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PH sovereign fund: Marcos’ first laudable initiative

First of 3 parts

SHRUGGING off the shrill opposition to the setting up of the Maharlika Investment Fund (MIF), which would be the country’s first sovereign wealth fund (SWF), President Ferdinand Marcos Jr. said that it was his idea. No wonder his cousin Speaker Martin Romualdez is the principal author of House Bill 6389 which will mandate the setting up of the fund.

Of course Marcos didn’t pluck the idea out of thin air.

Singapore set up its first SWF, Temasek, in 1974 and another one, the Government of Singapore Investment Corp. in 1981, with assets of both estimated at $1 trillion today. Koreans set up theirs, the Korean Investment Corp. in 2005. Malaysians organized its Khazanah Nasional (in Malay, “National Treasure”) in 1993. The Socialist State of Vietnam set up its State Capital Investment Corp. In 2005, inspired by the tremendous success of its sister socialist country’s SWF, the China Investment Corp., whose assets now total $1.3 trillion — the biggest such entity in the world.

The Indonesians organized theirs, the Indonesia Investment Authority, in the midst of the global Covid-19 crisis last year. Set up initially with $5 billion assets from the Indonesian government, other funds such as those from the United Arab Emirates, Japan Bank for International Cooperation and the US International Development Finance Corp have committed to beef up its assets to $10 billion.

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First case of BBM’s failure of governance

THE San Miguel energy companies’ predicament is becoming a classic case of an administration’s failure to govern, unless it intervenes quickly and uses all its political clout and persuasive powers to resolve the issues. I do hope it is the last such case of failure in governance.

The San Miguel’s quagmire is a very serious problem that could affect Meralco’s 7.5 million consumers, at the very center of the nation. It could even impact the economy as a whole and dent investor confidence. In broad strokes, the problem is as follows;

San Miguel’s two energy firms — South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC), operating two of the country’s biggest power plants — have been losing billions of pesos, and will go under if they continue generating power which they sell to Meralco. SPPC claims the consortium running the Malampaya gas field had unilaterally reduced its supply of gas needed to run its Ilijan plant. SMEC on the other hand claimed that its coal-fired Sual plant could not afford the tripling of gas prices, mainly due to Russia’s invasion of Ukraine.

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Should Marcos be blamed for soaring inflation?

NO, and yes.

No, since almost all countries in the world have seen their inflation – the rate at which prices increase over a given period – worsening since 2020, with the global average rising to 4.7 percent in 2021, to 7.4 percent so far this year. This has been initially due to the disruption in economic activity due to the impact of the Covid-19 epidemic that started in 2021. It has been a perfect storm, with so many factors involved.

To simplify things though:

Blame it on Russia’s invasion of Ukraine, which was like a meteor falling on the global sea, creating tsunami waves in different forms such as disruptions in energy and food supplies. The richest countries’ defensive actions not just to contain their local inflation but prepare for war with Russia worsened the situation. The US for example steeply raised its local interest rates, but this strengthened its dollar, which in our case drove down the international value of our peso, making our imports – either for manufacturing inputs or direct consumption—expensive.

But this doesn’t explain the fact that our inflation rate, at November at 8 percent, is highest in the region, next only to Laos, one of the poorest countries in Asia which reported a 39 percent inflation. Our 8 percent inflation is double that of Malaysia’s 4 percent, significantly higher than Indonesia’s 5.4 percent and Vietnam’s 4.7 percent

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ERC pooh-poohs Russian invasion of Ukraine

Last of 2 parts

ASTONISHING, just plain crazy, or a biased decision.

In this entire planet, only the three members of the Energy Regulatory Commission (ERC) — going by their denial of the San Miguel Energy Corp. (SMEC) petition for an increase in electricity rates — seems to ignore the earth-shaking impact all over the world of Russia’s invasion of Ukraine. That war, in its 11th month now, has resulted in an unprecedented skyrocketing of fuel prices, especially for coal which the SMEC plant uses.


As a World Bank article pointed out: “The Russian invasion of Ukraine has disrupted the global energy market. The consequences for global growth will be significant: higher energy prices alone are likely to reduce global output by nearly 1 percent by the end of 2023, our recent analysis suggests.”

SMEC had petitioned the ERC for an increase in electricity prices at which its coal-fired Sual plant sells to Meralco, for distribution to retail consumers.* Other than the Indonesian ban on its coal exports announced in January, the Russian-Ukraine war for various reasons (such as the West’s sanction to ban imports from that country) drastically pushed up coal prices, from $170 per metric ton in January 2022 to $326 per metric ton in May 2022.

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Do ‘they’ want San Miguel energy firms to go bankrupt?

First of 2 parts

THE Energy Regulatory Commission (ERC) seems intent on driving San Miguel’s power-generation corporations — San Miguel Energy and South Premiere Power — to bankruptcy.

It has rejected their pleas, initially made together with Meralco, the buyer of its electricity for retail distribution, for an orderly increase in rates required by unforeseen circumstances, including the Russian invasion of Ukraine.

President Ferdinand Marcos Jr. has unwisely joined the fray, issuing a press statement last week asking the Court of Appeals that issued a temporary restraining order favoring the San Miguel firms, to reverse its order. This is the first time a Philippine president has asked a court — which is beyond the authority of the executive branch — to reverse its ruling. Not even his father who had dictatorial powers ever publicly intervened with the courts, even just through a public statement.

In his statement, Marcos said: “The instantaneous effect of the temporary suspension on the implementation of the power supply agreement will consequently expose approximately 7.5 million registered Meralco consumers in the National Capital Region and other areas in Central Luzon and Calabarzon to higher electricity prices without preparation usually observed in case of power supply agreement termination.”

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BBM should take advantage of his high trust ratings

GNASH your teeth until they fall out, you Yellows, Pinks and Reds. President Ferdinand Marcos Jr. posted an impressive 86 percent trust and 78 performance rating, according to a survey undertaken by OCTA Research in the last week of October.

Marcos should take advantage of this colossal political support to start the reform programs this country direly needs even if these are unpopular or will be resisted by oligarchs.

Those ratings are basically at the high levels of his predecessor President Rodrigo Duterte, whom I would think the masses identified with more than Marcos. This is perhaps indicated by the fact that while both presidents had an 86 percent trust rating, Marcos’ performance rating was 78 percent, a bit lower than Duterte’s 86 percent. Those of the past three Yellow presidents — Cory, Ramos, Aquino 3rd — were all below Duterte and Marcos.

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Bloggers are not journalists

BLOGGERS, even prolific ones whom one Red propagandist calls, rather stupidly, “citizen journalists,” are not journalists. They are a new creature disseminating ideas and information solely in cyber space, a creature of the digital age. Period.

Many of the most widely read bloggers, claiming hundreds of thousands of views have even disappeared.

The prime example of this is the vociferous anti-Duterte blogger, Jover Laurio (PinoyAko), who got to be the Yellows’ rock star that the Philippine Daily Inquirer named her as one of its Most Outstanding Filipinos for 2017. Hardly anybody reads her blog anymore, unless one would want to contract her as travel agent, which she announces in her blog is her main work.

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US documents: Defense treaty does not cover Spratlys, Scarborough

THE big reason why we cannot believe Vice President Kamala Harris’ assurances of her nation’s military support in our territorial disputes in the South China Sea is that the US doctrine on this issue has long been settled and documented: It doesn’t recognize the Philippines’ and three other nations’ territorial nor maritime claims in the Spratlys. It therefore cannot intervene in these disputes if an armed conflict breaks out there.

There is no evidence, no documentation that this US policy has been changed. Harris and other American officials simply make it appear that it has changed. Harris speaks with a forked tongue.

Spratlys and Scarborough Shoal outside the Treaty of Paris limits, which the US says is the ‘metropolitan territory’ it is bound to defend under the Mutual Defense Treaty. Map is from Rosen, Mark E. ‘Philippine Claims in the South China Sea: A Legal Analysis.’ (CNA Occasional Paper. Arlington, Virginia: Center for Naval Analysis, August 2014.)

It was President Ferdinand E. Marcos, the current president’s father, who demanded that the Americans give him a clear written statement on this issue, way back in 1976.

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Don’t believe Harris re US help

AS always, US officials, this time Vice President Kamala Harris, have proven to be masters of prevarication, of ambiguity and of propaganda.

“Harris affirms US pledge to defend PH”; “Harris urges defense of sovereignty in South China Sea”; “US ready to defend PH vs armed attack in SCS.” These were the headlines describing Harris’ alleged assurances that we fall under the US eagle’s wings.

Her most detailed statement, “An armed attack on the Philippines’ armed forces, public vessels or aircraft in the South China Sea would invoke US Mutual Defense commitments. And that is an unwavering commitment that we have to the Philippines,” is what she told President Ferdinand Marcos Jr.

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