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Wishes for the economy in 2018

Happy New Year, dear readers!

We start 2018 on a positive note: My wishes for the economy in January 2017 were largely realized. (To read my wishes last year, please visit http://bit.ly/2017wishes).

1 Passage of Package 1 of TRAIN. Check, after a hard slog.

2 Appointment of a qualified, credible governor for the Bangko Sentral ng Pilipinas, preferably an insider. Check, and with an excellent outcome.

3 Efforts to change the Constitution and shift to federalism would be pursued responsibly, giving time for deeper study, informed debates, and awareness activities. The third, however, is a work in progress. Hopefully, future efforts to pursue extra-constitutionally (via a “revolutionary government” initiative or similar railroad variations) have been shelved for good. (See FEF Press Statement on Talks for a Revolutionary Government: http://bit.ly/FEFRev)

Allow me now to share our wishes for 2018, as posted on Global Source Partners, a subscriber-based network of independent analysts (globalsourcepartners.com). My colleague Christine Tang and I are its Philippine advisors.

Here are my three wishes for the economy in 2018:

1. MUCH MORE ACTIVITY UNDER BUILD-BUILD-BUILD.
The government’s massive P8.1- trillion medium-term infrastructure program has been likened to a battleship that will be hard to stop once it has gathered momentum. The passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act puts some P80 to P90 billion in new money in the hands of government in 2018 that people expect will largely be used for upgrading and expanding the country’s networks of water, power, road, rail and air/seaports. Government is targeting to increase its investments in infrastructure from 5.4% in 2017 to 7.3% of GDP by 2022, to help ease supply bottlenecks and allow the economy to scale a higher growth path.

However, despite assurances from the Department of Budget and Management of improving disbursement rates overall, the 50% disbursement ratio as of November 2017 of the Department of Transportation leaves much room for improvement.

2. PASSAGE OF PACKAGE 2 OF THE DUTERTE ADMINISTRATION’S COMPREHENSIVE TAX REFORM PROGRAM.
Package 2 seeks to lower the corporate income tax rate (CIT), currently at 30% and higher than the statutory tax rates in most ASEAN economies. To compensate for expected revenue losses, the Finance Department wants to remove a plethora of fiscal incentives that costs government about 1% of GDP annually. The plan is to calibrate CIT cuts so that revenue losses will be roughly offset by revenue gains from removing fiscal incentives. While Package 2 will not be a revenue measure, it is expected to (a) make the economy more competitive and attractive to foreign investments with a lower CIT and (b) widen the tax base with fewer activities given tax incentives.

3. MODERATE INFLATION PRESSURES THAT WILL GIVE THE BSP MORE FREEDOM TO MANAGE DOMESTIC AND EXTERNAL RISKS.
This includes tightening global financial conditions expected to accompany a wider current account deficit. Local prices are expected to rise in 2018 due to higher consumption taxes from the TRAIN Act, adding roughly one percentage point to the headline rate per BSP estimate. One policy response to tame inflation that local economists have long pushed for is freer importation of rice, which account for close to 9% of the CPI basket. Local rice prices have remained elevated in recent years despite softer world prices, an oddity tied to the fact that rice imports are subject to quantitative restrictions (QR). While removing the QR would require a change in law, experts think that with enough political will, government can administratively ease up on imports, e.g., by setting a high, non-binding import volume, and improving the handling of import permits.

Given that wishes are free, I would add two more:

4. FAVORABLE RESOLUTION OF DISPUTES ARISING FROM FAILURES OF THE LAST ADMINISTRATION TO COMPLY WITH LONG-STANDING PPP OBLIGATIONS.
These include:

a) the arbitrary interpretation of MWSS concession agreements with Manila Water and Maynilad. We need to restore a working two-decade old concession model that was broken by the last administration.

b) non-adjustment of toll road tariffs of NLEX, Cavitex, and Star Tollways, and

c) the contractual tax issue with the Malampaya consortium.

If these fester much longer in one venue or another, the current administration’s no-nonsense image will suffer, dampening private investments in needed public goods and services, not to mention wasting public funds to pay for costly international litigation.

5. IMMEDIATE IMPLEMENTATION OF A COMPREHENSIVE PROGRAM TO REHABILITATE MARAWI CITY.
The plan will incorporate the cultural aspects important to the Maranaos such as preservation of heritage and Islamic sites. While reconstruction of infrastructure is critical, such a program should prioritize the provision of services to allow over 200,000 refugees to return to normal life such as education, particularly literacy for the adults and technical training for livelihood and employment as well as loans and capital infusion for the business sector.

Marawi City has become a fertile ground for violent extremism, a justification used for Martial law extension.

Addressing the needs of the population, majority of whom have been displaced for over six months and brought to new lows of poverty, is critical if government is to prevent the spread of extremist sentiment. Business progress in Mindanao and the nation requires peace and stability. Armed conflict is the major roadblock on the road to development. To remove this barrier, not only is the rehabilitation of Marawi essential but the passage of the long-awaited Bangsamoro Basic Law as well.

Devoting government resources and political capital to address this political problem soonest to preserve our economic momentum is non-elective. In contrast, headline news for a change in government to one version or another seems like needless distractions from the economic managers’ agenda of improving our people’s lives.

Finally, allow me to echo a New Year’s toast from Benjamin Franklin. “Be at war with your vice, at peace with your neighbors, and let every new year find you a better man.”

 

Romeo L. Bernardo is a board director of the Institute for Development and Econometric Analysis. He was undersecretary of Finance during the Corazon Aquino and Fidel Ramos administrations.

Assessing TRAIN

The first package of the comprehensive tax reform, also known as TRAIN (Tax Reform for Acceleration and Inclusion), was the most significant yet very controversial piece of legislation in 2017.

Those who oppose TRAIN label it as pro-rich and anti-poor. Thus is the position of diverse Left-oriented groups like the Ibon Foundation, Bayan, and Freedom from Debt Coalition. And it is the same view articulated by liberals like Florin Hilbay. What is evident though is that those who are fully opposed to the Rodrigo Duterte administration do not spare TRAIN from harsh criticism either.

But as Vice-President Leni Robredo once said in an interview with Rogue (Special Collectors’ Issue, July 2017), the proper opposition is “one that doesn’t oppose for the sake of opposing.” Incidentally, the Vice-President is supportive of the Department of Finance’s version of TRAIN, which she says, “even if it isn’t perfect, it’s for the greater good.”

Thus, we ask: Is Ibon Foundation’s or Hilbay’s assertion that TRAIN is anti-poor an apt description?

Like the Vice-President, we at Action for Economic Reforms (AER) have taken a more nuanced position on TRAIN. That is to say, we see its imperfection but we likewise recognize the gains from it.

To say that it is anti-poor and pro-rich is an over-simplification. Those who dismiss TRAIN as such, without a deeper explanation and a reasonable justification, are ideologically driven, are opposing for the sake of opposing, are misinformed, or are not equipped with the analytical tools to dissect TRAIN.

Here thus is an attempt to have a sober if not unprejudiced assessment of TRAIN.

The legislated TRAIN yields significant revenue, amounting to an additional P90 billion in the first year. This is nothing to sneeze at, considering that the first package of TRAIN includes income tax relief, which will result in revenue loss. TRAIN will provide sustainable revenues to finance AmBisyon 2040, whose goals are to make the Philippines a high middle-income country, eradicate poverty, and create a stable middle class, in a period of one generation.

Furthermore, the increase in tax effort arising from TRAIN strengthens the macroeconomic fundamentals, necessary for sustained growth and employment. In fact, Fitch Ratings, Inc., anticipated TRAIN’s passage and upgraded the country’s credit rating from BBB- to BBB (investment grade) in early December 2017. In this sense, by creating jobs through new and increased investments, TRAIN is helping the poor.

TRAIN also gives significant income tax relief to the working classes and the middle class as well as sections of the rich. However, the richest earning a monthly compensation of P666,667 and (or P8 million and above annually) will have to pay a higher marginal tax rate of 35% (compared to 32% before). To give an example, the overwhelming majority of those employed in the business process outsourcing (BPO) industry — or those receiving a monthly salary of P20,833 and below — will no longer have to pay income tax.

But what about the poor? They have not been paying income taxes. Won’t they be hurt by TRAIN because of the increase in the excise taxes on consumption, particularly fuel?

Let’s explain the fuel tax issue, and it can be a bit complicated. Fuel taxes have not been adjusted to inflation since 1997. Thus, in real terms, excise taxes from fuel have been declining. Worse, under the Gloria Arroyo administration, the excise tax on diesel was even removed. It is but reasonable to keep the fuel tax rates in tune with inflation. This is no different from increasing wages and salaries to at least adjust to inflation or having income tax levels re-bracketed and lowered to prevent inflation creep.

The fact is, fuel is mainly consumed by the well off, not the poor. Scrutinize the data from the Family Income and Expenditure Survey (FIES). The households that constitute the richest 10% of the population consume 3.7% of their consumption spending for fuel. In contrast, the poor’s fuel consumption is equivalent to 1.1% of their total household expenditure. The richest 10% accounts for 51% of total fuel consumption. Some economists have thus argued that the fuel tax is “moderately progressive.”

Yet, it cannot be denied that the consumption taxes will increase prices, thus affecting the poor. The effective response is that government will provide unconditional cash transfers to those households from the first to seventh deciles that will not gain from the income tax relief but will be affected by the consumption taxes. The amount of transfer for the household beneficiary — P2,400 in the first year and P3,600 in the second and third years — more than offset the higher spending resulting from the higher consumption taxes.

Further, the independent Bangko Sentral ng Pilipinas and economists from various quarters project that the inflation growth that can be attributed to the new taxes will be low. Inflation rate for 2018 can peak at below five percent, which is quite tolerable.

To be sure, TRAIN is a product of compromise. The outcome would have been bad, if the President did not veto several items, including perks for economic zones and free ports.

TRAIN has removed 56 lines of exemption from the value-added tax (VAT), another significant reform towards improving efficiency and tax administration. But note that from before, the Philippine tax regime had 143 lines of VAT exemption from the tax code and special laws, with some overlap). From an equity perspective, only the essential goods and services consumed or used by the poor are justifiably exempted. TRAIN’s package 1 has failed to remove the exemption for some vested interests like the housing sector, but the compromise of having a threshold level for exemption is acceptable.

Vested interests are still protected in aviation fuel, luxury cars that enjoy a lower effective tax rate than the lower-end automobiles, dividends (the 10% rate being retained), among other items. The rich people benefit from these types of protection.

The excise tax on sugar-sweetened sweetened beverages is welcome for health reasons, but the law fails to earmark the revenue for health programs, particularly to finance nutrition programs. The absence of that can aggravate malnutrition in the country, given that it is a bigger problem than obesity.

The new excise tax on tobacco for the medium term will not address a significant reduction of smoking prevalence. Neither will it yield adequate revenue for the forthcoming expansion and strengthening of the universal health coverage (UHC) program. Nevertheless, at least for the first year, the increase of P2.50 in the tax rate for the first semester and another increase of P2.50 in the second semester can deter new smokers from acquiring the habit. In that sense, it is a gain for health, but it remains urgent to press for further increases in 2019 and beyond.

Thus, we cannot oversimplify our description to assess TRAIN. Gains have been secured, but serious problems remain and still have to be addressed through continuing advocacy.

From a long-run perspective, TRAIN will be good for the country, for AmBisyon 2040. Even those strongly opposing Duterte should be thankful for TRAIN’s passage.

The post-Duterte administration, hopefully one that is truly progressive and democratic, will benefit from TRAIN. At least, the post-Duterte reformers will no longer worry about having such a hard economic reform passed and thus can focus on rebuilding political institutions.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

Al-Attiyah takes Dakar opener; Loeb finishes sans brakes

PISCO, PERU — Two-time winner Nasser Al-Attiyah stunned defending champions Peugeot when he steered his Toyota to victory on the opening stage of the 9,000-km. Dakar Rally on Saturday.

The Qatari driver, who took the title in 2011 and 2015, swept across the short 32 km. Peruvian desert stage between Lima and Pisco in 21 minutes 51 seconds.

However, it was a miserable first day for nine-time world rally champion Sebastien Loeb who is bidding for a maiden Dakar win.

The Frenchman’s hopes were hit when his Peugeot developed brake problems which left him 5 minutes 37 seconds off the lead and down in 29th place.

“Happily, it was only 31 kilometers!” said Loeb who is bidding to become just the fourth man to win both the world rally title and Dakar after Finnish duo Ari Vatanen and Juha Kankkunen and Spain’s Carlos Sainz.

“I made it without brakes! Zero brakes!,” he added before admitting he had no idea where the problem originated and that his car’s brake lights had not provided any warning. The car’s handbrake also failed the Frenchman.

“Without brakes, it’s really shit.”

South Africa’s Bernhard Ten Brinke (at 25 seconds behind Attiyah) and Peru’s Nicolas Fuchs, in a Borgward (34 seconds) filled out the podium.

Peugeot, who swept the podium in 2017 with Stephane Peterhansel taking a 13th overall title, endured a day to forget with their cars struggling in the sand and wind of the desert.

Peterhansel, who has won the last two car titles, lost 2 minutes 15 seconds and is 11th overall while teammate Cyril Despres is 2 minutes 36 seconds behind and in 15th.

“I didn’t have a good feeling,” said Peterhansel. “The sun was high and I couldn’t see the other sides of the dunes. So I preferred to be safe. We will have to wake up.”

Al-Attiyah admitted that Sunday’s stage will be a challenge as he starts first, therefore acting as a pathfinder for his rivals.

“I know it will be very difficult, but I’m just really happy for today, tomorrow’s another day. We try to do our best,” he said.

Britain’s Sam Sunderland got the defense of his motorcycling title off to a winning start.

Sunderland, on a KTM, finished ahead of France’s Adrien Van Beveren, on a Yamaha, and Pablo Quintanilla of Chile on a Husqvarna.

The British rider finished the desert sprint in 20 minutes 56 seconds with his rivals 32 seconds and 55 seconds further back.

The second stage of the two-week event takes place in and around the town of Pisco on Sunday. — AFP

Trump willing to talk to North Korea’s Kim on phone

CAMP DAVID — US President Donald Trump said on Saturday he would “absolutely” be willing to talk on the phone to North Korean leader Kim Jong Un and that he hopes a positive development results from talks between North Korea and South Korea. North Korea agreed on Friday to hold official talks with South Korea next week, the first in more than two years, hours after Washington and Seoul delayed a military exercise amid a standoff over Pyongyang’s nuclear and missile programs. Trump, answering questions from reporters at the presidential retreat at Camp David, Maryland, expressed a willingness to talk to Kim but not without preconditions. “Absolutely, I would do that,” Trump said. “I have no problem with that at all.” Trump and Kim have exchanged insults ever since Trump took office, with Trump repeatedly calling Kim “rocket man” for testing nuclear weapons and ballistic missiles. Early last week Trump dismissed Kim’s taunt that the North Korean leader has a nuclear button on his desk, saying he has a bigger button. Trump suggested the talks might lead to an easing of tensions and took credit for the diplomatic breakthrough, saying it was a result of his steady pressure. “Look, right now they’re talking Olympics. It’s a start, it’s big start. If I weren’t involved they wouldn’t be talking at all right now,” he said. Kim “knows I‘m not messing around. I‘m not messing around. Not even a little bit, not even one percent. He understands that,” said Trump. “If something can come out of those talks, that would be a great thing for all of humanity, that would be a great thing for the world,” he said. On Sunday, North Korea announced a list of five officials who will represent Pyongyang, a day after South Korea confirmed its representatives, the South’s unification ministry said. — Reuters

Public warned against mall smoke

THE SMOKE from the fire that hit Metro Gaisano at Ayala Center Cebu has become an additional problem to authorities. As of last night, 23 hours after the fire broke out, the third floor of the building where the fire originated continued to emit thick smoke, which has spread to establishments and residences nearby and triggered coughing and even dizzy spells. Yesterday morning, the area of the Ayala Business Park where the Metro Gaisano wing is located was engulfed in haze. People working or living at the Cebu Business Park and in nearby areas were advised to wear protective masks to avoid inhaling the harmful smoke. — The Freeman

See full story on https://goo.gl/BGbViM

Bangsamoro: Beyond the combat zones

MORO ISLAMIC Liberation Front (MILF) Chairperson Al-Haj Murad Ebrahim, speaking at the 1st Bangsamoro Assembly on Nov. 27, 2017 held in Maguindanao, waxed sentimental on the years of armed struggle, of days lived in remote areas of Mindanao fighting for deeply-rooted grievances that go as far as five centuries.

“We cannot help but remember the vivid memories of the past — youthful memories spent not in the cafes of the metropolis but in the ever-changing rugged fields, mountains and marshlands,” Mr. Ebrahim said.

“We are proud heirs to a history of freedom and of the zealous struggle of our forebears for liberty, justice and peace for centuries amidst the onslaught of colonialism and conquest,” he continued.

The remembrance, however, was not meant to incite hostility at the event, a multi-stakeholder gathering prescribed under President Rodrigo R. Duterte’s Executive Order No. 8 expanding the composition of the Bangasamoro Transition Commission (BTC) to include representatives from the Moro National Liberation Front (MNLF), indigenous peoples (IP), and Christian settlers.

Rather, Mr. Ebrahim was putting into perspective the MILF’s resolve to pursue the peace process alongside Mindanao’s diverse communities and rally a united front for the passage of the Bangsamoro Basic Law (BBL).

“I say, let us work and contribute in determining our future with security and succor, a future of peace and plenty that harnesses the potentials of our people whose new skills and talents will be needed for a new age and era in the Bangsamoro. While we shall remain faithful and grateful to our brothers and sisters in struggle, let us tap into the vital energy of our youth and women, whose skills and enthusiasm in pursuing the Bangsamoro dream have kept my confidence in a more secure and certain future for our people,” Mr. Ebrahim said.

That future will largely be determined by the revised BBL proposal, which, for the second time around, lies in the hands of Congress.

The Senate and the House of Representatives, whose leaders are both from Mindanao and are allied with the administration, demurred from the President’s call during the Bangsamoro Assembly to hold a special session at the end of last year to tackle the BBL.

However, legislators in both chambers vowed that the proposal will be among the top priorities at the beginning of 2018.

None among the expanded circle of Bangsamoro stakeholders, over the past year, has publicly made threats of returning to arms if the BBL is not passed.

But Mr. Duterte himself has warned that a protracted legislative action, or worse another congressional bypass, would spell “trouble.”

“If we do not act on it expeditiously, I think that we are headed for a trouble. We must continue to talk and I will urge Congress to fast-track it because they (Bangsamoro stakeholders) are getting impatient,” Mr. Duterte said in a press conference in Davao City on Oct. 29, just before leaving for an official visit to Japan — a trip planned earlier in the year but was postponed in view of the Marawi City crisis.

“And I told them of the wages of how to negotiate peace. Sabi ko, ‘Sandali lang (I told them, just wait a bit), but we (government) will comply on our side what we have promised… that is a commitment eh. Not even a promise, but a commitment to the Moro people,” he added.

Dr. Aboulkhair S. Tarason, chairperson Basilan Ulama Supreme Council and the Basilan Inter-faith Council of Leaders, said in a phone interview, “We are in full support for the passage of the BBL as it will give fruition to the quest for peace of the Moro people.”

One expansion made in the new BBL draft, submitted to Mr. Duterte on July 17 and transmitted to Congress on Aug. 7, is the addition of seats in the council of leaders and sectoral representatives for the youth, traditional leaders, and the ulama, or those considered as scholars or learned of Islam. There are also seats allocated for IPs, settler communities, and women.

OLD AND NEW
BTC Chairperson Ghazali Jaafar, a top MILF official who headed the group’s peace negotiating panel from 1996-1997, explained that the BBL is about resolving the very old “Bangsamoro Question” and addressing a new threat, the emergence of violent extremism.

“Summing up all the number of years since 1521, it means that the Bangsamoro Question has been present for almost 500 years. Parallel to this is the rise and fall cycle of peace negotiations… Consequently, the trust of some Bangsamoro groups on the peace process faded away. These groups started to become radicalized and developed the mindset that the only solution to the Bangsamoro issue is through the use of force,” Mr. Jaafar said in a speech at the Dec. 4, 2017 forum “Way Forward: Beyond Peace in Mindanao” organized by the  Japan International Cooperation Agency (JICA) and the Ateneo de Manila University.

“They started gathering strength even to the point of disregarding the sources and the means just to develop their fire-fight capability. Because of frustration, they do not even mind if the source of the support they receive are from what others refer to as extremists or ISIS (Islamic State of Iraq and Syria),” said Mr. Jaafar, noting that these local armed groups “in a strict sense, are not ISIS themselves.”

“They are local armed groups that have been organized with the objective of resolving the Bangsamoro Question,” he added.

Conflict Alert, the monitoring system developed by International Alert Philippines, has noted “the growing strength of the local extremists” since 2015.

In its 2017 Report titled Guns, Drugs, and Extremism: Bangsamoro’s New Wars, launched Nov. 29, Conflict Alert said “Rebellion-related violence increased by 19% from 144 incidents in 2015 to 171 incidents in 2016.”

More than half of these incidents were in Maguindanao, accounting for 96 in 2016, up from 71 the previous year.

The province is a known lair of the Bangsamoro Islamic Freedom Fighters, also referred to as the Bangsamoro Islamic Freedom Movement, a group that broke away from the MILF at the height of the peace negotiations with the government, and has since pledged allegiance to ISIS.

Conflict Alert, in it’s 2016 Report, also noted “the growing strength of the Maute Group, which is at the core of Dawlah Islamiya.”

It said that “judging by the number of conflict deaths (86) from only six incidents involving the Maute Group that were monitored at that time, it demonstrated it had the resources and capacity to launch large-scale and deadly attacks.”

Their rampage in Marawi last year showed just that — a five-month long battle against government forces that left in its wake deaths, diaspora, and harrowing destruction in what is recognized as an “Islamic City”, the only one in the country.

Mr. Ebrahim calls these groups the “new enemies”, whom he described as followers of a “perverted ideology devoid of a national agenda… without regard to the rules of war and the welfare of the people.”

Mr. Duterte, unlike his stance on the communist movement, wants a comprehensive, inclusive and firm end to the Bangsamoro struggle through the BBL.

“So let us work on the historical issues. Land, the social injustices that were committed since then,” he said at the Nov. 27 assembly, even as he hinted on what he anticipates to be a battle in Congress.

“Alam ko realist kayo (I know you are realists),” he told the crowd.

“If it’s (BBL provisions) not in consonance… then we work it out, but at least Congress and the Filipino people should be given a day to hear you out on what we intend to do… I will impress upon them that you have to devote even one day or two days. Hear them out, hear us from Mindanao,” he said.

Professor Ali T. Yacub, Al-Hj, president of the Golden Crescent Consortium of Peace Builders and Affiliates, said the BBL is the “hard work of the Moro people” that should not be delayed in consideration of the proposal to shift to federalism.

Another Muslim leader, Sheikh Zayd Ocfemia, president of the Assunah Foundation and a member of the Ulama Council for Zamboanga Peninsula, expressed the same sentiment, saying: “Federalism takes a longer time before it will pass, while the BBL it’s already there.”

The bottomline, Mr. Duterte said, is to find a meeting point for two factors relating to the Bangsamoro Question: “Correct the injustice committed against the Moro people and all of the lumads (IPs) here. Second is to preserve the Republic… there has to be a condition that is for all.” — Marifi S. Jara, Arjay L.  Balinbin, Rosemarie A. Zamora, Andrea Louise E. San Juan, and Albert F. Arcilla

Canine couture cuts a dash in Italy’s fashion capital

MILAN, ITALY — Elegant, tailored outfits are not reserved just for fashionistas in Italy — couture for dogs is proving a hit with some Milan pet owners.

Man’s best friend should not be overlooked when it comes to cashmere sweaters and woollen coats, according to designer Giovanna Temellini, who enables the fashion conscious to match their style with that of their pooch.

“Everything is born out of love,” says the 57-year-old, who has been in the fashion industry for 25 years working for labels such as Bottega Veneta and Armani and is an active supporter of animal welfare groups.

One evening just under a year ago in her workshop, Temellini recalled, her daughter said to her: “You do so many little things for all the dogs…” referring to her animal protection voluntary work. “But when it rains, mine gets his ears all wet,” her daughter continued.

The following evening a member of her design team set to work making a hooded coat for the pet, to match the winter jacket of Temellini’s daughter.

From there sprung her made-to-measure fashion line just for dogs entitled Temellini Dog A Porter, with its first shop opening this month.

Her staff use a dog-shaped mannequin to create a range of sizes for different breeds, including dobermans, basset hounds and greyhounds.

But for each commission, the canine customer has its measurements taken to ensure a snug fit.

canine couture 2
A greyhound wears an outfit of Italian designer Temellini Milano in the workshop of the fashion house, in Milan in this photo taken Dec. 5, 2017. — AFP

BECAUSE YOU’RE WORTH IT
One dark gray jacket from her dogs’ range sports a high collar with buttons down the front, with the fabric matching a woman’s over-sized coat from Temellini’s main collection, for women, which she began 15 years ago.

But the focus on high-quality fabrics and stylish cuts means a cashmere T-shirt costs €142 ($171), a merino wool bomber jacket €212 and a coat with small pockets €252.

One customer snapped up an entire wardrobe for his dog, adopted from a shelter, because after what she had been through, “she deserved it.”

Twenty-four year-old student, Beatrice Gerevini, who likes to coordinate her dog’s outfit with her own, said it helps the pair to “create a connection.”

It is also “a sort of game, a way of being noticed — people smile when they see us.”

Temellini, who continues to do some work for other labels too, says she wants to create a collection suitable for all dogs, including those with disabilities.

“I am very respectful and attentive to all the requirements of dogs which are to be able to move, run, get dirty and socialize.

“I refuse to do something that would restrict or ridicule a dog, because they’ll be aware of it.” — AFP

Short on stars, London aims to stay in fashion with youth

LONDON — Grappling with the digital revolution upsetting all corners of the industry, Men’s Fashion Week kicked off in London on Saturday with fewer shows and star names.

But this fixture in the British fashion calendar is attempting to stay relevant by going back to its roots, and promoting a more youthful image.

Burberry deserted the event last year and now unveils its men’s wardrobe at Women’s Fashion Week, riding the trend towards less rigidity around gender.

JW Anderson, the label of Jonathan Anderson, who is artistic director of the Spanish luxury leather goods line Loewe, has followed suit, choosing to present only two runway shows per year instead of four.

Punk icon Vivienne Westwood has now said she will be presenting her autumn-winter 2018-2019 collection not in a catwalk but “through the form of film and imagery,” according to a statement from her company.

Designers have embraced a digital transformation of the industry in recent years, including the use of Web sites and social networking platforms for advertising and selling their latest collections.

“Not only are digital and combined menswear and womenswear shows often more cost-efficient, but such strategies also present the brand in a cohesive manner, whilst reaching new audiences,” Samantha Dover, of the analysis firm Mintel, told AFP.

Kristabel Plummer, editor of the fashion blog I Want You To Know, said designers are now more practical when it comes to catwalks and called the changes “sensible business decisions.”

“There’s no point doing things in the way they’ve always been done, if that’s not right for the brand.

“Increased flexibility and innovation can only be a positive thing, in this challenging consumer landscape,” she said.

‘ERA OF CONTENT’
“Brands need to move at the speed the world does, and today that is fast,” Anderson told The Guardian in a recent interview.

“We live in the era of content. We put something on Instagram and it gets reposted and it’s everywhere and a minute later it’s gone, over,” he added.

The drift away from London Men’s Fashion Week by established designers has seen the number of parades drop by a dozen this year.

It has led to questions over whether the British event, the younger of the annual fashion weeks, can still compete with Paris, Milan, and New York.

Organizer The British Fashion Council hopes it can still flourish by allowing young and upcoming local designers to showcase their talents.

Caroline Rush, its chief executive, said the 2018 edition will be “a celebration of discovery and the creative diversity that has made London an international hub for menswear.”

A raft of emerging names in British fashion will feature their clothes during the schedule, including the luxury streetwear of Edward Crutchley — dubbed a “rising star” by Vogue — and the bold neo-punk hip-hop wardrobe of Liam Hodges.

They are joined by Christopher Raeburn, a pioneer in ethical fashion and recycling materials, and Astrid Andersen, who designs sportswear.

“There’s a variety of brands on the schedule,” said Plummer, pushing back on notions London Men’s Fashion Week is petering out.

“Perhaps a new gem will emerge, thanks to the extra attention,” she added. — AFP

Tanker ablaze, 32 missing after collision off China

BEIJING — Thirty-two people, mostly Iranians, were missing Sunday after an oil tanker collided with a cargo ship off the coast of east China, the transport ministry said. The tanker, carrying 136,000 tons of oil condensate, caught fire following the collision Saturday night and its crew of 30 Iranians and two Bangladeshis were missing, the ministry said in a statement. The other vessel had been damaged but “without jeopardizing the safety of the ship” and all its 21 Chinese crew had been rescued, it added. The tanker was still ablaze Sunday, with images broadcast by state television channel CCTV showing the ship in the grip of an intense fire, enveloped in clouds of black smoke. — AFP

Cybersecurity a growing concern among many Filipinos — report

By Patrizia Paola C. Marcelo, Reporter

BUSINESSES in the Philippines should look at investing in talent to improve cybersecurity, as more Filipino consumers are increasingly worried about cyber attacks, a content delivery service provider said.

In its “The State of Cybersecurity 2017 — Southeast Asia” report, Limelight Networks said a survey showed 74% of consumers in the Philippines are “extremely concerned” about cybersecurity. The figure is higher than the 60% average in Southeast Asia (Philippines, Malaysia, and Singapore).

Also, the survey found 71% of consumers have had a more negative opinion of a brand after a cyber attack, while almost 40% of consumers said they will no longer make online transactions on a website that has been previously hacked.

Jaheer Abbas, Limelight Networks regional director for Southeast Asia and Australia-New Zealand, said the top concerns of consumers are the loss of financial/personal information, falling victim to an online scam, and infection of devices by malware.

“Businesses need to know that consumers are most concerned about violations of personal information when it comes to cyber attacks,” Mr. Abbas told BusinessWorld in an e-mail interview.

However, he noted said the high cautiousness of Filipinos compared with Singaporeans or Malaysians is a positive sign that can lead to a better handling of cyber security threats.

The survey showed 96.31% of Filipinos check if a website is secure before making an online transaction.  This is higher than the regional figure of 91.47%.

“This is thus a positive sign and we expect for demand to lead the push in technological improvements nationally in the Philippines to increase the sophistication of how cyber security threats are tackled and handled,” he said.

Mr. Abbas said companies should start planning and seeking out technologies and solutions that can help bolster cybersecurity, including firewalls for online platforms or security applications.

Businesses should also look at investing in talent to come up with a cybersecurity strategy and provide a “multi-layered” approach, employing various technologies and solutions.

“Additionally, to go a step further, they should look at investing in talent that can strategize for the security of their online platform and technologies that provide a multi-layered security approach, one that layers cloud and on-premise technologies into a ‘cyber security stack’ that can protect consumers from a variety of different vectors,” Mr. Abbas said.

Businesses must also communicate their cyber efforts to consumers. “Following that, they must communicate what they are doing to bolster cyber security to their customers. It’s important to let customers know that these measures are in place and that they are taking continual steps to ensuring optimal security and to safeguard against attacks,” he said.

Ang Larawan ng 2018

In the sepia haze, muted rays of suspended light paint a grisaille of the old Marasigan mansion in Intramuros. Bitoy Camacho remembers how it was when his friends Candida and Paula, spinster sisters, insisted to live there before the outbreak of the War — in the cruel reversal of fortune that unfairly tempted compromises of values and tradition.

Don Lorenzo Marasigan, the patriarch, was a once-famous painter — “El Magnifico,” he was called. Now self-exiled to the solitude of his upstairs bedroom, was he aware that his impoverished daughters would not sell his last remaining painting to pay for mounting utility bills? The rich older siblings Manolo and Pepang do not anymore live in the ancestral house. Stupid, they say of Candida and Paula! Sell this dying old mansion! Pepang has a ready buyer (who would give her a handsome commission).

Sell that painting — an American prospect will pay $10,000 (P20,000 at that time), their boarder, lover-boy type Tony Javier urges the two old maids. Many art critics and collectors want that last painting of El Magnifico: a puzzling self-portrait where he was the poet Virgil’s epic hero Aeneas carrying his ailing father Anchises (also depicting Marasigan, as an old man) on his back as they run from the burning city of Troy. Of course Tony will earn a commission from the sale, and he seduces the more vulnerable Paula to make sure the deal will happen. The buyer has doubled the offer to $20,000, and economically deprived, love-starved Paula elopes with Tony and the painting.

The three-act play of the late National Artist Nick Joaquin, Portrait of the Artist as Filipino has been performed hundreds of times in the original in theater and in adaptations in radio and film over six decades since it was written in 1952. At the 43rd Metro Manila Film Festival (MMFF 2017), Ang Larawan (The Portrait), based on the 1997 re-staging of Ang Larawan, the Musical won five of 12 categories, including Best Picture; Best Actress (Joanna Ampil playing Candida); Best Musical Score (Ryan Cayabyab); Best Production Design (Culturtain Musicat Productions: Girlie Rodis and Celeste Legaspi); and the Gatpuno Antonio J. Villegas Cultural Award plus the Special Jury Prize (Nick Joaquin, posthumous).

But the MMFF winnings of the 2017 Ang Larawan, though much to be jubilant about, seem to have unmasked some persistent tension in the Filipino soul that is precisely the message (or question) of Nick Joaquin’s undying Portrait of the Artist as Filipino.

“The year’s Best Picture (Ang Larawan) lost 15 theaters even before the awards night and (only) got relatively better patronage after the festival jury’s verdict. It had better audiences in middle upper-class turfs (Rockwell, Glorietta and Gateway) but suffered poor patronage notably in the provinces…the result of the recent MMFF awards night is a classic case of division between jury’s choice and the ever-changing public taste. Cineastes that include most members of the jury see the festival as a showcase of cinematic excellence while the masa see it as a chance to be entertained after a year of “bad news” ending in death in the highways, in the shopping malls and in the high seas (Pablo A. Tariman in The Philippine Star, Dec. 31, 2017).

Escape from reality (when reality is unpalatable) is the favored theme of popular art and literature — a happy ending is almost always expected by the audience. In the ending of Ang Larawan (2017) the “Unseen Character” Don Lorenzo Marasigan, the patriarch, the painter, the “Pius Aeneas” in the enigmatic portrait, unexpectedly descends from his bedroom isolation and joins the coterie of society guests and his family gathering in the sala of their primped-up old mansion for the feast of the Virgen de la Naval. (Co-producer Celeste Legaspi said in a text message that “that warm and emotional reunion provided a great jumping off point to [the impending] WWII). But it was somewhat a disappointment to see the blood and bones old man Marasigan replace the idealistic inferences to the unseen character that stood for the jealous and faithful respect for history and its values and tradition. It seemed iconoclastic to the portrait of the young Aeneas carrying the old Anchises on his shoulders (probably a take-off from the famous version by the Italian Renaissance painter Federico Barocci in the Galleria Borghese in Rome) that a pyrrhic victory was impliedly won by the Past over the Present.

Even the famous portrait was never actually shown in Nick Joaquin’s original play. Fr. James B. Reuter, renowned for his extensive work and accomplishments in Philippine theater saw in Nick Joaquin’s work “a vocation to preserve the beautiful values of the Filipinos; to preserve the memory of the great things Filipinos have done; their suffering, their courage; their patient, cheerful endurance; their love for one another; their laughter, their tears, their hopes, their dreams. He wanted to tell us that we are standing on the shoulders of great men; that we should not forget the warm hearts and the sacrifices of our ancestors; that we should treasure, and honor the beautiful gifts they have left us” (philstar.com May 8, 2004).

The final dénouement or “tying-up” of Joaquin’s Portrait/Larawan is really when Paula runs away from the manipulative womanizer Tony, and comes back to the old mansion — announcing that she has destroyed the portrait. Symbolically, the tension and conflict within the soul has ended. No more the “ifs and buts”, and the “howevers” that the money-valued painting stood for. No more temptations to compromise Beauty and Tradition, and the basic values of Filipino culture. From then on the portrait would exist solely in the mind and soul of Filipinos as the “Unseen Character” analogous to the “Pius Aeneas” in Graeco-Roman epic history who revered the values and traditions of the ancient peoples that became the foundation virtues and principles of human existence in a harmonious world.

But is Larawan relevant to the country and Filipinos, in 2018?

A snapshot of the country as of last year-end might probably call the sepia photos that Bitoy Camacho saw in his mind, of the old Marasigan mansion in Intramuros. Let the unseen portrait of a modern-day Aeneas carrying on his shoulders his old but steadfast moral and ethical values. Save the people, and run from self-immolation by the corruption of moral values, and as in Virgil’s Aeneid that described the subsequent decay and fall of mercenary Rome.

Mercenary. That is the fatal word that defined the conflict of selling or not selling the painting and the ancestral home in Portrait/Larawan. Compromises for financial security and economic progress in our country in international business and trade relations must not be the covetousness and deviousness of the Tony Javier character and the other opportunists who wanted the painting in Larawan. The end-justifying-the-means is always immoral even in the aggressiveness of a rabid drug war. Let the seeming political bullying end, as with the human rights abuses so loudly whispered about. The looming constitutional change happening this 2018 scares us too much for its eerie simile to Don Lorenzo Marasigan’s last painting being sold.

We pray to the Virgen de la Naval to protect and save us from ourselves, in 2018 and always.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Tax reform veto creates uncertainty over PEZA perks

THE Department of Trade and Industry (DTI) said there is uncertainty over whether firms registered with the Philippine Economic Zone Authority (PEZA) will keep their value-added tax (VAT) exemptions after Malacañang vetoed provisions of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

This was after PEZA reasoned that the TRAIN will not repeal the PEZA law –  which states that its economic zones are operated and managed as a separate customs territory – and was quoted in a Supreme Court decision but DTI still held its reservations.

“The supreme court decision is based on the laws that we have— the tax code and the PEZA. But the TRAIN package one, it’s also a law so it precedes all that is inconsistent but the supreme court law – the decision, is all this that is that was preceded,” Trade undersecretary for Industry Development Group Ceferino S. Rodolfo said in an earlier press briefing.

President Rodrigo R. Duterte in December vetoed five TRAIN provisions including the zero-rating on the sale of goods and services that cross separate customs territories and tourism enterprise zones, noting that the provision violates “the principle of limiting VAT zero-rating to direct exporters.”

Mr. Duterte noted in his veto that when goods or services cross separate customs territories without being taxed, it will lead to “leakages” in the tax system, which will defeat the TRAIN’s goal of making the tax process simpler and more efficient.

PEZA, an agency under DTI, gives fiscal and non-fiscal perks to certain commercial activities such as export-based manufacturing industries as well as business process outsourcing and knowledge process outsourcing businesses in economic zones.

In a briefing on Dec. 29, PEZA Director General Charito B. Plaza argued that “there are many interpretations of the veto of the President,” giving PEZA leeway to maintain its interpretation, effectively preserving the status quo.

In a dispute involving the Omnibus Investments Code, “there is a Supreme Court decision [which exempts PEZA]. If they’re going to implement otherwise, then that’s when we’re going to fight back because of the Supreme Court decision. But we’ll see,” she added.

PEZA’s Deputy General for Operations Mary Harriet O. Abordo argued that TRAIN does not change the fact that PEZA’s economic zones are considered foreign soil and will not be affected due to the cross-border doctrine.

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