Smoking, vaping and the nanny state

* My column in BusinessWorld, January 16, 2019.

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

— Friedrich Hayek,

“The Pretence of Knowledge”, Nobel Prize lecture Dec. 11, 1974

Among the stories we hear and read in the debates on higher tobacco/alcohol tax, smoking/vaping ban, are that 1.) smoking prevalence remains high and rising, 2.) vaping is not a smoking-cessation tool but smoking-enhancement, and, 3.) more government taxation and prohibitions are good to protect public health.

These are all myths and not consistent with facts. Here are the numbers and reasons why.

On No. 1, in most countries, smoking prevalence is declining. There has been a big decline of 10-11 percentage points for South Korea, Japan, and the Philippines in a span of 16 years. And as of 2015, only 2% of Philippine adults and 4.5% of youths were users of smokeless tobacco or e-cigarettes, vaping products (see Table).

On No. 2, vaping products have actually become smoking substitutes or smoking-cessation tools, leading to a decline in smoking prevalence of five to 10 percentage points in the Philippines, Malaysia, and Thailand as a portion of their smokers shift to smokeless, non-burning nicotine substitutes.

A “gateway theory” that vaping leads to smoking in young people is just a disproven hypothesis. In early 2019, a UK anti-smoking charity, Action on Smoking and Health (ASH), released a report showing that vaping remains uncommon among young people and is almost exclusively confined to current or past smokers, and that most teen vaping is experimental and short-lived.

Recently, the President, supported by the Department of Health, ordered a ban on vaping in public places. Government over-regulation follows the famous Newton’s third law of motion: “for every action there is an equal and opposite reaction.” Restated it becomes “for every government intervention and taxation, there is an equal and opposite distortion.”

Seven examples and cases below show why No. 3 above is wrong:

One, more prohibition means more corruption. Prostitution, drugs, certain gambling, gun running, etc. are prohibited, not just restricted and taxed in the Philippines. And these prohibited activities and products are all around. That implies that the police and government officials themselves, local and national, allow their proliferation in exchange for big bribes, other financial and political favour.

Two, more smuggling. The National Committee on Intellectual Property Rights (NCIPR) reported that full year 2018 seizures of pirated and counterfeit goods jumped to P23.6 billion. Of this, fake or smuggled cigarettes were P20.3 billion or 86% of total. Higher tobacco taxes under the TRAIN law of 2017 resulted in many smokers buying cheaper, smuggled tobacco.

Three, recent cases of coconut wine or lambanog poisoning in the Philippines. At least 23 people died due to suspected methanol poisoning, with over 500 hospitalized. As branded alcohol becomes more expensive due to more taxes, more drinkers shift to cheaper, untaxed, unbranded alcohol like lambanog, where products can include chemicals and prohibited substances.

Four, the Singapore vape ban has been in place for two to three years now. But instead of killing vaping, it sent it underground. There were seizures of $30,000 worth of illegal e-cigarettes in September, another $66,000 worth in November 2019.

Five, with misregulations around e-cigarettes in the US, illicit pods containing tetrahydrocannabinol (THC) oil together with Vitamin E acetate as a thickening agent have become widely available. Around 55 people have died after using these black market products rather than standard vape juice.

Six, when I was in southern Sweden in 2003 for two months, I noticed and read that Swedes who wanted cheaper booze would travel to Denmark to buy lots of beer and alcohol because Sweden’s alcohol taxes are very high. The same in Scotland after “minimum unit pricing” on alcohol was introduced in 2018 — Scot drinkers would go to England across the border to get cheaper alcohol.

Seven, in the UK, smoking data released after the implementation of plain packaging for tobacco products shows that for the first time in seven years, the smoking rate has risen. Illicit and smuggled tobacco became much easier because of the ease of copying the packs and cheaper prices. The same thing happened in Australia after its plain packaging policy was instated in 2012 — illegal tobacco use came in higher starting 2013, shown in KPMG study.

Friedrich Hayek has reiterated that “all-knowing” pretense and central planning of a nanny state can backfire. Thus, the state should step back from over-regulations and prohibitions. People own their bodies, not the state or NGOs. More state prohibitions only send people to seek illicit, even dangerous products and activities.

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Employment and e-cig ment

* My column in BusinessWorld, December 10, 2019.


The good news in the country’s labor force survey reported by the Philippine Statistics Authority (PSA) is that unemployment rate has significantly declined, from 6% in October 2014 to only 4.5% in October 2019. The underemployment rate has also declined to only 13%.

The bad news is that the labor force participation rate (LFPR) is declining, from 64.3% in October 2014 to 61.5% in October 2019. Declining LFPR means people are less optimistic, less confident that they will be hired or they can hire themselves, so they postpone seeking jobs or entrepreneurship and pursue more studies, training, or bumming around. Those who join the labor force are more confident, more skilled and that partly explains the lower unemployment and underemployment rates (see Table 1).

We should still aim for a 2.5% or below unemployment rate. That number can be considered as “full employment” as the 2.5% are considered as short-term “voluntary unemployment,” like people who are offered a P20,000/month job and refuse to take it as they wait for P25,000/month or higher job offers.

One recent issue that can have an adverse impact on employment — on the manufacturers, shops, and sellers — is the vaping ban, or heavy regulations and higher taxation of e-cigarettes and tobacco substitutes like vaping products.

We often hear many “crisis” and catastrophe stories — climate crisis, plastic crisis, non-communicable diseases (NCD) crisis, sugar/obesity crisis, tobacco crisis, vaping crisis, etc. Most if not all are exaggerations. If any or all of them are true, people should be living shorter, sicklier lives. Far out as people now are living longer, healthier, and wealthier as shown by the rising life expectancy.

When more people die of NCDs, that is good news. That means less people die of communicable and infectious diseases, less people die of wars and violence. More people though can die of injuries and accidents as people are now more mobile across islands and countries. Death by injury in the Philippines is declining but is higher than those in Japan, Singapore, and Indonesia, but lower than those in South Korea, Malaysia, Thailand and Vietnam (see Table 2).

“Harm reduction” is being done to mitigate injuries and diseases as people do what they want without harming others. Like helmets and body protection for cyclists and motorcycle riders, low alcohol content drinks like beer vs “high octane” hard drinks, and using vapor/heating instead of burning nicotine.

Dr. Carrie Wade, Director for Harm Reduction Policy, R Street Institute in Washington DC, USA, has good scientific research work on the biological mechanisms of opioid and drug addiction, addiction as a disease, and how the neuroadaptations of an addicted brain can result in destructive behaviors. She believes that “harm reduction practices can shift really risky behaviors to more neutral behaviors, decrease disease transmission and health care costs.”

In a paper, “E-Cigarette Bans Come at the Expense of Public Health,” she wrote, “Is it right to ban a largely successful quitting tool at the expense of people who benefit from it? Policymakers need to recognize that not all tobacco products are created equally, and it doesn’t make sense to prohibit and overly restrict safer alternatives when fatal ones are cemented in the landscape of our laws, economy and culture.”

If the nanny state is to be consistent in protecting people from themselves, it should also impose more regulations and prohibitions on sky jumping, rock climbing, downhill bicycle and motorcycle riding, and many full contact sports. Since the nanny state is not consistent, it should reduce its appetite for more regulations and prohibitions and recognize that people own their body, not the state or NGOs. There should be more personal, parental, and civil society responsibility in public health, not more state command and control.

Vape control and brand control

* My article in BusinessWorld last November 26, 2019.



“The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.”

— John Stuart Mill,

On Liberty (1859), Ch. 1 Introduction

We are now living healthier, wealthier, and longer. This despite people’s rising consumption of sugary food and drinks, fatty food and snacks, alcohol, tobacco, and vaping products. And there seems to be a problem with the narrative that more alcohol and tobacco and its substitutes like e-cigarettes, flavored vapor products, result in more sickness and by extension, more deaths. China and Indonesia have higher smoking prevalence (SP) than the Philippines yet they have higher life expectancy than us. The United Kingdom, United States, and Japan have higher SP than Thailand yet they have longer life expectancy than the latter (see Table).

Recently President Rodrigo Duterte gave a verbal order to ban or prohibit vaping in public places nationwide and to arrest the violators. This is on top of existing law on smoking ban in public places, allowed only in some designated places.

There is little or zero debate that smoking is bad for our health — it is generally accepted. The debate has shifted to whether to have more restrictions and prohibitions against smoking, or to allow “harm reduction” via e-cigarettes and vaping products.

I do not smoke, never smoked even a single stick in my 50+ years. But I drink. I have enjoyed drinking with friends for the past four decades. I prefer the “low octane” beer with just 5% alcohol content and avoid the medium to “high octane” drinks with 20% or higher alcohol content. In a sense, beer consumption is my “harm reduction” instead of consuming hard liquor, and I can still enjoy those alcohol molecules that go through our blood stream up to the brain, which tend to relax people and evoke lots of laughter, even singing and dancing.

From what I read, most of the vapers who were hospitalized in the US recently were using tetrahydrocannabinol (THC) oil cut with Vitamin E acetate thickening agent, not standard vape juice. Vapers may not admit it because THC is the active ingredient in cannabis and is illegal in many countries. Vitamin E acetate is also not safe to inhale and has been linked to lipoid pneumonia, which can be fatal. So the culprit here may not be those ordinary water-based, some nicotine-containing, juices but the black market THC cartridges.

Instead of looking at vaping as encouraging more harm, it should be considered as reducing harm, as a “smoking cessation aid.”

Looking at prohibitions, we have lots of those laws in the Philippines — bans on prostitution, bans on certain types of gambling, bans on harmful drugs, bans on unregistered guns, bans on smuggling, bans on corruption and plunder. And we have all of these around us.

More bans and prohibitions only encourage more corruption. More regulations and taxation further encourage more smuggling, the result of which is that more smoking, drugs, and drinking happen because the smuggled products are cheaper.

This happened in Australia. After they legislated plain packaging for tobacco products in December 2012 — no more colorful packaging, no logo, only huge graphic warnings of dilapidated tongues and lungs — illegal and smuggled tobacco has increased from 11.5% of total supply in 2012, to 13.5% in 2013, 14.7% in 2014, up to 15% in 2017 (source: KPMG, March 2018. Illicit Tobacco in Australia, 2017 Full Year Report).

Finally, vape control, brand control via plain packaging, (minimum) wage control, (ceiling) fare control, (maximum) drug price control, gun control, drugs control, etc. — they are more about state command and control and less about regulation.

With these ever-rising bans and controls by the state, soon we will have sugar control, salt control, chocolates control. Not good.

Photos, IPRI 2019 launching in Singapore

Late post, photos during the International Property Rights Index (IPRI) 2019 launching at Singapore Management University (SMU), School of Law, last October 22, 2019. The event was locally sponsored by the Adam Smith Center (ADC) Singapore, the first free market think tank in that city-state.

From left: Donovan Choy, me, Dr. Linda Low, Dr. Sary Levy, Lorenzo Montanari, Bryan Cheang, and Dr. Chandra Kukathas. Donovan and Bryan are from the ADC.

Photos, IPRI 2019 launching in Jakarta

Thanks again to the Center for Indonesian Policy Studies (CIPS) and Paramadina Public Policy Institute for co-hosting with the Property Rights Alliance (PRA) the launching of IPRI 2019, at the auditorium of Paramadina University last October 24, 2019.

IPRI 2019 and banning brand

* My column in BusinessWorld on October 18, 2019.

“Man… had still in himself the great foundation of property… when invention and arts had improved the conveniences of life, was perfectly his own, and did not belong in common to others.”

— John Locke, Second Treatise on Government (1690)

About two centuries before the concept of intellectual property rights (IPR) was formally articulated and legislated in many countries, the great British classical liberal thinker John Locke has already argued that such inventions and arts are private property and not societal, collective, or communal property.

I used that quote when I presented my paper during the global launching of the “International Property Rights Index (IPRI) 2019 Report” at the Fairmont Hotel in Makati on Oct. 16.

IPRI is an annual study and published by the Property Rights Alliance (PRA, Washington DC) in partnership with close to a hundred independent and market-oriented think tanks worldwide.

During the formal launch, PRA Executive Director Lorenzo Montanari discussed the philosophy behind IPRI and its annual reports. He said that private property rights are human rights.

IPRI 2019 author Dr. Sary Levy-Carciente, an academic economist from the Universidad Central de Venezuela and a Fulbright Visiting Scholar at Boston University, Center of Polymer Studies, discussed the components, sub-components and data sources of IPRI. The results of IPRI 2019 covering 129 countries, vs IPRI 2018 covering 125 countries can be seen in the table.

 

The Philippines’ performance in 2019 over 2018 can be summarized as: (1.) an improvement in overall IPRI rank, 67th/129 vs 70th/125, also in overall score, 5.31 vs 5.22; (2.) an improvement in PPR rank, 60th/129 vs 63rd/125, score is the same; (3.) an improvement in IPR rank, 58th vs 62nd; and, (4.) a deterioration in LPE, 102nd/129 vs 95th/125, although score has barely changed. Meaning other countries simply improved significantly in LPE compared with the Philippines.

The keynote speaker before the launch was Department of Trade and Industry Secretary Ramon M. Lopez. Mr. Lopez recognized the improvement in the Philippines’ overall ranking and noted improvements in their mandates like the rising number of IPR registrations like utility models, patents, and trademarks. He also noted that the Ease of Doing Business and Anti-Red Tape laws were created only last year and this year, hence the gains are not yet fully captured in IPRI 2019 results. So we can expect an improvement in the Philippines’ ranking in IPRI 2020 and 2021. Good point, Mr. Lopez.

IPRI 2019 has several cases studies, including my paper, “Banning Brand — Economic and Consumer Impact of Plain Packaging.”

It is surprising that while the original target of banning branding on packaging and using plain packaging instead — using largely graphic warnings, bland and non-colorful marks with no brands but with the names in very small type — was tobacco, recent moves and proposals are to extend banning branding among basic consumer items — candies, crisps, sweets, high sugar drinks, soda, and even chocolates. The new goal is to fight obesity and non-communicable diseases by demonizing major brands and companies that produce these goods, and these proposals are more pronounced in UK.

I showed a critique to these moves in UK by Ron Cregan, founder of Endangered Species. He wrote:

“Simplifying the design, construction and manufacturing of consumer packaging effectively lowers, and even removes, the barriers to entry for counterfeiters. Without this complexity, plain packaging allows criminal gangs to copy and reproduce authentic and legitimate products with relative ease.”

Banning brands is ineffective at achieving policy goals, It damages the IPR environment, and cedes market share to criminal syndicates that prefer to remain anonymous rather than earn a reputation.

IPRs like trademarks and brands should be protected — for consumer choices, for investment protection, even for government taxation and battling criminality and terrorism — and not prohibited.

There were three reactors to my presentation. Director General of the Intellectual Property Office of the Philippines Josephine Santiago, FEF Fellow and trade lawyer Kristine Alcantara, and vice-chair of the Philippine Chamber of Commerce and Industry’s IPR committee, Dmitri Roleda.

After the launch, Lorenzo and Dr. Carciente also visited some government offices like the office of Senator Koko Pimentel, the Chairman of the Philippine Competition Commission Arsenio Balisacan, and the Chairman of the Optical Media Board Anselmo Adriano.

It is important that the sanctity of private property, physical and intellectual property, should be upheld always. Inventors, composers, writers, artists who produce original and innovative products and services should be rewarded with such recognition.

Property rights and transportation bureaucracy

* My column in BusinessWorld on October 15, 2019.

“In all countries where there is tolerable security, every man with common understanding will endeavour to employ whatever stock he can command, in procuring either present enjoyment or future profit.”

— Adam Smith,
The Wealth of Nations (1776), Book II, Chapter 1, “Of the division of stock”

The father of market economics was referring to private property rights protection and how people will use such property to either expand current consumption or future investments. Otherwise, if there is rampant disrespect for private property and investments, “where men are continually afraid of the violence of their superiors… they conceal a great part of their stock,” Smith added.

Among the perplexing things that continue until now is the government confiscating private property (buses, aircon vans, taxi, jeepney, private cars, motorcycles, etc.) and having these impounded by various agencies like Land Transportation Office, Land Transportation Franchising and Regulatory Board, and Metropolitan Manila Development Authority in far away places. Corporate and individual owners of these vehicles must pay a big fine and a big towing fee before they can get their vehicles, while the vehicles may suffer some physical and mechanical damage in the process of towing and impounding.

If one passes by Ayala and Buendia Avenues in Makati, other commercial areas like Ortigas, Eastwood, BGC, and Cubao, among the regular daily sights are long lines of people, tens of thousands of passengers, queuing for a ride in buses, jeepneys, and aircon vans. There is huge insufficiency in the number of these vehicles daily, in the morning and afternoon till evening. The inconvenience has prompted many people have to drive their own cars or motorcycles, which contribute to more traffic congestion.

So why is the government confiscating and impounding private property like these vehicles when these are what the public and commuters need, which further cause inconvenience in public transportation?

Sure the owners of these vehicles have faults and may not have followed certain government regulations, but the regulations themselves are often very strict and costly, very bureaucratic and time consuming, they were designed to force some players to violate them, and that is where more government harassment and possible extortion comes in.

Then there is the problem with rails. The Philippines has among the most underdeveloped rail system in Asia (see Table 1).

The government should simply privatize the LRT, MRT and Philippine National Railways (PNR). After many decades, there is no significant improvement and modernization despite the huge increase in potential and actual passengers. The private sector has the financial and technical muscles to modernize these things without the need for additional taxes and subsidies, like the P6 billion a year annual subsidy to MRT alone in Edsa (see Table 2).

In addition, the Pasig River ferry needs to be privatized too. After many years of existence, the project does not appear attractive to the public.

The transportation bureaucracy, the many agencies, national and local governments, converge to penalize private sector initiatives like buses, TNVS and aircon vans with lots of restrictions, penalties, and impounding. Government needs to step back and focus on its main purpose — protect the people’s right to life, liberty, and private property. It should get out being in the business running trains and ferries.

Meanwhile, the global launching of the International Property Rights Index (IPRI) 2019 will be done tomorrow morning, Oct. 16, at Fairmont Hotel in Makati. The important speakers will be Department of Trade and Industry Secretary Ramon Lopez as Keynote Speaker, Dr. Sary Levy-Carciente, an academic economist from Venezuela to discuss the results of IPRI 2019, Lorenzo Montanari, Executive Director of the Property Rights Alliance (PRA, Washington DC), and former Department of Finance Secretary and now Chairman of the Foundation for Economic Freedom, Roberto de Ocampo as Closing Speaker. Famous TV host and trade lawyer Tony Abad will be the program emcee.

Property rights and agrarian lefts

* My article in BusinessWorld on October 08, 2019.

“CARP has instead effected a massive de-formalization of agriculture! Time to allow agriculture to march out of the informal into the formal sector. It is time, in other words, to stop redistributing poverty!”

— Dr. Raul Fabella, “CARP: Time to Let Go,”

UPSE Discussion Paper 2014-02, February 2014

Unlike agrarian reform in Japan, South Korea, and Taiwan that lasted only for several years before forced land redistribution was halted, the Philippines’ agrarian reform is endless, with no timetable — a forever program.

Former President Marcos declared his own agrarian reform in 1972 and when he was ousted, former President Cory Aquino implemented another version, the Comprehensive Agrarian Reform Program (CARP, RA 6657, June 1988). CARP should have ended by 1998 but it was extended under RA 9700 (August 2009). So from 1972 to 2019, there have bee 47 years of agrarian reform and there is no plan to end it.

Endless agrarian reform is wrong because it creates endless business uncertainty in two sectors, agribusiness and mass housing programs.

First, an agribusiness person develops an idle or ugly piece of land into a productive, revenue-earning fruit orchard. Rural jobs are created, food production is expanded, and that is also where the Department of Agrarian Reform (DAR) can come, knock on the person’s door to inform him/her that the land will soon be forcibly distributed to the workers. And this contributes to why many rural areas remain planted to traditional low-value crops.

Second, real estate developers endure many years of waiting for the DAR to approve land conversion from agricultural to mass housing projects.

I spoke with Jeffrey Ng, a fellow alumni of the UP School of Economics (UPSE) and President of our UPSE Alumni Association. He is also the Chairman of the Subdivision and Housing Developers Association (SHDA). Jeff said that they have to “get approval from National Irrigation Administration, Philippine Coconut Authority, Sugar Regulatory Administration, then the Department of Agriculture itself. Only then can we apply for actual conversion with DAR. After which comes LGUs, DENR (Department of Environment and Natural Resources) and HLURB (Housing and Land Use Regulatory Board). All these delays cost money and interest, which unnecessarily raises the cost of socialized and mass housing projects.”

President Rodrigo Duterte has ordered that this entire land conversion process should not take more than 30 days. Jeff said that it can be done if all these government agencies and departments will put up a one-stop shop under the new Department of Human Settlements and Urban Development.

Some 6.5 million Filipino families do not own a house yet, so the supply of buildable land for affordable mass housing should increase. And DAR and endless agrarian reform is part of the problem. This is agrarian and property leftism.

Related to this is the low score and global ranking of the Philippines in property rights protection like land. Small- and medium-size landowners are unsure if they can continue ownership and control of their land in the next 10 or 20 years.

In the International Property Rights Index (IPRI), an annual study by the Property Rights Alliance (PRA, Washington DC), the Philippines ranks low. The index is composed of three components: Legal and Political Environment (LPE), Physical Property Rights (PPR) and Intellectual Property Rights (IPR). LPE has four sub-components, IPR has three, and PPR also has three — Protection of physical property, Registering property, and Ease of access to loans.

In overall IPRI, the Philippines ranked 77th out of 118 economies in the 2010 Report, improved to 70th out of 125 economies in the 2018 report. In PPR, the Philippines has significantly improved over these years, ranked 80th in the 2010 Report and 63rd in the 2018 Report (See Table).

IPRI 2019 will be launched on Oct. 16 at Fairmont Hotel. How will the Philippines rank then, both in IPRI overall and PPR?

Report author, Dr. Sary Levy-Carciente, an economist from the Universidad Central de Venezuela, and a Fulbright Visiting Scholar at Boston University, Center of Polymer Studies, will come to discuss the report. PRA Executive Director Lorenzo Montanari will accompany her. The local partners of this event are the Foundation for Economic Freedom (FEF) and Minimal Government Thinkers.

The words of Dr. Fabella, a National Scientist, my former teacher, and our former Dean of UPSE, should be heeded by legislators and the administration, to finally end the endless forced redistribution of private lands.

Photos, IPRI 2019 launching in Manila, Oct. 16

Late post, here are some photos, courtesy of the Foundation for Economic Freedom (FEF) fb photos last October 16, 2019. The event was sponsored by the Property Rights Alliance (PRA), co-sponsored locally by FEF and MGT.

Our keynote speaker that day was DTI Secretary Ramon M. Lopez. He came early and after speaking, he has to leave for another speaking engagement in Quezon City. So we held the photo ops after he spoke.

From left: Dmitri Roleda, Tony Abad (program MC), Romy Bernardo, Kristine Alcantara, Bobby de Ocampo, Lorenzo Montanari, Sary Levy-Carciente, Sec. Ramon Lopez, Calixto Chikiamco, Josephine Santiago, Vaughnn Montes, me.

Opening remarks was given by FEF President Calixto “Toti” Chikiamco, then the keynote address by DTI Sec. Ramon Lopez.

IPRI and PRA were discussed by Lorenzo, Executive Director of PRA, then the results of IPRI 2019 by report author, Dr. Sary Levy-Carciente. Followed by Q&A.

Former DOF UnderSecretary (2x) Romy Bernardo during the open forum.

The audience.

 

Closing remarks was given by former DOF Secretary Roberto “Bobby” de Ocampo, he is now the FEF Chairman.

I presented my case study, “Banning brand: Consumer and economic impact of plain packaging.” Reactors were IPOPHL Director-General Josephine Santiago, FEF Fellow and trade lawyer Kristine Alcantara, and PCCI’s IP Committee Dep. Director Dmitri Roleda.

Thank you PRA, FEF and audience for a successful launching of IPRI 2019.

CITIRA, IPR and investments

* My article in BusinessWorld on October 01, 2019.

Among the contentious bills in Congress now is the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), formerly the TRABAHO bill. The Department of Trade and Industry (DTI) has a good proposal for this.

During the launching of the report, “The Importance of IPR for Progress: Reform Agenda for ASEAN Countries” on Sept. 24 at the Holiday Inn Makati, DTI Secretary Ramon M. Lopez gave the Keynote Speech and he suggested that the Income Tax Holiday (ITH) under CITIRA for innovation firms should be four years as base for products that are expanding and moving up the value chain; five years for activities like Agribusiness and investments outside Metro Manila; seven years for intermediate parts and components; and 10 years for superior to high-tech products that are not yet present in the Philippines.

These are good proposals and are related to the DTI flagship program for innovation, the “Inclusive Innovation-led Industrial Strategy” (i3S) that seeks to attract more businesses and investments to the country and see Filipinos’ innovations contribute to high value-added activities in regional and global value chains. The i3S also highlights the importance of intellectual property rights (IPR) in creating an innovation and entrepreneurship ecosystem.

Secretary Lopez also showed numbers on IPR applications in the Philippines in 2018. I expanded the numbers he gave by getting data from 2014 to 2019 first half (H1) and the data indeed saw big expansion in IPR applications: a 17% rise in 2017, 13% in 2018 and 11% in 2019 H1 (see Table 1).

In his presentation, Geneva Network (UK) Executive Director Philip Stevens explained that the report is a collaboration among five independent think tanks from five ASEAN countries plus the Geneva Network. The report will help raise awareness of the importance of IPRs for economic progress and proposed principles and recommendations for a high standard IP system in the region.

Philip cited the World Intellectual Property Organization (WIPO) report where one-third of the value of manufactured goods sold globally ($5.9 trillion) comes from intangible capital. Small businesses’ greatest opportunity then is to integrate into global value chains, offering specialized services or manufacturing capabilities.

On trademark in particular, Philip said that trademark-intensive industries are worth about 20% of the Philippines’ GDP. Trademark protection is essential for investment by foreign companies and the Philippines’ economic progress, but counterfeits are widespread: reported were P8.2 billion of counterfeit goods seized in 2017, up from P6.5 billion in 2016, and these include fake medicines, machine spare parts, IT goods, luxury items.

I checked trademark application (direct and via the Madrid system) data at the WIPO website — the Philippines’ numbers were low compared to its neighbors but the pace of expansion was impressive, only 18,600+ in 2011 to 31,000+ in 2017 (see Table 2).

Reactors to the presentation by Philip were Josephine R. Santiago, Director General of the Intellectual Property Office of the Philippines (IPOPHL), Jesus B. Varela, Director for Intellectual Property of the Philippine Chamber of Commerce and Industry (PCCI), and Kristine F. Alcantara, a Fellow of the Foundation for Economic Freedom (FEF).

Ms. Santiago narrated how IPOPHL encourages more use of IPR by Philippine businesses (see Table 1 again), clamping down on fakes and counterfeits. Mr. Varela urged collaborative effort to fight illicit trade, counterfeit products and services that steal from legitimate businesses, by enhancing transparency of the supply chain, and how GS1 barcoding helps here. Ms. Alcantara spoke about the Philippines’ compliance with international IPR commitments.

Forum emcee, George Katigbak, also of FEF, eloquently summarized many points and elicited questions from the audience, topics and concerns that included compulsory licensing of patented innovator medicines, drug price control, and patent linkage, among others.

This coming Oct. 16, another IPR-related international forum will be held in Manila. It is the global launching by the Property Rights Alliance (PRA, Washington DC) of the International Property Rights Index (IPRI) 2019 Report, to be held at Fairmont Hotel Makati. Co-sponsoring with PRA in this big event will be FEF and Minimal Government Thinkers.

After the official launch of IPRI 2019, to be led by author Dr. Sary Levy-Carciente, and PRA Executive Director Lorenzo Montanari, I will discuss my paper, “Banning brand: economic and consumer impact of plain packaging.” IPOPHL Director General Josephine Santiago, Kristine Alcantara and an officer of International Trademark Association regional office in Singapore will react to my paper. More discussions on IPR, trademark and corporate brand in this column in the next few weeks.