamentary. Once put in effect, parties will stay focused on their political ideologies and advocacy and not on personalities.

7. Go back to the two-party system. Very often, debate on public issues can be limited to whether there should be increased government interventions and regulations or fewer, whether there should be more and higher taxes or less, whether there should be free trade or protectionism. Candidates and voters can align themselves on either of two opposing positions.

Many candidates can be accommodated by the two parties and they will all go through primaries and knock themselves out until only one will represent the respective party. This could have prevented a Duterte win because many candidates in the 2016 elections talked about respecting the rule of law while Duterte repeatedly argued for breaking the law and short cut the process of winning the drugs war.

8. Or retain the multi-party system but have a round two elections where only the top two candidates will contest and “knock out” the other candidate in an open electoral system.

Again, this could have prevented a Duterte win because supporters of the 3rd, 4th and 5th placers can rethink their position and choose only either the 1st or 2nd placer. This will avoid having a “minority President.”
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Energy 100, Bjorn Lomborg on World energy mix

I am reposting here a post by Bjørn Lomborg in his fb wall early today. Thanks for this great piece, Bjorn.
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The world is mostly run on fossil fuels (81.4%). Nuclear makes up 5% with 13.6% from renewables. Solar panels and wind turbines contribute less than 0.7%.

When you hear 13.6% renewables, you will likely think 'wow, things are going pretty well with the change-over to renewables'. But these are not the ones you hear about. The biggest contributor is wood, used in the poor world to cook and keep warm. This leads to terrible indoor air pollution – it is actually the world's deadliest environmental problem, killing some 4.3 million people each year. We should definitely hope the poor will have to use *less* polluting wood in the future.


The other main contributors of renewables are biofuels (e.g. the American forests, cut down and shipped across the Atlantic to be burnt in European power plants to be called green and CO₂ neutral) and hydropower. In total, that makes up 12.1%. The last 1.5% comes mostly from geothermal energy (0.54%) and wind turbines (0.53%) along with solar heaters in China, tidal power etc. (0.29%) and solar panels (0.13%).

Contrary to the weight of news stories on how solar and wind is taking over the world, solar panels and wind turbines really make up a very small part of the global energy mix. (I started out coloring solar panels yellow, but the thin sliver at the top became invisible.)

Sources: The International Energy Agency has released their latest Renewable Energy Information 2017, http://www.oecd-ilibrary.org/.../renewables-information.... It contains 488 pages of data, with preliminary data for the rich world for 2016, but for the entire world for 2015. Unfortunately, the data is not free.

Since solar PV constitutes such a small part of the energy supply, the International Energy Agency combines it with tidal, solar CSP and solar thermal (the water heaters on rooftops for direct hot water). In 2014, the split was 34% for solar PV, 0% for tidal, 6% for CSP and 60% for thermal, so I applied the same split to the data for 2015.

All data is Total Primary Energy Supply, which is the International Energy Agency's own main measure, also used in all their graphs for global energy balances.
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Monday, October 16, 2017

Mining 57, More photos during Mining PH 2017 conference

Posting some of the quotes-with-photos made by the Secretariat during the Mining 2017 Conference last September 5-7, 2017.


Some of my photos at the farewell dinner.


With the Stratbase-ADRi group.


And in a brief karaoke segment, I sang on stage, "Twist and Shout" by The Beatles :-)


Meanwhile, reposting this article today by JB Baylon.
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Who’s afraid of open pit mining?
By Jose Bayani Baylon
October 16, 2017

THERE’S a lot of brouhaha about open pit mining these days, spurred by Ma’am Gina Lopez alleging that they create acids that will bedevil all of humanity for life. And you know how convincing she can be, so even the President has expressed apprehensions about open pit, apprehensions that could extend to actually banning this form of mining.

While listening to my mining colleagues discuss the issue, my genetic make up (I am the son of a doctor and a nurse and brother to two more doctors) kicked in and a very medical image cropped up.

Mother Earth and many women have something in common - they are gifted with blessings that need to be brought into the world so that life can be better. For Mother Earth these are her mineral wealth; for many women, this is a child.

Now women who are blessed with a child have two ways of bringing God’s gift into the world - the normal laborious method, or the sometimes quicker Caesarian section. These are two accepted methods that are used depending on the situation of the mother or the child, or both; the fact is some women can be at risk - and the child in their womb as well - if an OB Gyne does not resort to the “C-section.” My mother, for one, had to go through the C-section three times; thankfully she had the late great Dra Gloria Aragon watching over her.

Again: whether a woman gives birth via the normal way or by C-Section is determined by the situation and managed by the experts. No one can say we will ban Caesarian because it leaves an ugly scar and puts a woman at risk with her anesthesia etc etc etc.

Similarly the ore deposit determines which form of mining is done in order to bring out into the world the mineral wealth with which Mother Earth is blessed. An ore deposit or body near the surface of the earth is therefore mined using surface mining or open pit; an ore body that is in the form of veins or goes deep into the recesses of Mother Earth is mined via underground mining. Like a pregnant woman, Mother Earth’s situation determines the way her gifts are brought out into the light. Again one cannot force only one method of mining because the ore deposit or body determines what is used.

Are there risks? Of course there are. But that’s why you have experts who require pre testing and constant monitoring during the procedure. Are there accidents? Of course there are. But they are few and far between and sometimes they just happen. Are there examples of successes? Well, my brothers and I are just three of hundred of millions of examples of successful C-Section births, while for mining there countless examples around the world of open pits rehabilitated into such destinations as golf resorts.

The point is, in life, one can always choose to focus on the dangers. But then what happens? “Oh my gosh an airplane crashed! We should ban flights and shut down all airlines!”. Or “ An elevator got stuck! Let’s do away with lifts and use the stairs!”.

That’s why there are tests: for humans these range from blood tests to BP monitoring, while for environmental projects you have Environmental impact assessments and clearances. Once a patient or a project passes these tests then it means the experts are more than confident everything will turn out fine.

So: it’s right to worry about open pit mining just like it’s right to worry about Caesarian operations. But trust your experts. That’s the reason they’re there.

And if you like, pray or do yoga.
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