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Suggestions on the Economy

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Suggestions on the Economy

Post by nikko_33 on Sun Mar 06, 2011 3:18 am

It was dawn, sunday, and I couldn't sleep. So I got to organize my thoughts about ePH's economy. This is gonna be quite long, so please bear with me:

What about we run the government companies as profit-making machines?

I'm not a fan of big government in RL, but under our current circumstances in ePH, I think we have no choice but for the government to heavily intervene in the economy.

In short, I'm proposing that the government use all its resources and power to be able to set the salaries in all job levels and the prices of goods in the market.

Let me outline what I'm thinking:

1. Set the PHP at 0.008g. Congress would need to print lots of PHPs for us to defend this rate, and as you will soon see, it is vital to the whole plan.

2. Set the salaries in all levels - I haven't crunched some numbers, but maybe the figures below might help.

3. Populate the government companies with active citizens - to increase production and meet the expected rise in sales.

With all the advantages it has, it shouldn't be too hard for the gpv't to dominate the local market. We should aim to have our products among the 5 cheapest in the world. By setting the standard price in key industries locally, the competition has no choice but to either match the price or go lower. Either way, it would be good for the government as it wouldn't be too pressured to keep up with the (hoped for) demand.

At the same time, the government should be making a profit. So, hard as it is to hear, we must make adjustments on the salaries so the companies would still be making healthy profits (around 20%?).

This way, the private sector could still make some profits too, if they adjust correctly.

---

There are two things going for us right now:

a. A big war is happening right in our doorstep
- more spending on food, weapons and MTs.

b. Most government companies have licenses to the big countries involved - most notably the US.

So with our PHP's value, salaries expense and raw material prices going down, there's no reason why we can't aggressively compete in foreign markets. The beauty of it is we spend in PHP for salaries and raws, while we earn in (mostly) USD which we can easily convert to gold, to print more PHP's if needed. With profit, of course.

Our pricing policy could be two-fold:

a. PH Market
- pricing should aim for the top 5 cheapest in the world.
b. Foreign Markets - make as much profit as possible.

---

Surveying the government companies I know of, let me propose a list in order of importance to this plan:

1. OIL - though soon to be phased out, it is still needed. As what usually happens when eRep introduces new resources, I expect the existing stocks will be converted to the new ones. So I think we should exploit this resource, where we have the maximum bonus, while we can.

I saw some offers of 0.07 PHP in the local market recently, so it's probably not a far-fetched target price. Doing so would make our oil the cheapest in the world, with the PHP at 0.008g. I think this will be a cash cow for the gov't.

[PESO JOBS] ePH Training Oil - 16,094 in stock

[DoHA] ePH National Oil - 0 in stock. With license to Spain, 1% Import Tax.

Target Price : 0.07 PHP - cheapest in the world.


2. Iron - for weapons production. Hopefully we get Mindanao back to achieve 25% bonus.
The problem I see here is that we have just one iron company:

[Philippine Defense Department] ePh National Iron - 210 in stock

While we have 3 weapons companies to supply. We probably have more iron companies that I don't know of.

Target Price : 0.07 PHP - Assuming we get Mindanao back, we should be producing iron like we do oil.


3. Weapons - very high demand at the moment, profitable. The military could set the desired amount for stockpiling (to be used for actual war) and for training. The excess could be sold in the market for profit. We have 3 weapons companies:

[Philippine Defense Department] ePH National Rifles (Q1) - 1,975 in stock. Licenses in USA, Indonesia, Malaysia, China.

Target Price: 6.88 PHP (after VAT) - will put us in world top 5. Cheapest local offer: 6.49 PHP


[Philippine Defense Department] ePH National Helicopters (Q3) - 5 in stock. Licenses in USA and Russia.

Target Price: 20.00 PHP (after VAT) - will make us the CHEAPEST in the world, so room for higher price. Current local offer: 26.25 PHP


[Philippine Defense Department] ePH National Tanks (Q5) - 208 in stock. License in USA.

Target Price: 58.00 PHP - will make us the CHEAPEST in the world. So this figure may still change. Note: current price in local market: 49.35 PHP

4. Grains - Same with iron, just 1 grain company for 3 food companies.

[Department of Finance] ePH National Grain - 24,409 in stock.

Target Price - 0.08/0.09 - having no bonus, it's expected that grains is costlier than iron or oil. However, setting it at 0.07 PHP will probably just mean lesser profits, but we'll have the cheapest grains in the world if we do so.

5. Food - I think we should not compete as aggressively in this sector. We lack the bonuses others have, so pricing should have mainly the local market in mind. Prices should be affordable so the citizenry would be encouraged to spend and fight, while there's war going on. Speeds up the citizens' experience and ranking.

[PESO JOBS] ePH Training Q1 Foods - 4,455 in stock. US License

[Department of Finance] ePH National Q1 Foods - 24,409 in stock. US License

Target Price - 0.80 PHP (After VAT) - At 0.88 PHP, our Q1 food will cost the same as in the US and Indonesia, in terms of gold. So a target of 0.80 PHP might be achievable? Cheapest in the local market right now is 0.98 PHP.

[DoHA] ePH National Q3 Foods - 2,925 in stock. US License

Target Price - 2.40 PHP (After VAT) - If we achieve the target of 0.80 PHP for the Q1, Q3 food should only be 200% more expensive. Currently cheapest locally: 3.00 PHP

6. Moving Tickets (MT) - Not really a priority, but right time for serious profit because of the war. Like Oil, I expect MT stocks will be converted into the new products, so producing now is still ok - more items for us to sell while we can.

[DoHA] ePH National Q1 Tickets - 483 in stock. US & Brazil Licenses

Target Price : 8.75 PHP - will make us the Cheapest in the world. Current local price: 7.35 PHP. The Military/Executive should set the amount of MTs we must have in reserve. Excess MTs could be sold in both the local and US markets.

It's a pity that we don't have a Q2 MT company - I think it has a greater demand in the world market.


7. House - I was surprised to find out we have a house company:

[PESO JOBS] ePH Training Q1 House - 0 in stock.

No use operating this company at the moment. Let's wait for the new products.

---

NOTES:

- The above figures are based on the PHP = 0.008g peg.
- I used this site- http://erepublik-market.com/news.html -to look at world prices.
- US Import Tax: MT & Weapons- 1%
- Spain Import Tax: Oil- 1%
- I haven't figured out what the ideal wages should be as I have restarted running companies just recently. I think the gov't company managers are in a better position to give an opinion on this.
- The target prices are just suggestions. It's possible that we could go a bit higher so local companies could keep operating.
- Gov't companies (except the Q1 house) should be filled with 5-8 workers each for higher output. I suggest to form a team of 6-8 active, high-level workers who the managers could deploy to companies in need of quick, high volume production.

---

With this plan, the government's earnings will rise significantly, enabling it to: (a) implement its plans, especially on the military side; (b) expand its welfare program/s and (c) be in a better position to meet the challenges in the coming days. Hopefully, wage adjustment wouldn't be so drastic so citizens, especially the younger ones, would have decent purchasing power to enjoy the cheaper goods. Lastly, though profit margins will shrink, it should still be interesting for local business owners who will be challenged on how to stay profitable in the new environment.

So that's it - I hope this helps in the gov's effort to fix our economy and respond to current conditions. Sorry it was so long. lounge lizard

Your thoughts? Come to me


Last edited by nikko_33 on Sun Mar 06, 2011 5:19 am; edited 1 time in total
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Re: Suggestions on the Economy

Post by Revilo X on Sun Mar 06, 2011 4:19 am

the grain company is in the department of finance org/
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Re: Suggestions on the Economy

Post by nicholas2000 on Sun Mar 06, 2011 4:20 am

Your thoughts?

Well, here goes...

1)
This is gonna be quite long, so please bear with me:

This warning needs to be longer :p

2)Over what time period would these changes be taking place? Personally, I feel that they should be put in place slowly, so we can tweak the system piece by piece if a problem occurs.

3)Would it be possible to get an estimate on just how much PHP needs to be printed to maintain the 0.008 currency peg, while using this system?

4)Where exactly does private business fit into all of this?

5)(this sort of ties into #4): I have concerns on what would happen should there come a time when a terrible government is elected, and this whole system falls apart. I don't see that happening any time soon, but it is still a concern.
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Re: Suggestions on the Economy

Post by Revilo X on Sun Mar 06, 2011 4:35 am

I think if we will push this plan, we should also discuss about taxation also, which will also be a long discussion.

-And about implementation, I think we can do it per industry.
We can start with Oil, then MT, then so on...

-We already have a poll regarding the proposal of printing 40000 PHP and it will be offered in the MM @ 0.008 if it passed.

-I think, if we plan to make gov't companies profitable, it means the government will not sell product at cost.
So private company will also have a chance to sell at a profit. Not to mention that private companies have an advantage of 25% citizenship bonus and work as manager option.

- Regarding continuity, I think this is not a problem since politics in ePH is very united - for ePH's sake. And the only changes happening in ePH politics is the name of the CP, but the policies are almost still the same.


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Re: Suggestions on the Economy

Post by Paul Delos Santos on Sun Mar 06, 2011 4:41 am

I don't think we'll be selling weapons since they are going to be used by the military anyway. But as for food, I think we have surplus on our stocks at the moment.

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Re: Suggestions on the Economy

Post by nikko_33 on Sun Mar 06, 2011 6:17 am

Thanks Revilo! I added the 2 companies in the original post. thumbs up


@Nicholas2000:
nicholas2000 wrote:
Your thoughts?
Well, here goes..

1)
This is gonna be quite long, so please bear with me:
This warning needs to be longer :p
That's why I said sorry at the end...! lounge lizard

I'm just gonna add on some of Revilo's responses to your questions:

nicholas2000 wrote:2)Over what time period would these changes be taking place? Personally, I feel that they should be put in place slowly, so we can tweak the system piece by piece if a problem occurs.

There are lots of things to consider and coordinate before this is fully launched. But I hope it won't take too long. There is the war factor that gives this plan some urgency. As Revilo mentioned, we will do it on a per industry basis, making sure we have enough in stocks before we set a price so we could maintain it for long periods. However, we should start as soon as we possibly can in certain industries, particularly where we have advantages on.

nicholas2000 wrote:3)Would it be possible to get an estimate on just how much PHP needs to be printed to maintain the 0.008 currency peg, while using this system?

I think that the proposed 40K PHP will provide enough buffer, given that the BoP already has 20K. It's possible that 90% of our production in oil, MT and weapons will be sold in foreign markets. So we would be needing those PHP's once we've converted the foreign currencies into gold. It would all really depend on how much we can sell during this war.

nicholas2000 wrote:4)Where exactly does private business fit into all of this?

Aside from what Revilo said, there may be a need for gov't and private business collaboration to address a possible problem on grain and iron supplies (1 raw company for 3 goods companies).
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Re: Suggestions on the Economy

Post by nikko_33 on Sun Mar 06, 2011 6:26 am

Paul Delos Santos wrote:I don't think we'll be selling weapons since they are going to be used by the military anyway. But as for food, I think we have surplus on our stocks at the moment.
Ok! seems like weapons companies will do some stockpiling first.

Our problem with food is that its only foreign market - the US - has a 20% Import Tax on food. However, we could still sell some, as long as we're making some profits.
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Re: Suggestions on the Economy

Post by Paul Delos Santos on Mon Mar 07, 2011 3:09 am

well, a few invested gold for licenses can help in the long run if used correctly. We can still find some good countries to dump our excess stuff. Razz

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Re: Suggestions on the Economy

Post by nikko_33 on Mon Mar 07, 2011 4:37 pm

Paul Delos Santos wrote:well, a few invested gold for licenses can help in the long run if used correctly. We can still find some good countries to dump our excess stuff. Razz

I'm gonna look around for some possibilities, though it's not gonna be easy since food is usually on top of the list of industries protected by a country.

I think the US is still a good market for our food companies, despite the import tax, it just means less profits. Very Happy
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Re: Suggestions on the Economy

Post by Mocoman14 on Tue Mar 08, 2011 4:04 pm

I don t know what to say....economy is not my thing exactly :S
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Re: Suggestions on the Economy

Post by Paul Delos Santos on Wed Mar 09, 2011 2:34 am

nikko_33 wrote:
I'm gonna look around for some possibilities, though it's not gonna be easy since food is usually on top of the list of industries protected by a country.

I think the US is still a good market for our food companies, despite the import tax, it just means less profits. Very Happy

less profit > no profit :)

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Re: Suggestions on the Economy

Post by Hekter on Wed Mar 09, 2011 5:22 am

I really like the plan you've set out here. Personally, I would not mind seeing DoHA dump Q1 food prices to see if the market can follow Razz Say, 3,000 pieces at 0.50 PHP? Wonder what kind of ripple effect that'd have on the economy :o

Of course, as much as I love these beautiful figures and plans, it all becomes a moot point if we start mass-producing stuff on our own. I would recommend investing in more weapons companies to employ people, while we have company owners prop up the food market. Definitely need more iron companies operating to bring the price down at least.

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Re: Suggestions on the Economy

Post by nikko_33 on Thu Mar 10, 2011 1:13 am

Hekter wrote:I really like the plan you've set out here. Personally, I would not mind seeing DoHA dump Q1 food prices to see if the market can follow Razz Say, 3,000 pieces at 0.50 PHP? Wonder what kind of ripple effect that'd have on the economy :o
Hmmm...it will depend on how long you'll be dumping. If the price could be sustained, by adjusting the salaries, etc., and make it a policy, then everyone else will follow - they have no choice! Razz

This just occurred to me - there may be merit on the idea of dumping DoHA Q1 food in the local market at this time. With the new missions demanding for more food to be eaten, it's a good time to slash prices on food so that:

1. More citizens could accomplish the missions (BIG strength bonus.) - good investment for our military in the long run.
2. DoHA gets to convert its huge stocks into cash. - always a good proposition!

You could set the quantity to be sold, and if it runs out, then decide if you could offer more. The missions would end in 5 days or so, anyways. Come to me

Hekter wrote:Of course, as much as I love these beautiful figures and plans, it all becomes a moot point if we start mass-producing stuff on our own. I would recommend investing in more weapons companies to employ people, while we have company owners prop up the food market. Definitely need more iron companies operating to bring the price down at least.

Yup! Definitely true! Very Happy
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Re: Suggestions on the Economy

Post by Berritas on Thu Mar 10, 2011 1:37 am

So...need more iron? I can hire people again ;)....maybe....
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Re: Suggestions on the Economy

Post by Revilo X on Mon Mar 28, 2011 2:47 pm

We have the same topic inside the plenary hall

http://ephilippines.forummotion.com/t2599-hr012-economic-changes-taxes-and-mm

TOPIC CLOSED
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