Day 1 of Conference 2016

efn0The Economic Freedom Network (EFN) Asia conference 2016 at Dusit Thani Hotel in Makati ended last Wednesday. Thanks again FNF and EFN for another wonderful conference.

Here are some tweets from #efnasia2016 and my own thoughts about the event.

Protection of human rights is part and parcel of EU policy – Walter van Hattum, EU Delegation to the Philippines.

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It’s a responsibilty of businesses to respect human rights… It is state duty to protect and defend human rights in its territory.

Nobody can seriously suggest that businesses can opt in and out of respecting human rights as they wish… There is legal obligation for businesses to respect HR.

Businesses should be as transparent as possible so they will be less likely to be attacked by false news. Business leaders are often uncomfortable explaining to the public how they work. It’s understandable but unwise. — Markus Leöning, former Himan Rights Commissioner in Germany.

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Increasingly populist goverments a threat to human rights and economic freedom. The pendulum has swung as globalization has failed in its promises to those who have lost out in its benefits. Food for thought. — Frank Largo

For me, among the important human rights of the people is freedom to choose in the market place, freedom to sell or not sell, freedom to buy or not buy. Political human rights like the right or freedom from theft (especially organized criminals), murders, prosecution and harassment, that is where the state should come in.

A minimal government focused on enforcing the rule of law, enforcing contracts between and among people, is consistent with economic freedom and human rights protection. That minimal govt should have no business creating and expanding lots of endless welfarist programs. Prosperity is not an entitlement or privilege. Lazy and irresponsible have no right to a prosperous life, they deserve poverty. Politically incorrect statement, as usual.

Rule of law means the law applies equally to unequal people. So the law should apply to both rich and poor people, to big/giant and small firms. A law or contract can be written, verbal, done by govt or private entities. Basic human rights then means that people have access to such equality before the law.

Below, Rainer Heufers moderating, with Wan Saiful Wan Jan, Peter Kompalla, Rishi Sher Singh, Dr. Manzoor Ahmad in the new panel.

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People’s definitions of human rights vary. What may be HR violations to some can also be another’s sole income sourceDefinitions of human rights vary. What may be HR violations to some can be another’s sole income source. — Wan Saiful Wan Jan

Good point. Some westerners may consider temporary child labor as HR violation already but for some households, it is ok and necessary. If a sole family breadwinner is gone for instance, the young need to work to help sustain the family. Harsh but necessary.

Stakeholder values, not just shareholder values. — Rishi Sher Singh

Barun Mitra tweets:

Business of business is indeed business! Inclusive of profitability for investors, benefit to consumers, add values to society.

Better protection of human rights, improved environmental quality, higher sense of justice, necessary social value additions.

Value added products, economic and social, become affordable with prosperity, and necessity in a free competitive market.

Implentating Rule of law carries cost, level of effective enforcement has to be affordable, economically socially politically. #EFNAsia2016

I think corporate branding will help global firms stay the course in HR and econ freedom protection, respecting #ruleOfLaw. Firms would dislike to be associated with bad products, bad services, bad corporate image. So they will try to be as transparent as possible, to be accountable to their products and practices. Transparency is good protection vs negative image/attacks.

Session 2 Panel speakers: H.E. Franz Jessen of EU, Dr. Lee Taekyu of KERI, and Atty. Arpee Santiago of Ateneo Human rights Center.

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Govt and countries don’t trade, individuals and businesses do. Govt negotiating trade treaties leading to anti-trade backlash.

Free trade is voluntary, so win win. Govt negotiations may liberalise trade, but legitimises govt in trade n economy, corruption.

Environment, labour or human rights standards in national trade treaties, focus on outcomes, give advantage to large, richer cos!

Society / govt benefit most if they adopt unilateral free trade. All politics is local, a local decision will minimise backlash.

Govt negotiating trade, inevitably adopt export is good, import is bad outlook. Free trade is beneficial when govt has no role.

Access to internet can’t be a “Right”. Political rights are negative rights. Any +ive right paid for by others can’t be a RIGHT.

TPP may be good agreement, but has lost legitimacy because govts. no longer carry credibility among large sections of people. –– Barun Mitra

As usual, I agree with Barun’s ideas and observations: unilateral trade liberalization; countries and governments do not trade with each other, people do; so governments, national and multilateral, should step back from trade negotiations as much as possible. Let companies and people organizations negotiate with their suppliers and consumers abroad and keep prices low via low or zero tariff, minimal non-tariff barriers

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Rainer Adam and economic freedom in Asia

* Originally posted on March 11, 2014.

The FNF Regional Director for East and Southeast Asia, Dr. Rainer Adam, will soon leave our continent as he is assigned by FNF HQ to head the regional office in Eastern Europe. To know more about Rainer, here is a brief note from a good friend and long-term EFN PARTNER, Barun Mitra of the Liberty Institute in Delhi, India. Barun posted this in our yahoogroups today.

Dear Friends,

Here is a video prepared by FNF showing Rainer in different roles
https://www.youtube.com/watch?v=ssGAR4AHp6s

Rainer Adam needs no introduction to anyone in this group. Over the past 25 years that he has been in Asia, with the Friedrich Naumann Foundation for Freedom, he has built bridges among liberals and democrats across
the continent, and introduced the ideas of liberty to many new comers.

It is difficult to think of the liberal network in Asia, without Rainer. FNF has now posted Rainer to Europe. But the enduring friendship and the ideas he has planted in Asia will last a very long time.

I had met first met Rainer in 1994, when he was the FNF representative in China, and hosted the first major international free market conference in Beijing. That was my first encounter with the international group of free market, liberal and democracy scholars, activists, and policy makers. I learned about the world of think tanks, and Liberty Institute was formed about a year after that gathering in Beijing.

I still remember Beijing at that time when traffic jams during peak hours used to be caused by thousands of bicycles, and not cars as it is today!

After Beijing, Rainer was posted in India, looking after South Asia, then in Indonesia, and lastly in Bangkok, nurturing the seeds of liberalism in east and south east Asia.

Another reason I will remember Rainer is for the colourful choice of shirts, with typical Asian designs and motifs! Those shirts truly reflected Rainers personality, cheerful, helpful and always encouraging and inspiring. Rainer had adopted Asia with all its diversity as his own.

We will miss him in Asia. And I hope he would still have some opportunities to participate at the EFN Asia, and other FNF programmes in Asia.

I wish Rainer all the best in his new position in Europe. Rainer enjoys a challenge, and currently old continent has plenty to whet his appetite.

Best,
Barun
———-

Short but good and nostalgic points Barun, thanks.

I have met Rainer for the first time in September 2004, when I was first introduced to the Asian free market and liberal network through the Economic Freedom Network (EFN) Asia conference that year in Hong Kong. He looked like Eric Clapton so being a rocker, I liked his pose. I think I told him that he looked like Eric Clapton and that I was a Clapton fan then, until now actually. was the country director then of Indonesia. In this photo, with daughter during the FNF PH 3rd Freedom Run in Manila last October 2013.

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The Regional Director that time was Hubertus von Welck, a tall and mild-looking gentleman, he could be about 6’5″ or taller. Then Hubertus was assigned to Africa and Rainer took his place, about six or seven years ago.

Photo, Rainer with country directors and some chief of staff in the region. Also taken last October in Manila during CALD’s 20th anniversary.

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I have attended EFN Asia conferences in 2004-2006, 2008, 2010-2013, or 8 of the last 10 conferences so I have met Rainer on those 8 conferences. Besides, he would also visit Manila for some activities of FNF PH office and I would also meet him here.

With FNF-PH Country Director Jules Maaten  and Wolf Dieter Zumpfort of FNF Board, Berlin. This was during the EFN Asia conference in Hong Kong around October 2012.

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During the FNF PH’s 25th year anniversary here in Manila about two years ago, Rainer also came. Over glasses of red wine, I told him my honest opinion that FNF has done a great job in reminding and re-introducing to us the philosophy of liberalism, of individual liberty, rule of law and free market. As far as I know, FNF is the only political foundation that is doing tohis kind of political education in the Philippines and other parts of Asia.

During the EFN conference last October in Bangkok, he and Dr. Ken Schooland, author of the famous fiction story on liberty “Adventures of John Gullible”, Rainer and Ken played as Lao Tzu and Confucius on a dialogue about individual freedom, markets, government, individual responsibility. Very witty story authored by another friend, Liu Junning from Beijing.

To take Rainer’s place will be Siegfred “Siggi” Herzog, who is currently the Regional Director for South Asia. Siggi was also the Country Director for FNF PH until 2010, then he was promoted. Siggi is also a cool and friendly guy.

Thank you Rainer and your team. Thanks also to your great and hardworking staff, like Pett, Wimonpug and Poraporn.

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Friends in the Asian free market movement

* Originally posted on November 07, 2013.

During the Economic Freedom Network (EFN) Asia 2013 conference in Bangkok last October 21-22, two friends from the Japanese for Tax Reforms (JTR) came, Marc Abela and Hiroshi Yoshida. A third and young participant from JTR joined them.

Hiroshi is a long time friend since 2005, during the Atlas-FNF round table discussion on Hayek’s “The Constitution of Liberty”. Hiroshi came with Mr. You then, the President of JTR. After that one-day event, the EFN Asia 2005 conference started, same hotel in Phuket, Thailand.

1It was my first time to meet Marc, who has been a friend since several years ago in facebook and ARBM Phuket yahoogroups.  I had a debate with him before re anarchy vs monarchy, friendly debate. I didn’t know that he’s a cool, always smiling guy.

Marc is also the convenor of the Mises Study Group in Tokyo. He’s Canadian but has been working in Japan for about two decades now. And good news, he’s planning to help organize a regional or international forum of free marketers in Tokyo soon.

2Our photo, with (from left) Yo Kwong, formerly VP for Institute Relations of Atlas, Mr. You and Hiroshi Yoshida of JTR. During the Atlas Liberty Forum in Atlanta, Georgia, May 2008.

I miss Jo, really cool, warm and friendly lady. Last time I saw her was in November 2009, during the Atlas celebration of 20 years collapse of the Berlin Wall. She raised the funds for my trips during Atlas events in the US. She has resigned from Atlas in 2010.

In China, I have several friends there, from the Unirule Institute of Economics and CIPA in Beijing. Like Feng Xingyuan, Mao Shoulong, Liu Junning, Zhao Xu, others.

In India, many friends there too but the more prominent ones are Barun Mitra and Mohit Satyanand of the Liberty Institute in Delhi. Then Parth Shah of the Center for Civil Society (CCS), Bibek Debroy.

From S. Korea, great and cool friend, Chung-ho Kim, of the newly-formed Freedom Factory Ltd., a new think tank, came. He teaches Economics at Yonsei Univ. in Seoul. He used to be the President of the Center for Free Enterprise (CFE).

3Photo, LRI Reading Club Salon 2013, October 19, Hong Kong.

After the farewell dinner of the Reading Salon, I have a photo with Andrew Work, the first Exec Director of the  Lion Rock Institute. Andrew and I were friends way back in 2004, first met him at the Mackinac Center in Michigan, leadership conference with Larry Reed. I was sponsored by Atlas then, along with Ellen Cain of FEF. Parth Shah and his wife, Mana Shah was also in that Mackinac conference.

Then we went to Chicago for the Heritage conference, then the Atlas conference.

4First time I met Barun Mitra, April 2004 — in my hotel room. We were roommates then. I did not have any idea who Barun Mitra was, only at the Atlas conference did I realize that he was a giant in the Asian free market movement. He has been in the free market movement for 2+ decades already, while I was in the international movement for only 1 month then.

So Andrew and Barun were among my early friends in the free market movement. I met them again that year in Hong Kong during the EFN Asia 2004 Conference. We are still around until now. The way we manage our life, it seems we are stuck in this passion until we grow old, for the long haul 🙂

4bNow compare our faces, October 2013, at the Hong Kong airport. I told Madhu, Barun’s wife and my friend in facebook, that I saw him 3x in 3 countries this year, she laughed and said all she saw were photos.

Barun and Xingyuan also have their own photo. In Asia, perhaps the oldest or the pioneer in the movement is Barun Mitra. Followed perhaps by Xingyuan, who started working with FNF Beijing under Rainer Adam, for about 7 years in the 90s. So Barun has been around for 3+ decades, Xingyuan for 2+ decades, me and Andrew and Simon Lee, LRI co-founder, for almost 1 decade.

I know that Parth Shah, Bibek Debroy, have been around ahead of us, maybe contemporary with Xingyuan. I miss Mohit Satyanand, a tall guy, frank and no-nonsense speaker and moderator. He was a panel moderator of EFN conferences from 2004-2006. I also saw him in 2005 during the IPN’s “Global Development Network” conference in London.

5I met Feng and Barun 3x this year in 3 countries. First in S. Korea last May, in Seoul then Jeju, for the Jeju Forum for Peace and Prosperity where EFN Asia was a panel sponsor. Then I met them in Hong Kong last Oct 18-19, for the Reading Club Salon 2013 by the Lion Rock Institute. Then met them again in Bangkok, for the 3rd time this year.

Photo, Barun, me, Xingyuan, and Shoulong, inside the taxi from our hotel in HK to the HK Airport, to take our flight to Bangkok.

Wan Saiful Wan Jan is “new” in the Asia free market movement because he just moved in about 3 or 4 years ago from London where he worked for almost 18 years and was involved with the Conservative movement there. But IDEAS is the biggest, most dynamic free market think tank in the whole ASEAN. Or perhaps comparable in size with Freedom Institute in Jakarta, though I think IDEAS is more known globally than Freedom Institute.

I saw Wan 3x this year too. First in Korea along with Barun and Xingyuan, then in Manila two months ago when he attended a conference at De La Salle University (DLSU) and I dragged him to give an evening talk at my rotary club, where 4 other free marketers here in Manila came. Then met him again in Bangkok.

I am glad that Tricia Yeoh has migrated to IDEAS too, from Rakyat Institut. Tricia is a very articulate and intelligent lady, so IDEAS is being packed with more brains. Young and dynamic brains.

Another good friend from Pakistan is Zubair Malik whom I met in Hong Kong during the EFN Asia 2004 Conference. I would see him in all EFN conferences that I have attended. Zubair is also the President of the Pakistan Chamber of Commerce and Industry, elected last year. He travels a lot internationally, also within Pakistan,

6Another good friend from Pakistan is Khalil Ahmad of the Alternate Solutions Institute, a free market think tank based in Lahore. After the EFN 2006 conference in KL, I did not see him in other EFN conferences. Last time I saw him was in 2010 in Sydney, during the 4th Pacific Rim Policy Exchange sponsored by the Americans for Tax Reforms (ATR), PRA, IPA and IPN.

There are many other friends from Asia that I did not mention above. I did mention about them in my previous articles on EFN Asia.

FNF has done a great job in spreading freedom in Asia. For many of us in the movement, if we look back a decade or so from now, FNF will appear as the great partner to many of us.  Also the LRI. Thanks again to Peter Wong, Exec. Director of LRI, for inviting me to the two Reading Club Salon of LRI, last year and this year.

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More photos at the Jeju Forum

* Originally posted on June 06, 2013.

Our panel, the EFN Asia and FNF panel, during the recently concluded Jeju Forum for Peace and Prosperity, May 29-31, 2013, was held in the afternoon of Day 2, May 30. While some panels have mostly if not entirely Korean speakers and facilitator, our panel has speakers and moderator from six countries. Two from Malaysia, Wan Saiful Wan Jan (moderator) of IDEAS and Tricia Yeoh of Institute Rakyat, two from China, Feng Xingyuan and Liu Junning, main speaker from Cambodia, Sam Rainsy. Other discussants were from Vietnam, Pham Chi Lan; from India, Barun Mitra of Liberty Institute, and Choi Byung-Il from S. Korea. I was the Rapporteur, that’s seven countries represented.

The audience was big, mostly Korean university students, then other Korean and international participants.

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The Resident Representative of the Friedrich Naumann Foundation for Freedom (FNF) in Korea, Lars Andre Richter, a German, gave a brief opening remarks — that’s eight countries already in our panel, really an international panel. Lars introduced what the FNF and EFN Asia are, their activities to promote freedom and liberty around the world, especially in Asia.

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The group photo after the panel. German Ambassador to Korea, Rolf Mafael, gave the closing remarks. In the photo below, he is 5th from left. He was supposed to give a short closing remarks, perhaps 1 or 2 minutes, but he enjoyed listening to the panel and spoke for about five minutes. The audience like his talk because he gave a European, specifically German, perspective on the subject of economic nationalism. See my Rapporteur’s Report about the panel.

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On our first night at the forum, May 29, we were the last group to leave the dinner table. Before finally leaving the grand ballroom, we had a group photo, below. We were 13 people who travelled from Seoul that afternoon, including two staff of FNF Korea, Sungeun Lim and Ms. Kim, and Pett Jurapaiboon, the Reginal Program Officer of EFN Asia, based in Bangkok. In this photo below, only Sam Rainsy was absent because he went ahead.

On the second night, another dinner at the grand ballroom. The Jeju Forum organizers showed the EFN Asia video on the stage several times, wow. Barun Mitra and Pett Jurapaiboon with me, the EFN video on our background as it was being shown.

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The third and farewell dinner, May 31. This was taken by one of the young staff of the Forum, Ms. Summer Kim.

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The previous day, Ms. Kim and her two other fellow young staff interviewed me. They have read my previous articles about the Forum, weeks before we attended the event and they said they liked it. They asked me how I came to participate in the forum, I said it was EFN Asia and FNF which brought us to the event. They also asked if I have any comment how the event was organized, I said that everything was running smoothly, I have zero complaint, they and the Forum organizers are very efficient. Ms. Kim also sent this photo, minutes before the video interview.

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Once again, thanks to EFN Asia and the FNF for hosting that panel and for bringing me and other panel participants to Seoul and Jeju. It was a great learning experience, as usual.

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Dealing with econ. nationalism, Jeju Forum

* This is the Rapporteur’s Report that I submitted to the organizers of the Jeju Forum for Peace and Prosperity 2013. This is posted in the EFN Asia website, June 03, 2013

○ Session Outline

Title Dealing with Economic Nationalism Session Code 5-A
Time 15:40 – 17:00 Room A
Moderator: Wan Saiful WAN JAN

Presenter: SAM, Rainsy

Discussants: CHOI, Byung-il; FENG, Xingyuan; Pham Chi LAN; LIU, Junning;
Barun MITRA; Tricia YEOH

○ Key Points by the Presenter

– Economic nationalism is understandable. Early stage of development, there is a need to protect crucial new and small economies,

– Cambodia case, probably the poorest of the 10 member Asean countries. There is big disparity in economic development among members.

– Asean is creating a free trade zone but it raises lots of concern in Cambodia. It needs a period of time to adopt and prepare before liberalization.

– To compete successfully, country needs leadership. Not a matter of ideology but leadership with vision, that promotes national interest, any ideology can promote devt. No prospect for development bec leadership only wants to survive politically.

We need to put the house in order first before we face competition. Need physical and social infrastructure.

– Cambodia is a banana kingdom with gang and mafia of kleptocracy. One of the world’s most corrupt and underdeveloped countries.

– GDP growth of 6% or more is meaningless if the environment is destroyed, social fabric is destroyed due to prostitution and human trafficking, inequitable development.

– Free trade can be disruptive and destructive. Cambodia cannot face free trade and free market yet, it must have political democracy first.

– Korean ODA for Cambodia is a waste of Korean taxpayers money as human rights is not protected, the gangs and mafia are in power.

– Keyword:  political democracy, free market, Cambodia corruption, human rights violation, prostitution

○ Synopsis of Discussants

1. CHOI, Byung-il:

– Disagree with Mahathir that countries need protectionism. Economic nationalism is unsustainable.

– Many people in Korea complain of imported fish, other food, that we should be self sufficient, but forcing self-sufficiency in food, only few countries can survive.

– How to attain econ prosperity, invest in education, liberalize the economy. Good political leadership is also important.

2. Pham Chi LAN:

– Protectionist measures rose recently via technical barriers to trade (TBT). Tariffs are going down but various measures like health concerns, environment restrict trade.

– Vietnam been a member of the ASEAN since 1995, we experience trade deficit with Asean members plus North Asia, but trade surplus with EU.

– FDI about 80 percent coming from East Asia and South East Asia. But mainly for low cost, low tech industries, plus environmental problems.

– Asean initiative is good but not enough, E Asian countries need to open up their economies more for Vietnam exports.

3. LIU, Junning:

– Economic nationalism is a body of policies that protect certain local interests, requires the imposition of tariffs, restrictions of free trade, Intervention in the name of protecting “national interest”.

– Nationalism forces consumers to buy only local producers, trade protectionism, even nationalization of some foreign companies.

– Nowadays nationalism is omnipresent especially in dictatorships, currency control. It is costly to consumers because supply of capital, consumer goods becomes higher and costly.

– It appeals to national pride, suspicion, fear of foreign goods, but consumers lose. Case of high tariff on foreign made milk. Consumers endure high prices, low or bad, harmful product quality.

4. Tricia YEOH:

– Recent growth of Malaysia not at par with neighbors, cost of business is high due to corruption, bureaucracies

– 1971 New Economic Policy (NEP) to eradicate poverty, noble, but was meant to protect the Bumiputera, the local elites, the princess of the Earth. It engendered a culture of patronage and cronyism.

– Mahathir this morning said the need to protect automotive industry. Such protectionism actually is a waste of government money to protect local industries, bail out of around 69-70 billion Ringgit were lost.

– Government role has in the economy has been rising. Previously, private investments was high but since 1998 private investment was less than government investment.

– Government-linked corporations(GLCs) account for “approximately 36% and 54% respectively of the market capitalisation of Bursa Malaysia and the Kuala Lumpur Composite Index”. GLCs and GLICs are the major players in the economy.

– Malaysian economy is heavily dominated by government, in the areas which are privatised, select individuals are chosen to receive lucrative tenders and contracts.

– Cronyism results if government is dominant, give only to friends, monopolies in electricity, telecoms. There is need to remove barriers to trade, make the economy more competitive, control corruption.

5. FENG, Xingyuan:

– Trade benefits both players, allows efficient distribution of factors of production. The “infant industry” argument, we should not protect, we will only protect underdevelopment.

– Open markets and protection of property rights are key. Also stable currencies to protect foreign investors.

– Trade benefits even between unequal economies. President Obama was asking for “balance of trade” with China, meaning China should export less to the US. This is wrong. Trade surplus by China is used to invest and spend by citizens in the US, so deficit is compensated.

– US should ask instead that China should open up market in services.

– Trade ban campaign of Japanese goods last year, means banning our own development. Like manyJapanese companies are thinking of moving their investments out of China and go somewhere.

– Free trade is beneficial to all sides, both buyers and sellers, not only one side.

6. Barun MITRA:

– People trade, companies trade, governments don’t, but governments negotiate trade, and  negotiations take many years.

– India is not known for manufacturing, more for IT. Perhaps the only country manufacturing automobiles in the 40s after Japan, yet how many Indian car brands do we hear now.

– Today local car manufacturers survive only because of government support. The infant industry argument only resulted in cronyism.

– India believes industrialization inside, not export orientation, cronyism resulted and it  hurts our own poor people much more than other people

– IT not protected or subsidized, even completely neglected, and they prospered. About 80 percent of our IT products are for exports.

– Free trade is fair trade. Two sides agree, a win win situation, benefits both buyers and sellers. Economic nationalism is used by politicians to secure themselves. Losers are the people.

Sam Rainsy Reactions:

– If an economy is poor, unprepared, free trade is destructive. Need for a transitional period to produce positive effects first, before we open up the economy to free trade.

– Consider the social and political environment first, control corruption, farmers becoming landless under the name of trade liberalism.

Questions

1: Cambodia, how to develop it?

2: What is your vision for prosperity in Cambodia?

Sam Raimsy Answer:

– First, good leadership and second is education. Cambodia leadership is a mafia, a gang it can destroy a country using liberalism. From communism to democracy, become worse under a mafia.

– China and Vietnam, they are socialist but they have developed. They uphold national interest, they have long-term vision. Even non-democrats like Mahathir and Lee Kuan Yew but they have vision.

– Education, the war and dictatorships, 3 generations were lost, only low tech investments come. We need to catch up.

Barun Answer:

– Free trade to be effective and powerful, it has to be unilateral, nothing to negotiate. The most protected industries are also most inefficient, like agriculture.

– Pure unilateralism in trade allowed Indian IT to develop, without any government protection.

Xingyuan answer.

– Look also at HK, low taxes, free trade, there is economic prosperity

Choi answer

– Protectionism is understandable, to protect the weak, but consider the political economy.

– Beneficiaries of nationalism and protectionism are incumbent players.

Closing Remarks by German Ambassador to Korea, Rolf Mafael

– Building an internal market for asia will build prosperity.

– Germany case, global competitiveness, open economy allowed us to survive the recent global financial crisis

– Services sector need more liberalization in the EU. We have the same discussion and debate in Europe as you have here on economic nationalism.

– Our prosperity depends largely also to our trade with Asia.

– Priority is the WTO, multilateral negotiation.

– There are indeed social consequences to liberalization, like ensuring labor standards, but this was heavily opposed by many developing countries.

– If you step back, 1996-97 vs today, Asia has made big progress.

– When the EU-Korea FTA was negotiated, german car industry opposed, but who benefitted later? German car industry, they were able to enter Korean market better. Another beneficiary was the Korean car industry.

– Ultimately, customers won in both Korea and Germany. Liberalization will lead to more prosperity

○ Policy Implications

– Protection of human rights, controlling corruption, are key for poor economies like Cambodia.

– Economic nationalism and protectionism often results in cronyism and corruption, disadvantages the local consumers via higher prices, low quality products and services due to absence or limited competition.

– Economic liberalism will benefit consumers, will lead to peace and prosperity.

– Unilateral trade liberalization is one option that countries should consider to avoid cronyism, control corruption, directly benefit the people, consumers and producers alike.

○ Rapporteur

Name Bienvenido “Nonoy” Oplas Organization/Position President, Minimal Government Thinkers Inc., Philippines
Mobile Phone e-mail
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KL Conference 2011, Day 1

* This is my article in thelobbyist.biz, October 12, 2011.

It covers only the morning session of Day 1. Today, the conference has unofficially ended, we are still going to the farewell reception in an hour, for the formal closing of the activity. This is an excellent conference, thanks to FNF.
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http://www.thelobbyist.biz/perspectives/less-gorvernment/1195-competition-and-prosperity


Kuala Lumpur — Competition is the best regulator of business and market players, not government. The more players who compete with each other in producing similar goods and services, the more that they will be forced to provide good quality products at competitive and more affordable prices.
This is the main theme of the 12th Economic Freedom Network (EFN) Asia Conference here in the capital city of Malaysia. Today is the 2nd and last day of the two-days conference with the theme, “Competition, Engine for Prosperity”. The event is sponsored by the Friedrich Naumann Foundation for Liberty (FNF), co-sponsored by two free market-oriented local think tanks, the Institute for Democracy and Economic Affairs (IDEAS) and the Center for Public Policy Studies (CPPS). There was a welcome dinner two nights ago before the start of the conference, hosted by the German Ambassador to Malaysia, Dr. Gunter Guber. I posted photos and stories about it here.The conference is attended  by more than a hundred participants from many Asian countries especially from China, India, Malaysia, Singapore and Thailand who work in independent, if not free market-oriented think tanks, research institutes and NGOs. Country Directors and regional staff of FNF in Asian countries are also here. Unlike the previous years of the annual EFN Asia conference, only a few of us from the Philippines came here.

Day 1 of the conference yesterday was composed of the opening speeches by FNF Regional Director for Southeast and East Asia, Dr. Rainer Adam, then the head of ASLI, Dr. Michael Yeoh, and the keynote speech of DBM Secretary and top Liberal Party official, Sec. Butch Abad.

The three men expounded the advantages of competition over more government regulations, and the importance of transparency and accountability over secrecy and high bureaucracy. But Sec. Abad, being a high government official in the Philippines, gave more importance to certain government regulations to attain redistribution in society, to protect the marginalized sectors.

The free market system admittedly, will retain if not heighten inequality in society. But this is the natural result since some people are very efficient and very hard working and highly ambitious, while some have little or no ambition in life, who only want to party and drink each day whenever possible. When government intervenes hard to force or pretend to attain social equality, such intervention will naturally result in subsidizing the lazy and irresponsible, while penalizing and over-taxing the efficient and industrious guys.

Anyway, after the opening speeches, the morning session was very interesting. Five speakers from five different countries spoke on just one topic: “What Should be the Role of Government?” The speakers were (a) Prof. Jurgen Morlok, the Chairman of the Board of Trustees of FNF; (b) Battsetseg Shagdar from EBI think tank, Mongolia; (c) Dr. Arianto Patunru from LPEM, Indonesia; (d) Prof. Sheng Hong of Unirule Institute, China, and (e) Barun Mitra of Liberty Institute, India.

My assignment in participating in this EFN Asia Conference was to be a host or moderator in two discussions, including this one. I was lucky to take that role as I thought that ALL the five speakers mentioned really made excellent presentations yesterday.

Jurgen Morlok talked about promulgating the rule of law as the main function of government; to set the rules of the game, to be a referee of competing players, no more, no less. I think this is a bulls-eye statement which I totally agree with.

Baagi Shagdar talked about the pathways of Mongolian society from authoritarianism to democracy the pains and hurdles along the road, and the need for more citizen information and participation in governance.

Aco Patunru opened his presentation with important quotes from (a) Murray Rothbard (government should ensure that rules are equally applied to players, leave the market as competition will regulate the market itself); (b) Ronald Coase (government role is limited to enforce property rights); and  (c)Friedrich Hayek (government should ensure that competition goes on, set the rules and regulations for competition to prosper).

Sheng Hong discussed the recent Unirule research paper, “The Nature Performance and the Reform of State-Owned Enterprises (SOEs) in China. There are many surprising results, well at least for me, from that study. Like SOEs’ average profit from 2001-2009 was 8.1 percent vs. private enterprises’ 12.9 percent. But SOEs enjoy certain privileges that are not available to private companies, like low interest rate, low or zero rental fee, fiscal subsi and royalties. If these perks are removed, the average return on equity of SOEs from 2001-2009 goes down to -6.3 percent, a net loss.

Barun Mitra opened his presentation with a quote from Ayn Rand, “Civilization is the progress towards a society of privacy…” Then he discussed how India benefited from liberalization and competition in various sectors: automobile and land transporation, airline, telecommunication, etc., and the declining role and authority of public sector units (PSUs).

FNF has this good discussion set up that maximizes audience interaction with all speakers which I have not seen in any big forum in Manila. After the presentation by the five speakers in the ballroom, there was no Q&A. Instead, participants were divided into five separate meeting rooms, and the five speakers will be moving into those five rooms to answer questions for 15 minutes. Since I personally know three of the five speakers (Barun since 2004, Aco since 2005, Baagi since 2008), as well as some of the participants, it was relatively easy for me to facilitate the small group Q&A.

If there were no instant questions from the audience as soon as the speaker has entered the room, I have to ask the first question; if the speaker has already left after consuming the 15-18 (max) minutes allotted and the next speaker has not come yet, I asked the participants to continue the exchanges among themselves, to ensure there are no dull or idle moments. These were learning moments for me too as discussion host.

Today’s session will feature the official release of The Economic Freedom of the World (EFW) Report 2011, an annual study done by the Fraser Institute in Canada, then a talk from the Office of the Prime Minister of Malaysia, then a panel discussion on Competition Policy and Environment, a luncheon talk.

I am thankful to the FNF for giving me a travel grant to attend this conference, for giving me the opportunity to be one of the discussion hosts in two activities yesterday (morning and afternoon).

Competition is not a goal in itself. It is a means to a goal – to expand economic freedom and individual liberty. Even if the 2nd day of the conference is still not over (I wrote and submitted this article before breakfast), I can positively say that the conference is really educational and highly successful.

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KL conference 2011, Dinner at German Ambassador

* Posted on  October 11, 2010.

Here at the Royal Chulan Hotel, Kuala Lumpur, the venue of the 12th Economic Freedom Network (EFN) Asia Conference sponsored by the Friedrich Naumann Foundation for Liberty (FNF), a German liberal political foundation.

Last night, the German Ambassador to Malaysia, Dr. Gunter Guber, hosted a dinner for the participants of the 12th EFN Asia Conference. His residence is not far from our hotel. German time, we were in his place at 6pm sharp, and he personally greeted at the door all arriving participants.

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There were lots of German beer (I like the most that one from Munchen), soda, and wine for the initial cocktails. Then the formal program. A program with no microphone, the host himself, the Ambassador (speaking in the pictures) is also the MC, cool.

Many officials of FNF South and East Asia (India, Pakistan, Indonesia, Malaysia, Philippines, Thailand, etc.) were there.

2My digicam suffered a low bat, and the photos were blurred, agh! Anyway in these photos, top, with Barun Mitra of Liberty Institute, and Fred McMahon of Fraser Institute, Camada, which conducts the Economic Freedom of the World (EFW) Annual Reports.

Below, with Siggi Herzog, former FNF Philippines country director, now regional director for South Asia, and Mr. You of the Japanese for Tax Reforms. I miss his buddy, Hiroshi.

Below, with Asian friends: Fu Weigang from Shanghai, Peter Wong from Lion Rock Institute-HK, Bibek Debroy from India, Wan Saiful Wan Jan from Malaysia, others.

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From top left clockwise: Rainer Adam (center), FNF regional director for south east Asia, Siggi Herzog (center), Wan Saiful (right), and Jules Maaten (left).

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My digicam’s battery finally went kaput later in the night. I shall wait for photos from other friends.

Oopss, my photo with good friends in SEAsia — Luthfi Assyukane of Freedom Institute, Indonesia, Wan Saiful, Muhammad Thamrin of FNF Indonesia.

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Today, the 2-days conference will start. I will be one of the hosts for the discussions both in the morning and afternoon sessions. But at least I’m not going to present a prepared paper :-).
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Meanwhile, I am posting here my article in the lobbyist.biz last June 17 this year as this is related to my posting yesterday. This piece is particularly applicable to the Philippine government. I think many governments did not put the restrictions on foreign investments in their constitution. They usually do it via legislation, which is easier to revise or abrogate, than via Constitutional change.

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 http://www.thelobbyist.biz/perspectives/less-gorvernment/967-when-government-creates-monopolies

When Government Creates Monopolies

FRIDAY, 17 JUNE 2011 02:10

WRITTEN BY NONOY OPLAS

Tags: Less Government

Government is the main creator of monopolies in the economy, via the Constitution, legislative franchising, Executive regulations and local government laws and regulations.

Here are examples of monopolies and oligopolies created by the government.

  1. The Constitution

On profession monopoly, it says, “The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.” Filipino nurses, doctors, engineers, accountants, etc. can practice their profession in America, Europe and many other countries, but foreign doctors, nurses, accountants, etc. cannot practice here without some legal machinations.

For many sectors and industries, foreign ownership is limited to a maximum of 40 percent equity. So even if foreign capital and technology are the only viable players to expand competition, they are limited or not allowed to come in. The Constitution is also explicit in declaring, “Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.”

  1. Legislative franchising

Many public utilities have to get a legislative franchise, a law granting a franchise or sole provider of certain services for certain areas. Electricity providers, telecom companies, etc. have to get a legislative franchise. Given the horse trading culture in Congress, it is not far out that the bigger the franchise and monopoly power given to a private corporation, the bigger the risk that corruption and/extortion can take place.

  1. Executive regulations

The Department of Transportation and Communications (DoTC) is among the biggest agencies to have huge power to approve or disapprove new players. In airlines through the Civil Aeronautics Board (CAB), in shipping lines through the Maritime Industry Authority (MARINA), and in bus and taxi lines through the Land Transportation Franchising Regulatory Board (LTFRB).
While there may be five local airlines (PAL, PAL Express, Cebu Pacific, Zest Air, SEA Air), not all of them compete on all routes. Thus, for some destinations, there may be only one or two airline/s covering the area. In inter-island shipping like RORO (roll on, roll off), there are certain areas that are monopolized by a particular shipping company. The same with buses. There are dozens of provincial bus companies from Luzon to Mindanao, but in certain destinations, there is/are only one or two bus companies that cover the route.
Jeepney monopoly of certain routes is another example. Take the Ayala route. Bus passengers coming from the south (Parañaque, Las Piñas, Laguna, etc.) and going to Ayala have only one cheap transportation option, the jeepneys plying the Ayala-Washington route. Some of the ugliest and dilapidated jeepneys in the country are in Ayala Avenue, the premier financial center of the country.
The jeepney operators have no incentive to improve their units since ordinary passengers have no choice anyway.

  1. Local governments

Granting of franchise for tricycles belong to the city or municipal governments, not the LTFRB. Once tricycles dominate the route, the drivers and operators do not want the jeepneys or air-con vans to enter their turf. Ordinary passengers have to endure the discomfort and congestion inside a small tricycle as there are no alternatives except to take the taxi.

There are other legislative and executive agencies’ regulations that tend to limit competition in the economy.
Now, the President has issued a new Executive Order (EO) to control anti-competition and break monopolies and cartels. See this news report in Business Mirror, Aquino issues antimonopoly, anticartel EO. The report states:
President Aquino has designated the Department of Justice (DOJ) as the “Competition Authority” in charge of cases involving competition issues to help deter and break up monopolies and cartels in the country to ensure a level playing field.
In issuing Executive Order (EO) 45, dated June 9, 2011, the President said, “There is a need to promote competition and level the playing field in the market.”
The DOJ as the Competition Authority will investigate cases involving violations of competition laws and the prosecution of violators “to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.”
If the barrier to the entry of more competition is the Constitution or the Legislative franchising, what can the DoJ do? Lobby for early charter change?
A good example of an industry duopoly is the telecommunications sector. Before it was an oligopoly (Smart, Globe and Sun) but after the Smart takeover of Sun Cellular early this year, it has become a duopoly, and it is not good for the Filipinos.
The main barrier to foreign entry in the local telecom industry is the Constitution. Since foreign equity in public utilities like telecom is limited to 40 percent, interested foreign players will have a hard time looking for that local business group that can provide the 60 percent equity ownership, considering the huge capitalization required.
Another disadvantage of this set up is that the DOJ is given additional work which is far from its original mandate of protecting the citizens’ right to life, right to private property. By expecting the DoJ to do more business regulations function, its time and resources to promote property rights and promulgate the rule of law will be reduced and limited.
The only positive effect of this proposal perhaps is that the creation of another bureaucracy, the Fair Trade Commission (FTC), will become less likely.
Observing and asserting “anti-competitive, anti-cartel” behavior of a firm is tricky and subject to arbitrary political intervention and harassment.
When your price is lower than that of your competitors, you can be accused of predatory pricing. When your price is the same as your competitors, you can be accused of  price cartelization. And when your price is higher than your competitors, you can be accused of price gouging.
Whichever pricing you take, the government can invoke “anti-competition practice” if it wants to.

The President should not proceed with its new EO, nor should it push through the creation of an FTC. Government should reduce and simplify the rules and requirements for business, reduce the taxes too. This way, more companies will come in resulting in more competition in more sectors and sub-sectors of the economy.

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