MANILA, Philippines — San Miguel Corporation (SMC)-backed Citra Manila Tollways Corp. (CMMTC) supports a suggestion by Department of Transportation and Communication (DoTC) secretary Mar Roxas II for government to allow the construction of two major tollways connecting the South Luzon Expressway and the North Luzon Expressway.
The proposal to allow the construction of two connector roads for the SLEx and NLEx was earlier seconded by businessman Manny V. Pangilinan who controls rival Metro Pacific Tollways Corporation.
“Having two major tollways linking the north and south will indeed be very beneficial to the public. Not only will we decongest EDSA, we will also hasten the flow of traffic and commerce between North and South,” said CMMTC president Shadik Wahono.
He noted that, "the San Miguel Holdings - Citra Skyway 3 project and the ‘connector’ road of Pangilinan’s (MPTC) will cater to different markets and therefore, serve different purposes, we support the position of secretary Roxas and Mr. Pangilinan.”
Citra’s proposed north-south link, a 14-kilometer, six-lane tollway with exits in Quirino in Manila and Plaza Dilao, Aurora Boulevard, E. Rodriguez Ave., Quezon Boulevard, Sgt. Rivera, and Balintawak in Quezon City, is seen to greatly decongest Edsa.
MPTC’s connector road, on the other hand, will have four lanes and three exits in Quirino, Espana, and 5th Avenue.
“We don’t mind if the government will allow both Citra and MPTC to undertake their projects. The more that the roads complement each other, the better the traffic throughput would be," he said. (JAL)
Thursday, 8 March 2012
OUTSIDE THE BOX
EVERY year the Heritage Foundation publishes its Index of Economic Freedom. The latest issue, ratings for 2011, shows once again that the Philippines in its overall economic freedom ranks alongside some of the worst hellhole countries on the planet.
When your next door neighbors are Mozambique and Swaziland and you are way behind Mongolia, Lebanon and Uganda, it may be time to rethink your government policies.
By the Heritage Foundation’s definition, “Economic freedom [EF] is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”
They measure EF in four categories: Rule of Law; Limited Government; Regulatory Efficiency; and Open Markets. Overall, on a scale of 1 to 100, PHL received a score of 57.
However, in the subcategories, the score is worse. For Property Rights, it is a 30 and for Freedom from corruption, the score is a 24. On Property, we rank right up there with Syria, Indonesia and Nigeria. For corruption, we proudly stand with Nigeria and Bangladesh. Greece is less corrupt than the Philippines.
Before you start thinking that ending corruption and fixing the judicial system is the answer, the other factors are just as interesting. Remember the heart of the definition of economic freedom, “In an economically free society, individuals are free to work, produce, consume and invest in any way they please.”
“Business freedom is a quantitative measure of the ability to start, operate and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process.” In Business Freedom, PHL has a score of 54, similar to Indonesia and Ecuador, but way behind Vietnam (61), Chile (69) and Thailand (72).
“Labor Freedom is a quantitative measure that looks into various aspects of the legal and regulatory framework of a country’s labor market.” Here the nation is scored at 52 along with highly socialist France and also Spain. Thailand scores a very high 79 and India is at 74.
Business and labor freedom are critical aspects to investment. “In an economically free country, there would be no constraints on the flow of investment capital. Individuals and firms would be allowed to move their resources into and out of specific activities, both internally and across the country’s borders, without restriction.” And how did the Philippines score as to Investment Freedom? We got a 40, interestingly, the same as Thailand.
Yet Thailand’s overall rank is 60 with PHL at 107 and Thailand’s overall score is 65 versus ours at 57.
What could be the variables that place Thailand so far ahead of the Philippines both in economic freedom and the resulting better economic growth and poverty reduction?
Thailand’s freedom from corruption score is much better at 35 versus 24 and its protection of property rights is scored at 45 against ours at 30. Case closed as to what the problem is.
Investment in Thailand, both domestic and foreign, is what makes the Philippines look in comparison like a basket case. Yet their investment freedom ranking is the same as PHL. They have almost exactly the same foreign-investment restrictions on company and property ownership. Yes, their corruption and property rights ratings are both 55 ranks higher than PHL out of 179 countries.
The huge difference is business freedom and labor freedom. Thailand is 74 ranks higher in business freedom and 96 ranks higher in labor freedom.
There is of course a correlation between economic success and the rule of law, which is absolutely combined with freedom from corruption.
However, from foreign direct investment numbers and employment figures, decreased corruption and rule of law might be slightly offset by a better business climate. Russia has a worse score in the negatives but is much higher on the business freedoms.
Further, this economic freedom study has been done since 1995. The Philippines has improved little since its 1995 score of 55.
When you look at the longer-term picture, two trends appear. With countries having similar problems of corruption, greater business and labor freedom will create a better economy. Decreased government intervention and manipulation of business and labor creates a less corrupt environment. It makes sense. Make it easier to do business with less contact with government, then less opportunities for corruption.
On a personal note, e-mail me at firstname.lastname@example.org for details on my upcoming stock-trading seminar. I guarantee the seminar is worth every peso. Registration is very limited and will end this week. You will not be disappointed. Attendees get a one-month subscription to the Premium Area of MangunOnMarkets.com.
Tuesday, 6 March 2012
OUTSIDE THE BOX
FOREIGNERS, investors and tourists alike find the Philippines very familiar and then go home wondering what that strange place was that they visited.
If it looks like the West, walks like the West, and sounds like the West, it must be Western. Wrong.
Many years ago the late Adrian Cristobal said to me upon learning that I had been in the Philippines 17 years: “So you now think you’re an expert, right? No one is an expert on this country.”
After many more years, I agree completely. In fact, I am beginning to wonder if there are any “experts,” domestic or foreign, on the Philippines.
Since it is on everyone’s mind, take the Philippines’s judicial system, for example. Countless references to US jurisprudence and case law have been made during the impeachment trial. An outside observer could honestly think that the Filipino system is but a mirror image of what happens in the US. If the law is basically the same, then why is the local judicial system seemingly inadequate at dispensing justice and is inefficient?
Although the Philippine judicial system looks, walks and talks like the US, it is not. Trials, both civil and criminal, in the US are totally different from those the Philippines for two reasons that may explain the different results.
Actually, judges in the US rarely “judge” anything except rules of law and the rules of court. In virtually all cases, except administrative such as impeachment or bankruptcy, judges are more like referees between the two opposing sides. Juries, which cannot be involved in the trial in any way, decide guilt and liability.
The second huge difference, which may explain why decisions often take years here, is that in the US, trials run on a “continuing hearing” basis. Judges do everything in their power to have day after day of trial until the verdict is reached. Then they move to the next case.
The Philippine Stock Exchange is not a Western “duck” either and that is for the better.
In 1987 a movie came out that, if you haven’t seen, you have heard about: Wall Street. In it, the character Gordon Gecko says, “Greed is good.” The most important part of his speech at an annual shareholders’ meeting, came long before “Greed is good,” but the “lugaw for brains” commentators have never read this part. Remember it is in 1987.
“America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder.”
The following is the key paragraph.
“The men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company.”
And here is what has changed for the worse.
“All together, these men sitting up here (pointing to company management) own less than 3 percent of the company. And where does the chairman of the board put his million-dollar salary? Not in company stock; he owns less than 1 percent.
“You own the company. That’s right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.”
For the last 20 years, each year I have done a “net-profit margin” study of the 100 largest companies on the PSE. My study examines the preceding five years running, updated annually, through good, bad and worst-case government policy, natural disasters and all the global crises.
While there are always ups and downs and new winners and losers, the average net-profit margins of these 100 companies have always been around 15 percent.
Corporations in the West would kill for that kind of number. Why do these Filipino companies do so well? Because the owners are the managers and they have their own money in the company.
If you own and run your personal business, you know exactly what I mean. You aren’t there for the “fun” of it or the “big” salary. You are there to make the company successful, just like all the small and large taipans who own PSE listed firms.
That kind of greed is good for shareholders and that is why the PSE is an excellent investment, which the foreign money now knows. If you are of financial means, even smaller, and you are not in our local market, you are not optimizing the use of your financial resources.
On a personal note, e-mail me at email@example.com for details on my upcoming stock-trading seminar. You will not be disappointed and will make more money because of it. Attendees get a complimentary one-month subscription to the Premium Area of MangunOnMarkets.com.
E-mail to firstname.lastname@example.org and Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.