PREGUNTAVER

The papers report the following: Mutual Funds are UP: First Metro leads the pack with a yield of 18% (year-to-date)with the others, not too far behind. It simply means that an investment made at the start of the year would have already earned 18% of its original value, by now. The Philippine currency is UP: The peso is close to breaking below PhP 48 to a dollar. The Stock Market index is close to attaining an all time (Pre Asian Crisis level). What does it actually say? The continued success of the country's Mutual Funds will most probably lure more foreign (short term investments) into the country. With the american mutual funds market hitting an average of only 10% for the entire 2006, more hot money can be expected to come in. If this momentum continues, coupled with a sustained increase in OFW (overseas foreign workers) remittances, and the absence of a sharply negative occurence in all the other sectors of the economy, the US dollar will most likely continue to decline. D

As a way of cleaning its books and as an attempt to get a one time windfall, the Philippine government is implementing a Tax Amnesty measure. In the said program, the government aims to make PhP11~32 Billion. According to Businessworld : " Tax cheats could soon have a chance to redeem themselves and begin dealing with tax collectors with a clean slate as the Senate yesterday approved a bill granting a "general, one-time" tax amnesty for delinquent taxpayers who wish to settle their dues with the government. Time is running out however, for the next stage in the lawmaking process - deliberations with the House of Representatives to craft a final bill - with a senior House leader indicating the tax amnesty could still be months away. House Bill 2933, sent to the Senate in October 2006, was unanimously approved but after several amendments including increasing the tax amnesty rate to 5% from 3%. The rate will be charged on a taxpayer’s net worth as reflected in the stateme

The previous post spoke well of the government for its intervention in a market failure scenario. In the situation mentioned, 70 million (mostly poor) Filipinos were being deprived of proper health care by being forced to buy expensive medicines, in a cartel like (oligopoly) situation. A follow up to that story, however, will show that the government action to correct market failure is fast threatening to become a classic example of "Government failure". The Philippine Government created the "Botika ng Bayan " (People's Drugstore) in order to make affordable medicines accessible, especially to the poor. In order to show the strengths of the program, the cheap product prices , printed in colored canvass, stands outside the branches. At present, it has 5,800 branches and by 2007, the goal is to expand to 7,800 local offices. What fuels skepticism over the project are experiences that include: Two visits to a branch showed that the outlet was already closed by 7P

Friedman will probably agree to the government's importation of cheap medicines when the local drug industry has made prices unreasonably very high for the consumers. "A report released by the Senate trade and health committees showed, for example, that mefenamic acid under the brand name Ponstan costs P20.98 in Philippines but only P2.80 in India and P1.46 in Pakistan. Immodium (loperamide hydrochloric acid) costs P10.70 in the Philippines but only P3.27 in India and P1.94 in Pakistan." Let the market dictate. However, in the event of market failures, which happens quite often in small economies, I wouldn't object to measures such as the importation of cheap medicines in order to correct the inefficiencies of the market.

The previous post should have been dated sometime in the middle of January. Blogger mistakenly dated it as Jan 1. :-)