Manila to be a Hong Kong

DIE HARD III

Herman Tiu Laurel

7/3/2013

Daily Tribune

"Ridiculous" would be the first word that one hears from fellow Filipinos when it is ever suggested that Manila could be made into a Hong Kong for the Philippines. 
In fact, when I do try to provoke a reaction to the idea this is exactly the reaction I get. But really, if one looks at the history of Hong Kong since the 50s to what it is today, the allusion to Hong Kong as a parallel for the future development of the City of Manila is not preposterous at all.

In the 50s, the City of Manila was the envy of Asia: the fabled stories of the sunset of Dewey Boulevard and the Manila Hotel, the Quiapo underpass reportedly the first underpass complex in Southeast Asia built by Mayor Arsenio Lacson.

Hong Kong at that time was swamped by tens of thousands of refugees from China reeling from the end of the mainland civil war and dotting the Hong Kong skyline and harbors like Aberdeen, rife government and police corruption persisted until the ICAC (Independent Commission Against Corruption) in the 70s. 
The Manila elite flew to Hong Kong for breakfast and returned to Manila for dinner, while the migrants from Hong Kong took up the "dyaryo bote" junk trade to establish themselves in Manila.

Before there was the Hong Kong Ocean Park or the Singapore Jurong Park, Manila Zoo was with its seals, ostriches, elephants, zebras, boa constrictors and the like, enthralled us Baby Boomers as little children. Now Manila Zoo, which I visited just late last week, looks like a dump from the outside and the elephant Mali (its name) is subject of an international animal protection group's campaign to be saved from starvation (though the effort to transplant it would likely kill it instead).

The 50s was the time the Philippine Air Force acrobat air team, the Blue Diamonds, streaked across Luneta's skies when Manila hosted national and regional or international parades, carnivals and events, and Philippine universities hosted the children of Asian royalty who came to study and learn from the Filipino academe.
All that was great about the Philippines was about Manila, but now like the forlorn elephant at the Manila Zoo, Mali, the City of Manila is in a sad state: with a 2010 census population of 1,652,171, the second most populous Philippine city and the most densely populated in the world with 43,079 per square kilometers, according to Wiki, a third of whom are urban poor, squatters fancily called "informal settlers" in Tondo, Baseco, Parola, Isla Puting Bato and other areas working as stevedores, peons, vendors, kalesa drivers, waiters, mall sales girls, security guards, garbage men, laundry women, beat and traffic cops and aides, and jobless job hunters or simply permanent unemployed, ad nausea. Fifty thousands are vendors all over Manila, and many clog the Divisoria main road.

A new city administration has taken over starting July 1st, and the first public demonstration of its intention right after the first flag raising ceremony of the new city government at city hall was the symbolic street sweeping led by President-Mayor Joseph Estrada which was replicated all over the six districts of the City. Sweeping the garbage of the City clean will probably be the easiest task the new city administration will be doing because the rest of the sweeping involves sweeping the graft off of the City's management of the 50,000 vendors', thousands of parking slots, countless public market licensing and daily fees and real estate collection, which have been drastically reduced in the last administration leading to the Commission on Audir report of the City's P3.5-Billion budget deficit.

Being associated with President-Mayor Estrada many Manila residents have texted me about issues they want resolved: One living on Magdalena, now Magsangkay St. hoped the traffic and flooding problems could be solved; a property owner, Greg Licaros, congratulated Estrada for replacing the police chief from the past administration; yet another asked me to lunch to suggest the vision of A New Hong Kong by tapping the huge, huge PROC Chinese business community's very keen interest in investing billions of dollars to help the City of Manila.

It was thought that Hong Kong after the July 1997 turnover from British rule to China would start going downhill but instead it has been China that has allowed Hong Kong's unprecedented prosperity. The New Manila can replicate Hong Kong's feat with China.
The National Government leadership has disastrous relations with China, but the City of Manila should do differently and cultivate constructive and positive relations with China to showcase what good relations can deliver for the Filipino people.
China has been doing this with countless other countries in Asia, Latin America and Africa doubling trade, building infrastructure, extending easy loans, spreading solar power, etc.
It's time the Philippines tap into this for urban housing and industries as Hong Kong and Singapore prioritized.

(Tune to 1098AM, 5 to 6 p.m., Tuesday to Friday; Destiny Cable, Channel 8, Saturday 8 p.m. and Sunday 8 a.m.: "Specter: 60 percent foreign ownership of Rural Banks"; visit: http//www.newkatipunero.blogspot.com; text comments to 0923-4095739)

Power income tax, too!

DIE HARD III

Herman Tiu Laurel

7/1/2013

Daily Tribune

Last week, the income tax payments of the Metropolitan Waterworks and Sewerage System (MWSS)'s concessionaires being passed on to water consumers became the burning issue of the day. Manila Water and Maynilad were exposed again to be making consumers pay for taxes on what these companies are earning. This provision in the original water concession agreement with each company was signed by Fidel V. Ramos (FVR), which has effectively rendered MWSS regulators helpless, if not totally inutile.

Retrospectively, then, Ramos should be charged in the Ombudsman for this con act. The truth is, water consumers consumed with anger at the unjust P15-billion income tax pass-on should also pour their rage on one person — the supposed Chief Executive BS Aquino, whose office is still the official party to the agreement with the concessionaires.
Mind you. Such income tax pass-on is also continuing in the power sector. Many civic-minded citizens, including consumer activists, who in 2004 helped win the income tax reimbursement from Meralco of around P20 billion (which has yet to be completed), still believe that Meralco's unjust pass-on of its income tax had ceased after the Puno Supreme Court (SC) debunked the position taken by the Energy Regulatory Commission (ERC) and Meralco that income tax is in the same vein as "business taxes" like the value-added tax, which can be shouldered by the end user.

Former Chief Justice Renato Puno correctly declared that income tax must be borne by the party that earns the income. And clearly, in the case of such privatized power utilities, these private corporations earn the profits for themselves — neither for the government nor the consuming public. The ERC and Meralco were thus caught with their pants down.
However, right after that historic Puno decision, the ERC went into stealth mode to restore Meralco's pass-on of its income taxes in another roundabout scheme — the Performance Based Regulation (PBR) system. This is how Romeo Junia, one of our fellow power consumer protection advocates, put it in a letter-to-the-editor in 2010:
"PBR has effectively reversed a SC decision disallowing the charging of Meralco's corporate income tax to us. Justice Renato Puno, in that landmark refund order, denied with finality Meralco's 'stubborn stance' to hit us for their taxes. In an issue paper on PBR, however, ERC said: 'If income tax was not considered a recoverable cost, an equivalent revenue outcome (meaning the overcharge — RLJ) could be achieved by allowing a corresponding pre-tax regulatory weighted average cost of capital (WACC) to be earned on the asset base.' This was after ERC realized that openly including income tax as a revenue building block would go against the Court ruling, thus they tucked the item away in WACC, but with the same devastating impact on captive customers."

Who among our over five million Meralco power consumers are aware of every minutiae of such labyrinth rules concocted by the ERC in cahoots with Meralco, based on the powers given it by the Electric Power Industry Reform Act (Epira) of 2001?
Now Meralco's financial statements do indeed declare income tax payments but what is not seen by the public is the "pre-tax regulatory WACC to be earned on the asset base," recovering whatever income tax is to be passed on to consumers even before such is imposed.
For the water concessionaires, MWSS acting chief lawyer Emmanuel Caparas explained at the Water for People Network that I attended last June 29 at the UP Law Center, this WACC equivalent is the Appropriate Discount Rate (ADR) for their capital cost.
When we read "capital" in the financial reports of these privatized utilities, it must be understood that this comes not from the equity of the companies but from the computation of the "regulatory period" rate base, which means that consumers are charged the capital required by these companies for operating and capital expenditures spread over the regulatory period (of four years for power and five years for water).
In effect, all consumers are subsidizing both the private power utilities and water concessionaires! We can therefore describe this as "socialized capitalization" but with "privatization of profits or income."

Ordinary private companies or corporations, big and small, fund capital and operating expenses from equity and loans; but these goddamn lucky private (and supposedly public) utilities are funded by millions of hapless consumers.
Many are still clueless about why we have this onerous system from the privatization of our public utilities. It is really difficult for ordinary folks as well as legitimate entrepreneurs or businessmen, who go by the traditional route of raising their own capital and expending this very frugally and judiciously in the course of operating the business, to comprehend.
Privatized public utilities know nothing of this because their profits go higher the more they escalate the percentage of their so-called capital and operating costs.
Who imposed this privatization program, if not the international financial institutions, in exchange for stand-by loans during FVR and Gloria Arroyo's terms, the last one totaling $800 million after the Edsa II-induced crisis.

The privatized public utilities companies with the sponsorship of the international financial institutions are now dispersing and obfuscating the trail of the capital and wealth the private companies gained form privatization through promotion of "investments" of these companies in other countries.
A food and beverage giant's power and fuel units have put in hefty investments in our North Borneo land-grabbing neighbor, Malaysia; ditto for Meralco in that country and for Vietnam, too.

Clearly, such grave injustice in the privatized public utilities sector cannot be redressed without nationalization of these companies, with all capital and earnings due the consumers restored to them. And this will only happen after the next popular revolution — an outcome hoped for as this nation gradually knocks some sense into its mind and heart.

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN Destiny Cable Channel 8, Saturday, 8:00 p.m. and replay Sunday, 8 a.m., this week on "Specter: 60 percent foreign ownership of rural banks"; visit http://newkatipunero.blogspot.com; and text reactions to 0923-4095739)

ADHD nation?

DIE HARD III

Herman Tiu Laurel

6/24/2013

Daily Tribune

The country has just gone through one of the worst roller-coasters of its stock market, along with a half-day's rain that produced one of the worst flash floods along the main avenues of its premier metropolis that had commuters and drivers pulling their hair. But, in a snap — as if nothing happened — almost the entire nation turned to television and spent several days rapt in the US basketball match-up between the Miami Heat and the San Antonio Spurs. Is the Filipino nation just that easily distracted or is this symptomatic of a wider, national ADHD — Attention Deficit Hyperactivity Disorder?

Such scatter-brained response is not mere occasional occurrence; it's a weekly, daily, even hourly, jumpiness in focus and activity — one moment hysterical over one crisis or another and the next laughing or crying with the latest sports, celebrity, or disaster spectacle — which must be one reason why this nation is going nowhere at all in solving its problems.

It was late last week that I first noticed this mania for the Heat vs Spurs. My sons were grabbing the remote from me, switching to the games, while I struggled to follow the latest developments in Syria and the Bernanke "tapering" of QE (quantitative easing) that has caused near Armageddon in the local and regional markets. This last one was really serious for some sectors of the economy as the Philippine Stock Exchange index lost at least P420 billion over the past weeks. Syria, and the US decision to arm the Free Syrian Army and its terrorist allies today, is like Poland in 1939 when Hitler invaded it — the event which many historians trace the beginnings of the Second World War to.

If these developments may be too far from the realities of Filipinos, let's look at issues closer to home, such as the triple whammy announcement of hikes in power, water, and Metro Rail Transit/Light Rail Transit fares. These threatened rate hikes are only the latest in a decade of increases, in the face of shrinking real values of the peso and people's wages and earnings, and one of the root causes of dwindling industries and the commensurately worsening unemployment and underemployment situation. We've been tracking these issues that are crying out for the people's attention, action and solution; but it's impossible to make them focus on these beyond a few days' stretch.

If it were only the tier of society that my sons count themselves in, i.e. the generation Y crowd of the middle to upper-middle class, maybe we don't have so much to worry about; but in the middle of last week when I sat around a table of pre-War and Baby Boomer generation folks, the discussion was also about the same games and who was betting on which team. When I made the point that the NBA (National Basketball Association) is an unnecessary distraction for a poor nation that's getting poorer, the septuagenarian became even more emphatic in analyzing the moves of the Heat's star player LeBron James. I was outnumbered all to one.

Late last week one mainstream newspaper, allegedly the largest in circulation, headlined on its Internet edition the sex scandal allegations surrounding Philippine embassies in the Middle East in the so-called "sex for fly" deal. But right below, it was the "James Yap posts Instagram photo with rumored girlfriend" bit. Is this to be the next frenzied focus of the Filipino people next, along with the probable dalliances of Mr. Yap's controversial ex?

I remembered then, just before I noticed the seemingly ADHD symptoms on the Filipino nation jumping about on the NBA games, the newspapers and mainstream media in general had also been headlining the seesawing games in the series. Now we know what the trigger for the ADHD symptoms of the Filipino national psyche is — the headlines of the mainstream media that broadcast media mindlessly repeat and re-echo from morning until night.

I raised this matter with my two NBA fixated sons and pounded on them that these distractions mainstream media are always triggering are not healthy for the country. My journalist son retorted, "Haven't you thought that the reason the Filipino is so easily distracted is that he wants to forget those problems?"
If that is how we as a people deal with life's difficulties, then we'll never ever get to solve anything. Clearly, that is where the Filipino people are at. Sad but true.

(Tune in to 1098 AM, Tuesday to Friday, 5 to 6 p.m.; watch GNN Destiny Cable Channel 8, Saturday, 8 p.m. and replay Sunday, 8 a.m., this week on "MRT, power, water rate hikes again"; visit http://newkatipunero.blogspot.com; and text reactions to 0923-4095739)