Thursday, May 4, 2017

[Second Opinion] More expensive in the Philippines

by Gideon Lasco 
Philippine Daily Inquirer

For music fans, Coldplay’s recent Asia tour was a reminder that it’s more expensive to attend live concerts in the Philippines than in other countries. My friend who went to Taipei pointed out that the expenses for her trip—hotel, airfare, and a VIP ticket—came out even cheaper than buying an equivalent ticket in Manila.

I could live without watching Coldplay in Manila and, I imagine, so could most Pinoys. But it is not just music concerts that’s more expensive in the Philippines; I worry more about those that are closer to our everyday lives.

Medicines, for instance. I cannot forget the account of a lymphoma patient when I was training in the Philippine General Hospital: The patient’s family members would fly to India just to buy Mabthera (Rituximab); it was cheaper to go there—airfare and all—and buy the drug for around P30,000 a vial, than to buy the same vial here for P90,000.

Today, a 20-milligram tablet of Adalat (Nifedipine) costs around P40 in our drugstores—but the exact same brand or preparation only costs P2 in India and P5 in Malaysia: a dramatic difference for hypertensives who take it daily. Despite the passage of the Generics Law, pharmaceuticals in the country—branded and generic drugs alike—remain among the most expensive in Asia.

Then there’s electricity: We have one of the highest power rates in the world. Despite our vast potential for clean energy—geothermal, hydroelectric wind, solar—the fact that our power rates are second highest in Asia is both ironic and tragic, even as the mothballed Bataan Nuclear Power Plant continues to mock us.

Telecommunications, including internet, are also pricier in the Philippines. In Singapore, MyRepublic’s monthly plan for 1 Gbps costs around P2,100; Globe Telecom offers a similar plan for P9,499.

Finally, tax rates in the Philippines are also among the highest in the region. If your annual income is P500,000, the tax rate here is 32 percent compared to just 10 percent in Malaysia and Thailand. That the Duterte administration is looking at tax reform is a welcome step—but what of reforms in the pharmaceutical, power, and telecommunications sectors?

In an Esquire Philippines article, Maan d’Asis Pamaran explains the steep price of the Coldplay tickets by drawing from an industry insider. She writes of a baffling host of fees: On top of bringing in the artists, securing a venue, and giving royalties to local music associations, “there is also an entertainment tax, a local government tax, working visas—and yes, believe it or not, barangay and police clearance!”

In a way, a similar piling up of costs can also explain the steep cost of medicines. As a longtime regulator tells me, the high prices are not just because of the manufacturing and research, but also because of retailers who pursue profit maximization, celebrity endorsers, ads with catchy jingles, a battalion of medical representatives, and, of course, doctors, some of whom are provided incentives (free meals and conferences abroad): an inconvenient truth for the medical profession.

As for electricity, experts point to the privatization of power (beginning in the late 1980s and culminating in the Epira Law in 2001), kilometric red tape, as well as our lack of energy diversity, among the reasons for high cost. Alas, the overlapping oligopolies that control our power and telecommunication sectors have done nothing for our cause, even as they themselves have earned massive profits.

Unfortunately, we have taken the high cost of these things for granted. When a poor family cannot afford medicines, we think it is because they are “poor,” forgetting that it can very well be because the medicines are expensive—unnecessarily so. We have gotten so used to Meralco’s price hikes that only groups like Bayan Muna routinely react to them with outrage.

Moving forward, I think we need to first realize that this is not normal; we need to get to the bottom of why this is so—and hold to account the people who have benefited from the status quo. The ensuing loss of competitiveness, and more importantly, the toll on ordinary Filipinos, is a price we shouldn’t have to pay.

Originally published in the Philippine Daily Inquirer on May 4, 2017:

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