FIRe, Innovation and rising income

* This is my column in BusinessWorld last September 03, 2019.

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Next week, on Sept. 9, the BusinessWorld Industry 4.0 Summit with the theme “Winning Together in the Fourth Industrial Revolution” (FIRe) will be held at the Shangri-La at The Fort, BGC, Taguig City. This big event is a partnership of BusinessWorld, the Department of Information and Communications Technology (DICT), and the Philippine Chamber of Telecommunications Operators (PCTO).

The main speakers will be DICT Secretary Gregorio Honasan II, Senator Grace Poe, Anthony Oundjian of Boston Consulting Group, and Dr. Jose Ramon Albert of the Philippine Institute for Development Studies.

FIRe is the most recent of the technological revolutions that modern humans have invented. I searched for the approximate timeline, here is what I got. Others will have slightly different years but the period will not be far from what I have stated in Table 1.

Table1_090319

Taking this timeline, I am curious how major economies and ASEAN countries have developed since the First Industrial Revolution, at least from 1800. I found data from the University of Groningen, Groningen and Growth Development Center (GGDC) – the Maddison Project Database, version 2018. Bolt, Jutta, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden (2018), “Rebasing ‘Maddison’: new income comparisons and the shape of long-run economic development,” Maddison Project Working Paper, nr. 10, http://www.ggdc.net/maddison. (See Table 2.)

Table2_090319

Here are some important points to consider from the data in Table 2:

  • One, growth and income from the First to Second Industrial Revolutions was modest, per capita income of the United States of America and the United Kingdom expanded only two to three times after 100 years.
  • Two, incomes from the Second to Third Industrial Revolutions have expanded by 1.5 to 2.5 times after 50 years. Since ASEAN countries have no data in 1900 except for Singapore, we use 1913 as the region’s Second Industrial Revolution income baseline. For the region, there was a decline or a modest increase in income from 2013-1950, that is after World War II.
  • Three, the recurring belief that the “Philippines was the second strongest Asian economy after Japan after World War II” is a myth, not true. In the ASEAN alone, Malaysia and Singapore had per capita incomes nearly two times that of the Philippines.
  • Four, the Third Industrial Revolution ushered fast growth in wealth worldwide, with incomes expanding by 1.5 to four times (Singapore) and eight times (Japan) in just 30 years between 1950-1980.
  • Five, the Fourth Industrial Revolution (FIRe) was even more expansionary in terms of the material wealth and prosperity of people. Incomes have increased two to six times (Vietnam), and seven times (Singapore) from 1980 to 2016. The Filipinos’ incomes expanded only more than two times during that period. Marcos’ Martial Law’s repression of the economy, and huge natural disasters (the Pinatubo eruption in 1990, the big earthquake in 1991) contributed to this sad story.

We have entered the beginning of FIRe, where smart mobile phones have become affordable to billions of people and they have more access to internet, where drones take aerial photos and videos much better, where robots and modern machines are used more in manufacturing, commerce, and restaurants.

It is also in FIRe period where intellectual property rights (IPR) are becoming more and more prominent. Innovation is the keyword that is almost interchangeable with modern IR and innovation cannot happen fast if innovators’ patent and trade secrets of their inventions, trademarks and brands of their companies, copyrights to their compositions, are not respected and protected.

On Sept. 24, strong advocates of private property and market competition, the Geneva Network (UK) and the Minimal Government Thinkers (MGT, Manila) will launch a new report, “The importance of IPR for progress: A reform agenda for ASEAN countries” at the Holiday Inn Makati. Speakers will be DTI Secretary Ramon Lopez, Philippine Chamber of Commerce’s IPR Committee Chair Jess Varela, Geneva Network Executive Director Philip Stevens, and yours truly for MGT.

IPR protection ensures more innovation, which fuels endless modernization and disruption under FIRe. Humanity’s material prosperity is further ensured. More people, rich and poor, will ride cars, motorcycles, e-bikes and they will ride horses and bicycles only for leisure and sports. This is the positive impact of continuing IR and innovation, enabled by private property protection and market competition.

 

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MGT and FEF to co-sponsor IPRI 2019 launching

This coming October 16, 2019, Minimal Government Thinkers (MGT) and Foundation for Economic Freedom (FEF) will co-sponsor with the Property Rights Alliance (PRA) in the launching of International Property Rights Index (IPRI) 2019 Report,
http://www.internationalpropertyrightsindex.org/.

IPRI 2015 to 2019 author Dr. Sary Levy-Carciente and PRA Executive Director Lorenzo Montanari will come to Manila to formally launch the report, also meet with some PH government officials, private sector and NGO players engaged in property rights protection, physical and intellectual property.

The index is composed of these three components and their respective sub-components, numbers are tallied and the overall scores determine the global ranking of countries and jurisdictions.

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IPRI 2018 was co-sponsored by the following independent, non-government and market-oriented think tanks and research institutes.

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The event is by invitation only but a few interested leaders and individuals outside the list may be accommodated. Send me a letter of interest, minimalgovernment@gmail.com.

FEF made the announcement too in their website,
http://www.fef.org.ph/uncategorized/fef-to-co-host-2019-ipri-report-global-launch/.

IPR protection in the ASEAN

* This is my article in BusinessWorld on August 27, 2019.

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The fastest-growing sub-sector in the Philippine economy over the past 5-1/2 years — 2014 to the first half of 2019 — is intellectual property products, under Capital Formation (or private investments). It was growing at 28% per year, with capital formation growing at 14% and GDP at 6.3%.

And this points to the need to further protect intellectual property rights (IPR) because they are easier to copy and counterfeit, unlike physical property.

The Philippines is not ranked high globally when it comes to innovation and IPR-related businesses. See this result from the World Intellectual Property Organization’s (WIPO) annual report, the Global Innovation Index (GII).

In WIPO’s GII, “Knowledge creation” includes patents and industrial design by origin, and “Intangible assets” include trademarks and industrial design by origins.

In the overall innovation index, the Philippines ranked 54th out of 126 countries and jurisdictions, and lower in knowledge creation and intangible assets (See table 1).

Table1_082719

Then in the US Chamber of Commerce’s Global Intellectual Property Center (GIPC) International IP Index 2019 report, the Philippines ranked 37th out of 50 countries covered.

Low or poor IPR protection means there are more fakes, counterfeits, smuggled and illicit products passing around and sold.

True enough, in the Economist Intelligence Unit’s (EIU) Global Illicit Trade Environment Index (GITEI) 2018 Report, the Philippines ranked 64th out of 84 countries covered. GITEI measures how countries and economies enable (or inhibit) illicit trade through their policies to fight smuggling and illicit trade and the index is composed of four main categories or indicators, each of which have sub-indicators — government policy, supply and demand, transparency and trade, and the customs environment (See Table 2).

Table2_082719

So the recent fast growth of IP products means there is some catching up going around in the Philippines, which is good.

In the new 18th Congress, House Bill 1597 by Congressmen Michael L. Romero and Enrico A. Pineda was filed, Amending RA 8293 (Intellectual Property Code of the Philippines), increasing penalties and sanctions, rationalizing its power and functions.

The authors say that their bill seeks to “streamline all administrative procedures of registering patents, trademarks and copyright, to liberalize the registration on the transfer of technology, and to enhance the enforcement of IPRs in the Philippines.” Good move then.

On Sept. 24, Geneva Network (UK) and Minimal Government Thinkers (MGT, Manila) will jointly launch a new report, “The Importance of IPR in the ASEAN.” The report will be jointly signed by five independent (non-government) free market think tanks from Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, and will be launched in their respective capital cities. Geneva Network is coordinating the study.

And on Oct. 16, the Property Rights Alliance (Washington, DC) will launch the International Property Rights Index (IPRI) 2019 Report in Manila. MGT and the Foundation for Economic Freedom will be the local sponsors of this event. The IPRI annual report measures the degree of respect and protection of both physical and intellectual property of many countries and economies. The Philippines ranked 70th out of 125 countries in IPRI 2018 Report.

At both events, Department of Trade and Industry Secretary Ramon Lopez will be the keynote speaker. Mr. Lopez is a standout among Cabinet Secretaries of the Duterte administration because of his consistent advocacy for a competitive, innovative, non-bureaucratic economy and ease of doing business. Price control, IPR tweaking and weakening are far out from his work and department agenda.

Keeping the sanctity of private property, physical or intellectual property, is an important ingredient to attract and keep more private investments and job creators, both local and foreign.

Rule of law and property rights, Hong Kong vs China

* My column in BusinessWorld on August 15, 2019.

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“… the rules must apply to those who lay them down and those who apply — that is, to the government as well as the governed — and that nobody has the power to grant exceptions.”

— Friedrich Hayek, Chapter 10, The Constitution of Liberty (1960)

This is the essence of the “rule of law” — that the law applies equally to unequal people, no one is exempted and no one can grant an exemption. Once exemptions are made, this automatically leads to the rule of men. The powerful and the mob are exempted from penalties for violating certain laws.

The nearly three months of protests and discontent in Hong Kong is centered over a subject related to the rule of law — the proposed Extradition bill, where suspected criminals and dissidents in Hong Kong can be extradited to China. And China, being a one-party communist government, is known for having little respect for the rule of law, little respect for the rights of suspects. It sends shivers down the spines of the people of Hong Kong to contemplate what would happen if some or many of them are extradited to China when Hong Kong has its own courts already.

There is proof behind the statement that China has little respect for the rule of law. In the World Justice Project’s annual “Rule of Law Index” (RoLI), countries and jurisdictions are scored and ranked based on their performance on eight factors and 44 sub-factors. The RoLI 2019 Report involved more than 120,000 household surveys and 3,800 expert surveys in 126 countries and jurisdictions.

China ranks low overall on RoLI, 82nd out of 126 countries; in contrast, Hong Kong ranked 16th. China scored particularly low on Factor 4: Fundamental Rights, like Freedom of opinion and expression, Freedom of belief and religion, Freedom of assembly and association, are effectively guaranteed. It is also low on Factor 8: Criminal Justice, like Criminal system is impartial, is free of improper government influence.

In property rights protection, both physical and intellectual property, again Hong Kong ranked high. We consider the annual study International Property Rights Index (IPRI) by the Property Rights Alliance (PRA), based in Washington, DC. The IPRI 2018 Report showed that Hong Kong ranked 17th while China ranked 52nd out of 126 countries and jurisdictions. In intellectual property rights (IPR) protection, the same pattern is observed (see Table).

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The United Kingdom and its former colonies in Asia — Hong Kong, Singapore, and Malaysia — rank high in both RoLI and IPRI. The great minds of British classical liberal thinking like John Locke, Adam Smith, and John Stuart Mill, successfully influenced the legal and economic philosophy and practice of these countries.

Communist China in contrast, is still reeling from the influence and heavy-handed dictatorship of its founder Mao Zedong. Its tolerance for citizens’ freedom of expression is very low. Extended in foreign relations, its tolerance for international rule of law like respect of international waters at the South China Sea/west Philippine Sea is also very low.

I have great respect and admiration for the brave people of Hong Kong, especially its youth. You are fighting the lackey of the biggest dictatorial government for a noble cause.

On a related note, the UK-based Geneva Network and Minimal Government Thinkers (MGT) will launch a report on the “Importance of IPR for ASEAN” in Manila on Sept. 24. This joint report will be co-signed by the Institute for Democracy and Economic Affairs in Kuala Lumpur, Paramadina Public Policy Institute in Jakarta, Siam Intelligence Unit in Bangkok, MGT in Manila, and the Viet Nam Economic Policy Research Centre in Hanoi. The Geneva Network is coordinating the study.

The keynote speaker for the event will be Trade and Industry Secretary Ramon Lopez. Mr. Lopez is very explicit in his support for IPR protection being among the cornerstones of technological innovation and economic competitiveness for any country.

IPRI 2019 will also be launched in Manila later this year. MGT and the Foundation for Economic Freedom will be the local partners of PRA in launching this big event.

PH IPR courts, BOI-IPO, GII 2019

Some updates on IPR protection in the Philippines here. Private property is private property, physical or intellectual. They are not social or communal property.
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(1) SC asked to designate special courts for IPR cases
August 5, 2019 | 10:41 pm
https://www.bworldonline.com/sc-asked-to-designate-special-courts-for-ipr-cases/

THE Intellectual Property Office of the Philippines (IPOPHL) said it proposed to the Supreme Court the creation of more courts specializing in commercial matters to handle intellectual property rights (IPR) cases.

In a statement, IPOPHL said Director-General Josephine R. Santiago met with Chief Justice Lucas P. Bersamin on July 24, requesting the creation of more special commercial courts (SCCs) with the power to issue search warrants in connection with IPR cases.

“We believe the designation of additional SCCs to be located in the Visayas, Mindanao, and Northern Luzon will further bolster the Philippines’ standing in the areas of rule of law and administration of justice and will be beneficial, as this will serve a greater number of stakeholders,” Ms. Santiago was quoted as saying.

According to IPOPHL, SCCs are only located in Pasig, Makati, Manila, and Quezon cities.

“The request is made amid increased IPR cases over the years, relating particularly to trademark infringement,” IPOPHL said, adding that it will submit a report to the SC showing the effectivity of having courts focusing on IPR cases in other countries help in disposal and declogging of dockets.

It also requested the designation of Regional Trial Courts specializing in IPR cases as the SCCs for all commercial cases.

IPOPHL said Mr. Bersamin responded positively to the proposal, saying the designation of additional SCCs or special IPR courts is possible because Congress has agreed increase the number of trial courts. The chief justice also tasked Associate Justice Diosdado M. Peralta to review the guidelines.

Asked to comment, the SC’s Public Information Office head Brian Keith F. Hosaka said the court will consider the proposals of IPOPHL.

“The proposal of IPOPHL will indeed be seriously taken into consideration by the Supreme Court,” he said.

“However, there must be a formal resolution by the SC en banc before additional commercial courts are designated,” he added. — Vann Marlo M. Villegas

(2) Supreme Court and IPOPHL to work on speeding up disposal of IPR cases
Published on August 5, 2019
https://www.ipophil.gov.ph/news/supreme-court-and-ipophl-to-work-on-speeding-up-disposal-of-ipr-cases/

The Intellectual Property Office of the Philippines (IPOPHL) has paid the Supreme Court (SC) justices a courtesy visit which yielded encouraging discussions on various approaches that can ease crowding dockets and bring faster resolution to pending intellectual property rights (IPR) related cases.

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Last July 24, IPOPHL Director-General (DG) Josephine R. Santiago elevated to Chief Justice (CJ) Lucas P. Bersamin the office’s request for more special commercial courts (SCCs) with the power to issue search warrants, in relation to IPR cases, that are enforceable nationwide.

(3) BoI, IPOPHL to push commercialization of IP rights
July 30, 2019 | 10:21 pm
https://www.bworldonline.com/boi-ipophl-to-push-commercialization-of-ip-rights/

THE BOARD of Investments (BoI) and the Intellectual Property Office of the Philippines (IPOPHL) have agreed to promote the commercial use of registered intellectual properties by linking these to investors.

The two agencies signed a memorandum of agreement (MoA) on July 23, 2019 for the project, which is also in line with the objective of the BoI to attract more innovation-driven investment.

BoI Managing Head Ceferino S. Rodolfo said his office has been setting record investment approvals over more than 50 years.

“While we continue to outperform ourselves in promoting investments, we still need to attract new investments that are considered ‘innovation drivers’ under the 2017-2019 Investments Priorities Plan (IPP),” he said.

Mr. Rodolfo, who is also Trade undersecretary, enumerated these drivers to include research and development (R&D) activities, conduct of clinical trials, the creation of so-called “Centers of Excellence,” innovation centers, business incubation hubs, fabrication laboratories, and co-working spaces, and the commercialization of new and emerging technologies and products of the Department of Science and Technology or government funded R&D.

Through the MoA, the agency will be part of IPOPHL’s Mind2Market Network, which will tap the existing programs of BoI, such as the One Window Network (OWN) and the Trade and Industry Development (TID) Talks, to create stronger linkages between creators/inventors and investors.

BoI said it had also agreed to create communication channels with IPOPHL “to ease technical consultations on matters related to innovation, including on new and emerging technologies that are registrable with the BoI.”

It said the move would also facilitate the resolution of issues that industry stakeholders might face in the registration, recognition and enforcement of intellectual property rights.

The agency quoted IPOPHL Director General Josephine R. Santiago as saying that the partnership “should excite all creators and innovators.”

“This period is the sunrise of our intellectual property, especially now that we have partnered with formidable agencies such as the BoI. I hope that with the national innovation law that was recently passed and the creation of the national innovation council, we hope to put and enhance value to the innovation agenda of the President,” she said.

BoI said the “patent landscape reports” being prepared by IPOPHL would help the investment promotion agency to identify gaps that require foreign investments to bring technologies into the country. — Victor V. Saulon

(4) Expanding innovation-fostering society drives PH’s 19-notch leap in 2019 GII ranking
Published on July 27, 2019
https://www.ipophil.gov.ph/news/expanding-innovation-fostering-society-drives-phs-19-notch-leap-in-2019-gii-ranking/

The Intellectual Property Office of the Philippines (IPOPHL) has expressed delight with the results of the latest Global Innovation Index (GII) report, viewing the Philippines’ huge improvement in both ranking and score as the concretising of the country’s efforts to put innovation at the center of its economic, socio-cultural, and scientific development….

The 2019 GII report showed that the country is now placed within the top 42% innovative economies, pulling it closer to the frontier as compared to the past four years when it has annually been within the 60% top countries. This, as the Philippines landed 54th from 73rd in the previous report, making the country the most improved among its peers in the Association of Southeast Asian Nations (ASEAN).

The Philippines also entered for the first time into the group of innovation achievers—economies that outperformed on innovation relative to GDP—for 2019 as it booked above-average scores in all innovation dimensions, with the exception of market sophistication, relative to its lower-middle-income peers….

(5) MOST COMMON INTELLECTUAL PROPERTY RIGHTS PROBLEMS: FOCUS ON SOUTH – EAST ASIA
July 2019
https://iiprd.wordpress.com/2019/06/22/most-common-intellectual-property-rights-problems-focus-on-south-east-asia/

… A wide range of foreign industries are now looking towards Southeast Asia, not just to take advantage of an abundance of cheap labour for production of goods for export, but also to tap into new consumer markets formed from a growing middle class population. But the less developed nature of business-related legislation means the dangers of intellectual property (IP) infringement are often great.

IPR Enforcement in South East Asia

Particularly, the development of IP laws across South-East Asia has been uneven and IP laws in many South-East Asian countries are still being developed and revised to be in alignment with international standards.

This table below provides a summary of the status of accession of South-East Asian countries to key international IP Treaties and Agreements in relation to the ten countries of the ASEAN Economic Community.[2]

The three columns: (1) Accession to Bern Convention, (2) Accession to Paris Convention, (3) Accession to TRIPS:

Brunei                   YES         YES         YES

Cambodia            NO         YES         YES

Indonesia            YES         YES         YES

Laos                       YES         YES         YES

Malaysia              YES         YES         YES

Myanmar            NO         NO         YES

Philippines          YES         YES         YES

Singapore            YES         YES         YES

Thailand               YES         YES         YES

Vietnam               YES         YES         YES

Unlike the EU, which has a unified instrument directing IPR enforcement, South-East Asian countries do not yet share the same level of cooperation, resulting in comparatively fragmented IPR enforcement laws and regulations.  Implementation of IPR laws across South-East Asian countries vary from one another.another , This is mostly due to the diversity of culture, history and laws in the region.  The Association of South-East Asian Nations (“ASEAN”) however has established the ASEAN Working Group on Intellectual Property Cooperation (AWGIPC)[1]which aims to align and streamline IP rights and practices across the region, and more changes should be expected from this collaboration…

Plain packaging on sweets, soda — impact on investment and health

The brand- and trademark-busting policy of generic plain packaging, started first with tobacco products, is now moving to sweets, soda, cakes and so on. State nannyism is becoming a monster year after year. 
Now comes this 44-pages report,

ENDING THE BLAME GAME: THE CASE FOR A NEW APPROACH TO PUBLIC HEALTH AND PREVENTION
https://www.ippr.org/files/2019-06/public-health-and-prevention-june19.pdf

See the first four reports here.

1. Sweets and fizzy drinks are to be sold in cigarette-style plain packaging in latest bid to tackle the UK’s obesity epidemic
PUBLISHED: 22:01 BST, 3 June 2019 | UPDATED: 01:47 BST, 4 June 2019
https://www.dailymail.co.uk/news/article-7100797/Sweets-fizzy-drinks-sold-cigarette-style-plain-packaging.html

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To combat the obesity epidemic, Cadbury, Walkers Crisps, Coca-Cola and other major brands would be forced to abandon their vibrant designs.

Instead they would be compelled to use a uniform drab design intended to put off consumers. This would be in line with the greeny brown colour – chosen for its ugliness – seen on cigarette packs….

Simon Stevens, who is chief executive of the NHS, said last week that obesity was becoming the ‘new smoking’.

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The proposals from the Institute for Public Policy Research, an influential think-tank, also include:

* Extending the sugar tax on soft drinks to sweets and cakes as well as milkshakes;

* A ban on day-time TV adverts for junk food, sweets, soft drinks and processed food;

* Free fruit for pupils and a ban on fast-food outlets within 160 metres of school gates;

* Supermarkets to be ordered to provide cookery lessons;

* Raising the legal age for buying cigarettes from 18 to 21.

2. Is it time to treat sugar like smoking?
Nick Triggle   4 June 2019
https://www.bbc.com/news/health-48499195

From the smoking ban in 2007 to the introduction of plain packaging a decade later, everything has been done to discourage people from taking up the habit.

And there are signs sugar is heading the same way.

Sugary drinks are already taxed – and now a leading think tank has even suggested sweets, snacks and sugary drinks should be wrapped in plain packaging to make them less appealing, given the excess consumption of the sweet stuff….

3. CHEWING GLUM Sweets, crisps and sugary drinks should be in plain packaging to reduce ‘pester power’ from kids, health campaigners say
By Shaun Wooller  4th June 2019, 2:13 amUpdated: 4th June 2019, 2:14 am
https://www.thesun.co.uk/news/9216714/sweets-crisps-sugary-drinks-should-plain-packaging/

The Institute for Public Policy Research also calls for the products to be taxed, their adverts banned from daytime TV and for supermarkets to fund healthy cooking classes for customers.

Critics say plain packaging, like with cigarettes, will make shops “grey and boring” and do nothing for waistlines.

But the IPPR’s research found two decades of progress in reducing preventable disease has stalled since 2012.

4. Fat chance of tackling obesity without advertising bans
clare foges, june 3 2019, 12:01am, the times
https://www.thetimes.co.uk/edition/comment/fat-chance-of-tackling-obesity-without-advertising-bans-fhxfkfn7n

Freedom campaigners against ‘nannying’ taxes are condemning the poorest children to a life of ill health

5. In defence of food advertising
Chris Snowdon, 30 MAY 2019
https://velvetgloveironfist.blogspot.com/2019/05/in-defence-of-food-advertising.html?m=0

The Department of Health’s consultation on banning adverts for HFSS (high in fat, sugar and salt) food and drink before 9pm on television closes on June 10th. The government’s various allies and sockpuppets have been encouraging people to make a submission so I thought I would too.

Banning advertising is a hunch-based policy, but the Department of Health’s impact assessment is obliged to make it look evidence-based…

the government wants to tackle something that is far less common than it thinks by restricting something that is far less important than it thinks, in order to make financial savings that probably don’t exist….

There is no meaningful difference between the state banning an advert because it disapproves of the product being advertised – or the views of the person featured in it – and the state censoring an article, speech or play being it doesn’t like what is being said. If a ban on cakes, ice creams and jam being advertised before the watershed becomes law, it will give licence to every obsessive, single-issue fanatic to press for further prohibitions. Once we start banning inoffensive adverts for harmless products, the censoriousness will become a runaway train.

6. The IP squeeze: Brand restrictions around Malaysia — Etienne Sanz de Acedo
01 March 2019
https://www.malaymail.com/news/what-you-think/2019/03/01/the-ip-squeeze-brand-restrictions-around-malaysia-etienne-sanz-de-acedo/1728221

The sky is the limit when one believes there is no downside to plain packaging. For example, there even have been calls in Australia to plain package financial services — lest consumers be induced by brands to take on bad loans.

With plain packaging, trademarks will cease to serve their function to distinguish one producer from another. This will ultimately hurt consumers.

Ultimately, the question is whether taking such a radical step as removing trademarks from legal products that consumers trust and rely upon will be beneficial for a country overall.

And what could come next?

7. Banning Brands: A Menace To The Global Economy
Lorenzo Montanari  Feb 21, 2019, 04:46pm
https://www.forbes.com/sites/lorenzomontanari/2019/02/21/banning-brands-a-menace-to-the-global-economy/#2f43ba11248d

Just last month The Lancet published the “Global Syndemic of Obesity, Undernutrition, and Climate” which called for advertising restrictions on all “unhealthy food” in order to protect the environment.

By spreading to more industries than tobacco plain packaging has the potential to disrupt major industries and trade relationships. Far more countries are stakeholders in the targeted food, sugar, and beverage industries. These categories contain the most well-known and valuable brands in the world — many headquartered in the United States.
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Soon the nanny states will go for plain packaging of all beer, wine, whiskey and rhum, all candies, cookies and cakes.

Statists still do not realize that nature abhors a vacuum: penalize and restrict the legal, unique supply, the illegal and easy-to-copy generic supply will fill the gap. These illegal products are a lot cheaper and hence they will encourage more consumption of the targeted ‘bad, unhealthy’ products. In addition, the investment climate will sour for legal brands as the illegal brands undermine them.

The nanny state and its activist advocates ultimately will go for socialism and heavy-handed interventions and prohibitions. Soon people can go to jail because they ate the unique, non-plain packaged soda or cake or candy. What a lousy society it will be then.

Innovation, competitiveness and development in Asia

* This is my article in BusinessWorld yesterday, May 17. I forgot to mention the Institute for Democracy and Economic Affairs (IDEAS, Malaysia) as co-sponsor of the seminar when I submitted my paper to my editor. IDEAS helped a lot in organizing that event.

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Kuala Lumpur — I just attended the “Asian think tanks dialogue on Innovation, Competitiveness and Development” in Kuala Lumpur sponsored by the Geneva Network (UK). The event, last Wednesday, was attended by mostly free market-oriented and independent think tank leaders with participants from China, India, Indonesia, Malaysia, Myanmar, Philippines (me), Singapore, S. Korea, Thailand and Vietnam.

The first presentation was “The Policy Ingredients for Innovation: Lessons From Abroad” by Nigel Cory, associate director for trade policy of the Information Technology and Innovation Foundation (ITIF, US). Nigel emphasized that intellectual property rights (IPRs) are essential for innovation because they (1) Create incentives for innovation and help repeat it in a virtuous cycle, (2) Induce knowledge spillovers that help others to innovate, (3) Attract investment and ensure companies can focus on innovating, (4) Promote the international diffusion of technology, innovation, and knowhow, and (5) Boost domestic levels of exports, R&D, and FDI.

The second paper was “The Role of IPR for Asian Development” by Philip Stevens, founder and director of Geneva Network. Philip showed a ranking of Asian economies, from the most to least innovative, in the Global Innovation Index (GII) 2018 Report. I added the GII 2012 Report here to show changes in global ranking and scores of selected economies (see table).

GII_051719

Third paper was “IPR and Access to New Technologies” by Amir Ullah Khan, professor at Maulana Azad National University in India. Amir showed some glaring health data in India: 1 government doctor caters to 11,082 people, 1 government hospital bed to 1,908 people, and 80% of the population do not have significant health coverage.

Then he showed the negative impact of heavy government interventions like drug price control and patent-busting compulsory licensing: “With non-availability of cancer drugs, price controls have had a depleting effect on the efforts towards development of new antibiotics. Of the 18 largest pharma companies, 15 have stalled work in antibiotics due to economic, regulatory and scientific obstacles.”

Fourth and last paper was on “Emerging Policy Threats to Innovation” by Azrul Mohd Khalib, founder of the Galen Center for Health and Social Policy in Malaysia. Azrul discussed the IPR on health polices in four ASEAN countries. In Indonesia for instance, amendments to the Patent Law would require that the manufacture of patented products and use of patented processes should take place in the country. In Malaysia, there is concern on IP protection and enforcement because the government has either issued or threaten to issue compulsory licensing.

The Philippines has shown improvement in global ranking and score but it still belongs to the bottom half in ranking as shown in the above table. Now there is growing appreciation about the importance of innovation and IPR protection.

A BusinessWorld report, “IP protection applications rise 15% in 2018” (March 5, 2019) said, “IPOPHL said filings for patents, utility models, industrial designs, trademarks, and copyright deposits in 2018 totaled 44,461, up 15% from a year earlier. Applications filed online totaled 10,346 last year, up 35%. This covers all IP types, except copyright deposits.”

While many Asian countries appreciate the value of innovation, there seems to be less appreciation on the value of IPR protection. As pointed out by Philip, among the weaknesses in Asian innovation are counterfeiting (3.3% of global trade in 2016, higher in Asia), online piracy, more difficult to secure and defend patents (compulsory licensing, restrictive patentability criteria like in Thailand, average of 16 years to gain a pharma patent).

There should be more understanding and appreciation by governments to promote and protect IPRs. Most physical property values now are predicated by non-physical property values, like shoes with “big check” logo and trademark are more expensive than lesser-branded logo.