Property Rights Alliance meeting in Kuala Lumpur

The 4th Asia Liberty Forum (ALF) started last night here at the Renaissance Hotel Kuala Lumpur, with an opening dinner, keynote speech given by Tom Palmer of Atlas. Earlier, the Property Rights Alliance (PRA) headed by Lorenzo Montanari held a short meeting for its Asian partners.

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Lorenzo discussed what the International Property Rights Index (IPRI) is all about,  its contents and ranking of countries, the value of property rights protection, etc.

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From left: Arpita  Nepal of Samriddhi, Nepal; Wan Saiful Wan  Jan of IDEAS, Malaysia; Bican Sahin of Freedom Research Association, Turkey; me; Tricia Yeoh of IDEAS, Malaysia; Lorenzo; Barun Mitra of Liberty Institute, India; Baladevan Rangaraju of India Institute, Dhananath Fernando of Advocata, Sri Lanka; and John Humphreys of PRIME, Cambodia.

PRA

See my article today in BusinessWorld, “Asia Liberty Forum and property rights“.

Patents and pharma issues in Asia in 2007

The first time that I attended a formal discussion on IPR issues like patents of newly-invented medicines was nearly 9 years ago, during the 1st Pacific Rim Policy Exchange in Hawaii. There was one special topic on IPR-busting policies like issuance of compulsory licensing (CL), special CL, “international exhaustion” of a patent worldwide once a patent has expired in one country.

I just found my notes last night, no soft copy, so I took photos of one brief handout. The speaker was from an innovator company. He said that below were the important issues in the industry, ie circa 2007.

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For the Philippines, the main issue that time was the “cheaper medicines bill” that later became the Cheaper Medicines Act of 2008 (RA 9502) via amendment of the Intellectual Property Code (IPC). Among the important IPR provisions of the bill were:

— encourage parallel importation by implementing the principle of “international exhaustion” for patents and trademarks of innovator pharma products,
— easier process to issue CL by eliminating some of the safeguards provided at the WTO TRIPS Agreement, and
— deny new patents for new uses and indications of pharmaceutical compounds.

For Indonesia, the issue based on media reports, was that the Ministry of Health was considering issuing a CL for certain popular innovator medicines. In Malaysia, either a price control or CL, and data exclusivity via FTAs.

Singapore and Japan (and S. Korea?) seemed to be the only Asian countries where IPR protection of newly-invented medicines and vaccines was not a problem.

I thanked the International Policy Network (IPN) and the Property Rights Alliance (PRA), two of the 6 co-sponsors of the Hawaii conference, for giving me the opportunity to attend such a great forum.

Among the photos (I combined 2-in-1 here) in that event, from left: Martin Krause (ESEADE, Argentina), me, Julian Morris (IPN, UK), Alec van Gelder (also from IPN), and Barun Mitra (Liberty Institute, India).

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More on IPRI 2015 launching in KL last year

I am reposting this article from the Property Rights Index (PRA, Washington DC) last year, about the launching of IPRI 2015 in Kuala Lumpur that I attended. The photos I added and not part of the original PRA article.
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2015 International Property Rights Index

Monday, November 16, 2015 | By Dennis Cakert

The 2015 International Property Rights Index (IPRI) was officially launched this morning in Kuala Lampur, hosted by Wan Saiful Wan Jan, Director of Southeast Asia Network for Development (SEANET). Today featured an introduction to the IPRI given by the Executive Director of the Property Rights Alliance, Lorenzo Montanari, followed by a presentation on this year’s findings by the 2014-2015 Hernando De Soto Fellow, Prof. Sary Levy Carciente….

02Lorenzo Montanari released this statement earlier this morning:

“The 2015 IPRI emphasizes the necessity of property rights for creating a free market and driving economic growth” said Lorenzo Montanari, Executive Director of the Property Rights Alliance, “but we also recognize that property rights are first of all a matter of human rights. Property rights are directly related to the values and principles of individual liberty. The special case studies in this year’s edition demonstrate the importance of property rights for women and the poor in developing countries. This year data was available in countries where it was previously not, which is a good sign for future improvement. There are now 129 countries included in the analysis, up from 97 countries in last year’s edition. Countries that had strong property rights systems experienced significantly higher GDP per capita. In the EU, for example, IP accounts for 26 percent of employment and 39 percent of GDP. Societies undoubtedly achieve greater societal development by protecting property rights of authors, entrepreneurs, artists, innovators and inventors.”

There was also a presentation from Ganesh Muren, founder of Saora Industries, a Malaysian Innovative Social Enterprise that specializes in delivering safe and clean drinking water to rural and marginalised communities. Saora has innovated a proprietary solar powered water purification system that is able to purify any surface water (e.g. river water, rain water, pond) to safe clean drinking water through nanotechnology. The competitive advantage of Saora is their intellectual property. They have developed proprietary nanotechnology that replaces the usage of UV light to kill and eliminate bacteria and viruses. The affordability of this new technology developed by Saora makes it appealing and reachable to the poor, those at the “bottom of the pyramid”.

Mr. Burhan Irwan Cheong, Malaysia’s Lead Negotiator for the IP Chapter, Ministry for Domestic Trade, Cooperatices, and Consumerism, presented on the Intellectual Property Chapter in the TPPA and how it will implement a fair and transparent patent system in member countries. Young entrepreneurs like Ganesh Muren is a perfect example about how the TPPA will contribute to protecting the patent on his water purification system. Without the certainty of the rule of law, innovation does not exist.

noyLastly, Bienvenido Oplas Jr., President of Minimal Government Thinkers in the Philippines and a SEANET Senior Fellow, presented his economic analysis on the benefits of the TPP for trade. His extensive research showed that if the Philippines joins the TPP, exports are expected to rise 48 percent and real GDP will increase 61 percent. He also spoke regarding the importance of property rights to maintain order in society, while debunking the myth that IP hurts public health, proving instead that government taxation of medicine is the real problem.
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Afternoon of that day, Dr. Sary Levy was interviewed in Bloomberg TV Malaysia, live. The place is outside KL proper.

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The interviewer was a pretty and very articulate lady. Among the footages shown while Prof. Levy was speaking. It’s Wan, the CEO of IDEAS and Director of SEANET.

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Civil society enforcement of patents, copyrights

Property rights, physical or intellectual, are good only if they are enforced. While the means of property rights protection is via government, national and local, there are other non-governmental, professional and civil society way of enforcing IPR. Some news reports here last year.

(1) “The benefits of a strong regime of property rights apply just as much to intangibles as to land and goods. We long ago worked out how to make the ownership of cars and houses and factories work, but we are not always as effective at protecting the interests of the originators of an idea, the creators of a work of art or design, or the inventors of a scientific process. Yet the benefits from clear ownership of intellectual property (IP) are every bit as clear as those flowing from the ownership of land and buildings. Those of us who watched the ease with which the private sector beat the government in mapping the human genome is but one recent example of the galvanising effect IP can have on investment in R&D.”
February 5, 2015, http://www.macdonaldlaurier.ca/strong-intellectual…/

(2) “Imagine spending years on research, experiencing a breakthrough, developing a new tool, technology, or medicine, but knowing that your innovation may not be protected. Many innovators around the world face this harsh reality. Intellectual property creates value – both socially and economically- by creating jobs, driving economic growth, and enriching our culture. Yet, despite these things, intellectual property protections around the globe remain inconsistent.”
Feb. 9, 2015, http://lillypad.lilly.com/entry.php?e=6093

(3) “Rather than looking to Washington for solutions, a coalition of thousands of advertising firms are looking to collaboration to combat digital piracy and counterfeiting in today’s globalized economy. This new initiative is part of an industry led and managed effort designed to restrict the activities of those that promote counterfeit or stolen products and hamper innovation.

Earlier this week, the Trustworthy Accountability Group (TAG), a coalition of advertising industry groups, launched the “Brand Integrity Program.” The initiative, supported by the Association of National Advertisers, the American Association of Advertising Agencies, and the Interactive Advertising Bureau plans to “attack ad-supported piracy, digital advertising fraud, malware, and other deficiencies in the digital communications supply chain.”
Feb. 23, 2015, http://dailycaller.com/…/creative-industries…/

(4) “In order to realise the goal of an industrialised India, policymakers, the legal community and industry must prepare a synchronous blueprint to align the objectives of our nation building with a responsive IPR regime. Such a regime must lay down the minimum IP capability and process maturity standards for government institutions, industry, education system, judiciary and legal environment.”
April 28, 2015, http://www.financialexpress.com/…/column-make-in…/67410/

(5) With the strongest data protection laws in the Asia-Pacific region, Japan and the US have become leading centers for biologic research. There are plenty of reasons for others to join them in setting high standards. Relative to traditional chemical formulations, development of biologic medicines involves fewer barriers to entry. The sector is dominated by small, start-up companies. Today, many countries can foster a dynamic medicines sector, and firms in Singapore, Malaysia and elsewhere are among those leading the way.”
May 6, 2015. http://www.forbes.com/…/japan-and-the-us-have-to-get…/

(6) “Unfortunately, attacking patents is a misguided way to improve access to medicines in low and middle-income. Although it is a counter-intuitive conclusion, strong patent rights are a better way to achieve this goal.

In an international environment of strong patent rights, innovative drug makers would have every incentive to lower prices voluntarily to poor countries. Costs of manufacturing and distribution are a small percentage of prices charged for patented medicines in the United States. The reason the government recognizes patents is so the manufacturer can charge enough to earn a return on investment in research and development.”
April 29, 2015. http://www.forbes.com/…/intellectual-property-rights…/

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Nearly 3 years ago, I briefly debated Jeffrey Tucker, a famous anti-IPR libertarian anarchist. He wrote,

“If patents for inventions were part of the free market, to make and sustain them would not require legislation, constitutions, bureaucracies, filings, armies of attorneys, and years of litigation.”

I countered that it is faulty thinking because:

“One, physical assets like cars,… are part of the free market, and they require legislation, constitution, bureaucracies.. And so IPRs are also part of the free market, they are property rights that need respect and enforcement.

Two, private property rights can be enforced by the private sector or civil society, with or without govt penalties. If thieves and shoplifters are caught inside a mall, they are apprehended by private security guards, they can be photographed and their faces plastered in the mall in a wall of shame…

The same way, thieves of IPRs like patent, trademark and copyright can be penalized by an industry association, a civil society org. If someone sells burgers wrapped with fake McDo or Burger King wrappers and trademark, and the consumers get good poisoning, who will they sue — (a) the orig McDo/BK, (b) the IPR thieves like those sellers, or (c) IPR abolitionists like Jeff Tucker? Obviously (a) and (c) will not accept responsibility so (b) must be prosecuted for misleading the public and consumers.”

Growth, IPRI 2015 and the TPP

Two weeks ago, I attended the launching of  the International Property Rights Index (IPRI) 2015 Report in Kuala Lumpur, then I also gave a short presentation on IPR and the Trans Pacific Partnership (TPP) Agreement.

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I showed portions of Dr. Ramon Clarete (University of the Philippines School of Economics, UPSE) paper during the UPSE-Ayala forum, Going Regional: Which Mega Trade Deals Should the Philippines Join? last February 2015.

He used the Gravity model of trade in estimating the level of bilateral exports or imports between two trading partners.

* Dependent variable: flow of trade between and among countries studied

* Independent or explanatory variables, their expected signs or relationships: GDP (+), population (+), dist. between two countries (-), commonality of language (+), shared borders (+), landlocked state (-).

* In addition, TPP and RCEP indicators or dummy variables are introduced: (a) TB1, 1 if both trading countries are TPP or RCEP members, 0 otherwise, (b) TB2, 1 if exporting country is a TPP or RCEP member, 0 otherwise; (c) TB3, 1 if importing country is a TPP or RCEP member, 0 otherwise. For overlapping memberships, a dummy variable where TPP*RCEP =1 if both trading partners are members of the two trade blocs.

And here are some results.

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Then I briefly discussed my article in BusinessWorld that day, Property rights protection in APEC economies. Then I discussed the IPR on medicines aspect of the TPP.

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And showed actual texts in the TPP agreement….

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Below, from left: Lorenzo Montanari, Exec. Dir. of the Property Rights Alliance (PRA); Dr. Sary Levy, author of IPRI 2015, and Wan Saiful Wan Jan, CEO of IDEAS and Director, SEANET.

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Concluding Notes:

1. Joining the TPP has more gains than pains for member-countries, especially in exports and overall GDP expansion.

2. IPR health provisions in TPP are not scary, they do not reduce access to cheaper generic drugs. Existing TRIPS flexibilities are maintained.

3. It seems that the generic pharma lobby + the anti-capitalism, anti-globalization NGOs created more noise and fear than what the TPPA actually provides.

4. There is more to fear in government taxation of medicines, in mandatory drug price discounts and price controls, than IPR protection.

“IPR create incentives for businesses to invest in ideas, to develop new products, and to earn a profit from the sale of those products. This in turn leads to improved customer satisfaction, improved profitability, and greater employment opportunities.”
– Prof. Sinclair Davidson, RMIT Univ. (Econ Dept.), Melbourne, Australia.

The full presentation is posted here.

IPRI 2015 in APEC economies

* This is my column in BusinessWorld last Monday, November 16, 2015.

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KUALA LUMPUR — The protection of property rights and promulgation of the rule of law are the cornerstones of peace and order in society. When such property rights are removed and unprotected, society can quickly degenerate into chaos and disorder. For instance, your house or car is also somebody else’s house and car, and he/she can take and occupy it anytime, anywhere.

Measuring property rights protection across many countries has been done by the Property Rights Alliance (PRA), a network of 74 independent, nongovernment, and market-oriented think tanks from 57 countries around the world and is based in Washington, D.C.

PRA produces the International Property Rights Index (IPRI) annual reports, which is a measurement of how governments in the countries covered promulgate the rule of law and protect property rights, public and private, physical and non-physical or intellectual.

The IPRI 2015 Report is launched today here at Park Royal Hotel in the capital city of Malaysia. The event is jointly sponsored by the PRA and the South East Asia Network for Development, which is a regional project of the Institute for Democracy and Economic Affairs in Malaysia.

The event’s theme is “Protection of Property Rights, Economic Growth, and the TPP.” The Trans-Pacific Partnership (TPP) is included in the theme because of its recent approval by the original 12 member-countries including Malaysia. TPP of course will not be implemented unless each member-country ratifies the agreement.

IPRI is derived by getting the score (one to 10, 10 being the highest) of each country covered in three major areas:

1 Legal and Political Environment (LP), which includes judicial independence, rule of law, control of corruption and political stability;

2 Physical Property Rights (PPR), which includes registration and protection of physical properties, and access to loans; and

3 Intellectual Property Rights (IPR), which includes protection of IPRs, in particular patents and copyrights.

As a result, countries with high scores in two or all three of these areas will have a high IPRI score and global rank.

In the 2015 Report, the top 10 from 1st to 10th places are: Finland, Norway, New Zealand, Luxembourg, Singapore, Switzerland, Sweden, Japan, Canada, and Netherlands.

For this piece, the focus will be on Asia-Pacific Economic Cooperation (APEC) member-countries that are covered in the IPRI annual reports. Only 19 countries are in this table because Brunei was not included in the IPRI 2014 and 2015 Reports while Papua New Guinea was never included in all IPRI reports, past and present. (See Table)

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APEC countries that were not included in the 2014 Report because of some incomplete data were given this observation in that report:

1 Philippines: Between 2010 and 2014, the Philippines IPRI score increased by +2.9%. In 2014 IPRI increased by +0.2 due to slight increases in all components. LP increased by +0.2 points due to all four of its items increasing in 2014. In particular, item Political Stability improved by +22.7% between 2013 and 2014.

2 South Korea: Over the 2010-2014 period of analysis, the South Korea IPRI score fluctuated around the value of 6.3. PPR data is missing from the analysis completely and IPR is missing for 2010 and 2011… In general, the overall IPRI value for South Korea is good and stable.

The Philippines’ jump in global rank from 77th in 2013 to 65th in 2015 is somehow impressive despite the flat score of 5.1 and 5.0, respectively. The reason for the big jump is because many countries have suffered significant decline in their scores from 2014 to 2015.

Within the Association of Southeast Asian Nations-6 that are also APEC members and covered in this annual report, there is a mixture of results over the years. The bad news is that (a) the gap in overall score between high-ranked Singapore and low-ranked Vietnam was very wide, with the average score of the former almost twice that of the latter; (b) Thailand and Vietnam suffered significant declines in scores and global rank, both falling by at least 19 notches in ranking from 2014 to 2015; and (c) Indonesia global rank also fell significantly from 59th in 2014 to 70th in 2015.

The good news is that Singapore and Malaysia have managed to retain their high scores and global ranking.

The results of this annual study should prod the governments of the Philippines and other East Asian economies to remember the main function, the raison d’être or reason for existence, of governments: to enforce the rule of law, the protection of the citizens’ right to life (against aggressors), right to private property (against thieves and destroyers of properties), and right to liberty (against bullies and despots).

There is a positive relationship between economic development and economic freedom, and the strength of property rights protection. Civil society leaders should keep reminding governments of this reality, and dissuade the latter from enacting and implementing various programs that directly or indirectly erode the respect of private property.

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, Inc., which is one of the 74 think tank-members of PRA. He is also a SEANET Fellow.