Erap: Solid gains

DIE HARD III / Herman Tiu Laurel / February 3, 2014


Three great news items emanated from the City of Manila of late: 1) President-Mayor Joseph Estrada’s assistance in resolving the impasse between the Philippine and Hong Kong governments over the official apology demanded by the latter for the August 2010 Luneta Massacre of eight Hong Kong citizens; 2) the micro-management of key critical problem areas, such as the city’s traffic woes as well as the mess of Divisoria’s teeming vendors; and 3) the street-level monitoring of peace and order directly from the office of the mayor, where we personally viewed closed-circuit television (CCTV) footage of security hotspots with Mayor Estrada last week.

To beef up the monitoring system for Divisoria, Mayor Estrada is setting up several high pylons where cameras alongside loudspeakers will be installed. The Mayor wants to watch over the traffic situation, including the vendors, from his office and be able to directly issue oral commands from his post in city hall, such that no beat policeman, market supervisor, or area sweeper can hide from his eagle eye.

Before I saw the CCTV clips, I had heard (and almost believed) that Estrada was failing to clear Divisoria of its legendary congestion; but lo and behold, I saw before my eyes Divisoria’s roads free and flowing, with vendors staying strictly along the center-islands. To see is to believe, as they say.
There I saw how Estrada really meant what he said when he vowed to clear the mess that other mayors also promised but never succeeded at.

Come to think of it, from the very first month of his administration when he cleared Taft Avenue of 90 percent of its terrible traffic, he has always shown that he means business. Although there are still areas in the vicinity of the Philippine General Hospital and Padre Faura that need major action, the CCTVs that are soon-to-be installed will certainly help the mayor crack down on sleeping or pretending-to-be-sleeping traffic officers.

However, the most important contribution the mayor of Manila can give at this time, and not just for the citizens of the city, is the restoration of normal relations between the Philippines and Hong Kong. It is without any doubt that the Filipino public is now in favor of expressing an “official apology” to Hong Kong. I have discussed the matter with many different publics in my radio program, not to mention discussion groups, media “kapihans,” the “masa” the taxi drivers, etc., and the overwhelming common sense reaction is: “As the Hong Kong people suffered the deaths, there’s nothing wrong in us issuing an apology.”

Even though my son says that the attitude of netizens on the various “social media” is one of apathy, if not outright aloofness, owing perhaps to youthful arrogance or being out of touch with the sentiments of the common man, what is real and palpable is the welfare of over 200,000 Filipino workers in Hong Kong and our other economic ties with this particular Special Autonomous Region (SAR) of China.

As Mayor Estrada has always been mindful of the need for him to maintain warm ties with the Chinese government and its representatives, his promise of using this to help resolve the tensions can really bear fruit.

Still, the City of Manila has many problems to surmount. One of these is the mountain of debt it is facing. Given the dire straits of the national economy, which imposes burden upon burden on the local economies, options are limited.
Of all the cities in Metro Manila that are intending to or are actually increasing taxes, Manila has the most defensible case. Manila’s taxes have been among the lowest in the metropolis all these years. The moaning about any such tax hikes would come mostly from businessmen, but where else can increased revenues be derived? That, of course, cannot be said of Quezon City, which is again into increasing its already highest real estate, business, and employment taxes, apart from imposing a new garbage tax.

There are many major storms — both figurative and actual — ahead for the City of Manila, for sure.  That’s why the same CCTV network will also be crucial in disaster relief operations, especially for the dreaded earthquakes that have been long awaited.

For calamitous events like “Yolanda,” Manila’s environmental planners, led by lawyer Donna Gasgonia, have been planning the revival of mangroves along the shores of Manila Bay where squatter communities abound, which is why I brought the reef conservation group of former Magdalo officer James Layug to Estrada’s office to help in the mangrove replanting.

But no matter how things seem to be on the up and up, worse storms may be coming to sweep Manila, the country, and the region, not unlike the financial “perfect storm” of 2008.

Last week, three international bankers, Mike Dueker of Russell Investments, Gabriel Magee of JP Morgan’s European HQ, and Bill Boeksmit of Deutsche Bank, all committed suicide.  What drove them to madness, we may not yet know.  But, like the eminent mayor of Manila, it’s always better to be prepared.

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30 years of deregulation

DIE HARD III / Herman Tiu Laurel / January 29, 2014

As the Philippines ponders its power ills from its recent price shocks, let’s look at the experience of other countries in the world with the same problem. From the US are some of the following reports and commentaries we gathered:
“Deregulation in Texas fails to make power more reliable, cheap... Jan. 13, 2013... A decade of electricity deregulation in Texas has driven up the pay of investor-owned utilities’ chief executives, but it has not fulfilled promises to produce the nation’s most reliable and cheapest power. In fact, deregulation has had the unintended consequence of discouraging the building of new power plants, leaving the state’s power supplies vulnerable as Texas continues to grow... A new report from the Texas Coalition for Affordable Power says Texans in deregulated areas paid $10 billion over the national average for power over the last decade.” 

“Electric deregulation fails to live up to promises as bills soar... 4-21-2007, by Ryan Keith, Associated Press, Benton, Ill. — This wasn’t supposed to happen with deregulation. Electric bills were supposed to go down. Instead, Ellie Dorchincez can almost see the dollars evaporating every time she turns on the lights or opens the freezer at her small Farm Fresh grocery store. Her electric bill, which used to be about $800 a month, has jumped to $1,800. She’s shut down a large freezer of frozen treats and now closes the store an hour early to cut costs but fears she still may have to raise prices and lay off some workers.

‘I’m just trying to figure any way that I can right now to keep my business afloat,; Dorchincez said. ‘My life is at stake here.’

“The cause of her distress is a common problem: the failure of deregulation to deliver its promise of lower electricity prices. In many states, it’s had the opposite effect with sharply higher rates — 72 percent  in Maryland, up to 50 percent in Illinois. Not one of the 16 states — plus the District of Columbia — that have pushed forward with deregulation since the late 1990s can call it a success. In fact, consumers in those states fared worse than residents in states that stuck with a policy of regulating their power industries. An Associated Press analysis of federal data shows consumers in the 17 deregulated areas paid an average of 30 percent more for power in 2006 than their counterparts in regulated states. That’s up from a 24 percent gap in 1990...”

From Australian, “Economic Affairs: Privatization has failed to deliver cheaper electricity... by Colin Teese (former secretary Dept. Of Trade), News Weekly, May 1, 2010... Victoria’s State Electricity Commission generated and sold power to Victorian consumers from 1926 to 1998. In every single year it reduced the real price of power to customers. Since privatization, however, electricity prices to the consumer have gone up 50 percent. Competition in power generation makes no sense —  To have two power-generating companies (or more), with their separate and enormously costly equipment... governments, ...can borrow at cheaper rates than can private companies... fine-tune the system better with a combination of power plants to ...meet the unexpected surges in demand.”

From Britain, “The grip of privatization on our vital services has to be broken... powerful interests are driving a 30-year failed experiment. Utilities belong in public hands — Seumas Milne, The Guardian, Tuesday, 29, October 2013... Ever since Ed Miliband forced electricity and gas profiteering... The monopolists have outdone themselves. Squealing that such interference threatened power cuts, one after another has taken the opportunity to jack up prices still further. Four of the ‘big six’ cartel, which controls 98 percent of electricity supply, have now increased prices by over 9 percent — blaming green levies and global costs — while wholesale prices have risen 1.7 percent in the past year and profit per customer’ has doubled... Thousands of old people will certainly die this winter... 

In the Philippines the steps toward privatization of utilities, including electricity, started with the ascendance of Corazon  Aquino to power after Edsa I. The first overt at was the appointment of electricity oligarch Ernesto Aboitiz to head the National Power Corp., an appointment with a clear conflict-of-interest involved as Aboitiz is part of a family that is a major power generator and electricity distributor, producer and supplier. Systematic cancellation and delay of various power projects were done leading to the power crises, the “Dark Age,” from 1989 to 1995 which justified Fidel V. Ramos’ massive Independent Power Producers contracts and later the Epira in 2001 after the ouster of President Estrada who dragged his feet on the Electric Power Industry Reform Act.

The Philippines has now had at least 25 years of experience with public utilities privatization and deregulation, it’s time we learned the lesson and change course just as many countries are beginning to do.

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Fostering false expectations

DIE HARD III / Herman Tiu Laurel / January 27, 2014


So it was cast. The government and the Moro Islamic Liberation Front signed the final normalization annex in the Framework Agreement on Bangsamoro (FAB) with a bonus to the MILF called the addendum on Bangsamoro waters to the power sharing annex that would cede parts of Yllana Bay, the Moro Gulf and the Sulu Sea to the rebel group.

The normalization annex even seems to have veered totally from its intent of a disarmament agreement with the government negotiators now talking of “socio-economic issues and transitional justice for the Bangsamoro people.” The alibi was that these provisions were not included in previous peace agreements.

“Normalization does not only deal with the decommissioning of MILF,” Teresita Quintos Deles, Presidential Adviser on the Peace Process, said.

The statements were an oblique admission that no disarmament was really agreed on and it was set aside just to complete the FAB and proceed to the signing of the comprehensive agreement on Bangsamoro that would finally realize the creation of the substate for the MILF.

The surrender of territory to the MILF under the FAB was even greater than what was envisioned under the botched Memorandum of Agreement on Ancestral Domain (MoA-AD) of the previous administration, which incidentally was ruled as unconstitutional by the Supreme Court (SC).

The MoA-AD was ready for signing in Kuala Lumpur, the same venue where the Bangsamoro agreement is being forged, and would have been in force if not for the timely intervention of the SC.
The MoA-AD did not even have a provision that included the yielding of the country’s seas yet it was thumbed down as violating the Constitution.

The premise of the rejection was that the MoA-AD sought to create a substate with its own basic law or Constitution, police force and an internal security force which were all granted the MILF under the FAB.

Sen. Aquilino Pimentel, an ally of Noynoy invited to the signing ceremony for the normalization annex in Kuala Lumpur, warned the government negotiators that they may have promised too much that Congress may reject anyway when the final agreement is sent to the legislature for approval.

Pimentel’s guarded view on the current negotiation process is evidently borne out of the aftermath of the SC rejection of the MoA-AD that resulted in the pillaging of Mindanao communities by disappointed MILF members which the government and the MILF later tagged as breakaway groups of the rebels.

From then on, it seems the MILF breakaway groups initiate disruptive campaigns whenever the negotiations between the MILF and the government reached a contentious point something like the MILF pointing a shotgun at the government’s head.

The FAB, which would become the basis of the CAB, is clearly headed the same way as that of the MoA-AD through sheer comparison of the likely form of the CAB and the MoA-AD.
The MILF’s view is the forming of a substate against the insistence of the government that a mere political subdivision is being formed through the Bangsamoro.

Proof of the false notion that the MILF had formed about the negotiations was some MILF forces jumping the gun on the setting up of a Bangsamoro political office in Zamboanga City which appears to be a de facto diplomatic post.
What the government obviously impressed on the MILF was the Bangsamoro would be a state all its own.

A state within a state is unconstitutional, the SC had spoken.