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How diversity and inclusion boost Schneider Electric

By Arra B. Francia
Senior Reporter

ENERGY management firm Schneider Electric is working on employing a more diverse population set with the help of policies that will ensure everyone has the chance to grow and improve.

Schneider Electric Senior Vice- President for Human Resources International Operations Ferran Raurich described diversity and inclusion as something that benefits both the company and the society it serves.

“We believe what we can bring together as a company is much more powerful if we have high levels of diversity than if there’s none. For us, everyone is a business benefit and at the same time a contribution to our growth,” Mr. Raurich told BusinessWorld in an interview earlier this month.

Diversity in the workplace means hiring people with different cultures, nationalities, background, religion, and gender or sexual orientation.

The company works to ensure employees have psychological safety, where they can feel safe in the workplace regardless of their religion, background, nationality, or gender.

“At the end of the day whatever you do, it has to be translated to what is happening in the work place. Inclusiveness and psychological safety is a key factor to understand how to build diversity in a work place,” Mr. Raurich explained.

In terms of addressing the gender gap, the company is trying to help talented women move up the corporate ladder.

“What we have to make sure is at the base of the pyramid I need to have this inclusive environment where I have policies and initiatives who help me to drive a talent webline which is going to represent the total diverse population,” Mr. Raurich said.

The company currently employs 2,612 people in the Philippines, more than a thousand of whom are women. The male-to-female ratio differs in every office, with one out of three offices dominated by women.

Women also hold key leadership positions such as industrial automation head, home and distribution head, country human resources director, human resources director global supply chain business, and cluster finance business partner.

Mr. Raurich noted that benefits for their employees are also higher than what is stated in the Labor Code, including leaves (vacation leave, sick leave, bereavement leave, care leave, maternity leave, sabbatical leave), work from home options, life insurance, medical coverage for employees and dependents, and retirement.

Aside from these benefits, Schneider Electric also has a yearly allocated budget to address the gender pay equity gap. It further sources candidates that ensures a “healthy representation of women even for technical positions that’s male dominated.”

“Obviously the job is still for the best candidate. In any case, where you create the difference is if I ensure that I have the right initiatives to build balance. What happens is the people growing naturally will represent all kinds of backgrounds in different elements,” Mr. Raurich said.

The company’s goal is to be a “truly global company” with hubs from all over the world welcoming all kinds of nationalities. Mr. Raurich said their global employee base is currently one third European, one third American, and one third Asian.

“We look at many different angles in order to build that diversity,” he said.

Why Gucci and Dior want to rebuild Notre Dame

By Andrea Felsted
Bloomberg Opinion

IF THE fire at Notre Dame cathedral had happened 20 or 50 years ago, France’s luxury fashion houses would surely have rushed to support its reconstruction as quickly as they did in 2019.

There is no doubting the sincerity of LVMH, Kering SA and their founding families, who led the way with donations after the devastation last week. The city of Paris, its streets and landmarks, have held a special role as the artistic center of the industry since its earliest days, so to restore what has been lost is to preserve its own history.

But more than a century after Coco Chanel sold her first hat, the titans of luxury have even more reason to ensure Notre Dame recovers.

And it is not just that they are among the wealthiest in France — LVMH’s Bernard Arnault is France’s richest man and Francois Pinault, who created Kering SA, ranks third. L’Oreal SA and its principal shareholder, the Bettencourt Meyers family, are also key donors.

Fashion generates 2.7% of French gross domestic product. Luxury, including L’Oreal, represents 19.8% of the CAC 40 index. With such a sizable share of the nation’s business, it’s only natural that the leading producers of high-end goods would step up to preserve one of their country’s iconic locations.

It’s important that they do, because selling high-end goods has changed over the past decade. The lines are blurring between fashion, art, travel, and culture, and developing a brand depends on so much more than offering the latest It bag. Success means blending all these elements together, so there’s a drive to branch out.

The big groups are already involved in art and restoration. LVMH opened the Fondation Louis Vuitton, a Frank Gehry-designed center for contemporary arts, on the western edge of Paris in 2016. Pinault, meanwhile, is building a museum to house his private art collection at the former Bourse de Commerce, in the center of Paris.

Notre Dame is associated with heritage and beauty, values that resonate within the luxury industry. Preserving the cathedral burnishes donors’ position as a guardian of those characteristics, which in turn highlights the broader lifestyle they seek to promote.

Landmark preservation fits well with this ethos.

Fendi, part of the LVMH empire, contributed $2 million to the repair of the Trevi fountain in Rome. Sister brand Bulgari donated $1.7 million to overhaul the city’s Spanish Steps. Outside of the Arnault stable, Italian leather goods group Tod’s SpA has underwritten the $28-million restoration of the Colosseum in Rome.

Their altruism works best on high-profile sites that appeal to tourists, as their donations also literally put their names on the map for the millions of visitors to key locations each year. Fendi even held a fashion show at the Trevi Fountain under the late Karl Lagerfeld. A restored Notre Dame will be no different (though fashion shows may not be allowed).

The real prize for the French houses is to assure their connection to the Chinese, who are the number one buyers of luxury goods globally. LVMH and Kering each generate about a third of their sales from Asia excluding Japan.

Paris is one of the main destinations for travelers from this region, and anything that affects visits can also impact sales of luxury goods. For example, the 2015 tourist attacks on the city, and the recent yellow vest protests, hurt demand. On the other hand, a weaker euro can lift sales. For these companies, there is a special urgency to ensure that Paris is preserved.

When Notre Dame is finally rebuilt, donors will rightly be credited with rescuing a symbol of the city.

They’ll also have created an even bigger draw for visitors. It makes good business sense for them to have taken part.

How PSEi member stocks performed — April 17, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, April 17, 2019.

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pseiactive041719

Two-day Boao Forum for Asia conference kicks off in Manila

PRESIDENT Rodrigo R. Duterte and Speaker Gloria Macapagal-Arroyo will be leading the Philippine delegation to the first Boao Forum for Asia (BFA) in Manila on Monday and Tuesday at the Shangri-La Hotel in Bonifacio Global City.

The forum, which aims to build further cooperation among leaders of the Association of Southeast Asian Nations (ASEAN) and China in relation to Beijing’s Belt and Road Initiative (BRI), is scheduled to take place in Manila on Monday and Tuesday, according to the program’s agenda posted on the official website of the BFA.

The BFA said it was its first conference in Manila. “The Manila Conference comes at a time after the BFA Annual Conference 2019 and prior to the 2nd Belt and Road Forum for International Cooperation. The conference is expected to build consensus on further cooperation in respect of the Belt and Road initiative and regional interconnectivity. It will also send a positive message on the prospect of world economy and intellectually supporting Asian countries to address common risks and challenges,” it said.

The BFA also said that its decision to hold a conference in Manila came at the invitation of Ms. Arroyo.

“The Philippines is one of the initial countries of BFA, and has also served as the coordinator of China-ASEAN relations since last year. Against the backdrop of the progressing China-Philippines relations from recovery, consolidation and improvement, as well as the upgrading of China-ASEAN relations, the forum’s decision to hold its conference in Manila at the invitation of H.E. Ms. Gloria Macapagal-Arroyo, Speaker the House of Representatives of the Philippines, reflects its support of and confidence in the China-Philippines relations and East Asian cooperation,” it said.

The forum seeks “to build a new communication and cooperation platform for government, business and academic leaders between China and the Philippines as well as China and ASEAN.”

The private sector will be focused on parts of the conference dedicated to innovation, Philippine Chamber of Commerce and Industry (PCCI) Chairman George T. Barcelon said.

“This is the first time it will be held here and I think this will be a subset of what was discussed there,” Mr. Barcelon told BusinessWorld via telephone on Sunday.

Mr. Barcelon was referring to the BFA Annual Conference 2019 held on March 26-29 in Hainan, China, which he attended with Speaker Gloria Macapagal-Arroyo.

“Ang main focus (of the) forum is to share ideas. What we heard, they talked about innovation, they talked about (the period) before Industrial Revolution and they talked about the China market opening to free their service sector,” he said.

“They talked about the financial shift in new technology to make the availment of finance easy for the MSME (Micro, Small, and Medium Enterprise),” he added.

The PCCI is also among the supporting partners of the BFA and the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII) for the two-day forum in Manila along with Philippine Exporters Confederation, Inc. and the Chinese Embassy in the Philippines.

Mr. Barcelon said bringing the BFA to Manila will allow Chinese investors to better gauge the business environment in the Philippines.

“Our local counterparts can have the opportunity to listen and at the same time, you have about 300 foreign guests coming from all parts of China. This allows them to see for themselves the conditions here in the Philippines,” he said.

Mr. Barcelon said the chamber hopes to find investors in the manufacturing sector to increase employment opportunities for Filipinos.

“We hope we can also attract people in the manufacturing sector; they don’t necessarily have to be very big, as a matter of fact, (we find it more important for small and medium-sized business to explore investing here,” he said.

“We see possible investments that could create more job opportunities for the country.”

When asked about the territorial dispute in the West Philippines Sea, Mr. Barcelon said he sees the two countries remaining open to bilateral discussions.

“I’m sure in this fora, maybe it will not be concentrated too much on this topic, but it will be talked about from the point of view that, yes we have sovereign rights, but our gates our open for bilateral discussion at the same time,” Mr. Barcelon said.

“I think the focus there, even with the pronouncement of the administration, is that the issue will focus more on economics and trade. Maybe they will touch on that but the sentiment on both sides is that there’s much more to be gained by being open on these trade and commerce.”

Trade and Industry committee chairman George T. Siy of the FFCCCII said hosting the BFA for the first time will allow the government to promote the Philippines as business partner.

“Its held in the Philippines for the first time as a promotion of the potential business relationship between the Philippines and China because they are sending more than 200 business people here from various fields, including manufacturing, tourism and technology,” he told BusinessWorld in a separate phone interview Sunday.

“They will be trying to build relations with business people here and looking at the business environment. On our end liligawan naman natin na maglagay ng (we will try to attract) investments.”

Mr. Duterte is scheduled to attend the forum and deliver a keynote speech on the first day of the conference while Ms. Arroyo will deliver her keynote speech on Tuesday.

Other leaders who are expected to attend the event are former Deputy Prime Minister of Thailand Surakiart Sathirathai, BFA Vice-Chairman Zhou Xiaochuan, and BFA Secretary-General Li Baodong.

“About 500 entrepreneurs from China, Thailand, the Philippines and other ASEAN states as well as western countries will attend the conference,” the BFA also said.

The BFA said further that the conference “will focus on the theme of ‘Concerted Action for Common Development in the New Era,’ aligned with and built on BFA’s theme ‘Shared Future, Concerted Action, Common Development.’ New era call on new actions. Faced with a world of fundamental changes, Asian countries need to shoulder common responsibilities and take concerted action to address challenges in the new era.” — Arjay L. Balinbin and Charmaine A. Tadalan

DTI to expedite permit process for integrated steel projects

THE Department of Trade and Industry (DTI) said it will expedite the permit process for the construction of steel plants in the Philippines on orders from President Rodrigo R. Duterte.

“[Trade] Secretary [Ramon M.]Lopez vowed to closely coordinate with all government agencies so that permits and licenses for critical steel projects are issued within 20 days from filing and to intensify DTI’s effort in tracking and weeding out substandard steel from the market — particularly as these are typically being used in lower-end housing,” according to a DTI statement issued last week.

Mr. Duterte recently assigned the DTI to monitor and coordinate all government efforts to ensure the timely implementation of investment projects that will bring integrated steelmaking to the country.

“President Duterte assured investors that government will address the two issues raised: 1) slow permit and licensing processes [e.g., land conversion, environmental permits] and 2) absence of level playing field because of sub-standard imported and locally-manufactured steel,” the DTI said.

At present, Steel Asia Manufacturing Corp. is the only domestic firm with current plans to put up an integrated iron and steel plant.

Steel Asia will operate in partnership with Hesteel Group Co. Ltd., a Chinese iron and steel conglomerate.

The production facility will initially process iron ore and later, major intermediate steel products like billet and slab steel, which are all currently imported.

The country also relies mainly on imports for both flat and long steel products, except for rebar which it produces from imported billet.

Steel Asia President Benjamin O. Yao said jobs in the steel industry are expected to double from the current 10,500 to around 21,000.

Job multipliers in support industries will also result in the creation of 52,500 more jobs, doubling the jobs in support industries job to around 126,000.

“Once the integrated steel facility becomes operational along with the revival of the flat segment, steel industry jobs and its related industries could also potentially double up to 300,000 personnel,” Mr. Yao was quoted in the statement as saying. — Janina C. Lim

Dominguez cites WB role in bringing PHL to ‘upper middle-income’ status

THE Department of Finance (DoF) said the Philippines will be able to achieve “upper middle-income” status this year with the assistance of the World Bank (WB).

In his speech in Washington D.C., Finance Secretary Carlos G. Dominguez III said the “generous” support of the WB is a “key factor” in the country to achieve its goal of becoming an upper middle-income economy in 2019, three years ahead of schedule.

“This year… we are proud to announce that the Philippines will achieve the status of an ‘upper middle-income’ nation ahead of schedule. The (World) Bank shares much credit for this achievement,” said Mr. Dominguez during the Philippine Day Forum held on April 11.

The WB defines an upper middle-income economy as having a per capita income of between $3,896 and $12,055. According to the latest WB data, the country’s gross national income per capita of $3,660 as of 2017.

Under the administration of President Rodrigo R. Duterte, the government targeted upper middle-income status by 2022, eventually becoming a high-income economy by 2040.

The government also plans to bring down poverty incidence to 14% by the time Mr. Duterte steps down from office in 2022, from 21.6% in 2015.

Mr. Dominguez also expressed gratitude to the bank for its assistance over the last six decades in developing the country’s human capital, disaster risk management, education and transport sectors, among others.

He also cited WB’s support in bring about peace and development in Mindanao’s conflict-ridden areas, which “has been a major component of the bank’s program in the country.”

“Today, the Philippines is one of the fastest-growing economies in the world. Reaching this milestone in our development story is attributable to many years of hard work — especially in building a strong fiscal position and a bureaucracy honed to the task of catalyzing growth,” Mr. Dominguez said.

He added that Mr. Duterte had “delivered resoundingly” on his socioeconomic reform agenda, which include a progressive tax reform program, improvement in ease of doing business and increased investments in human capital among others.

The government is pushing for comprehensive tax reform to simplify the regime and generate more revenue to expand social services and support its infrastructure program, which is pegged to cost P8 trillion.

The government embarked on its “Build, Build, Build” program in an effort to boost economic growth to 7.8% until 2022.

Mr. Dominguez also highlighted several reforms passed, including the new bank charter, adoption of a national ID system and new platforms to minimize the cost of doing business.

“These reforms should translate into even stronger resilience as we face the challenges of this year,” said Mr. Dominguez, citing foreseen global economic slowdown and rising concerns of recession in major industrial economies. — Karl Angelo N. Vidal

Cebu Pacific cabin crew establish new union

CEBU Pacific Air Inc. is gearing up for upcoming negotiations with its new cabin crew union, Juan Wing Regular Cabin Crews of the Philippines, after the union was formally established last week.

“In the coming weeks, we will be meeting with representatives of the Juan Wing cabin crew union. We intend to engage in healthy dialogue and ensure a positive and productive relationship,” Cebu Pacific COO Michael Ivan S. Shau told BusinessWorld on Sunday.

Last week, the ballot counting from the April 1 to 5 elections for the establishment of a union for cabin crew showed 1,124 out of 1,135 votes cast chose “Yes to union.” Both the elections and counting were overseen by the Department of Labor and Employment (DoLE).

The Associated Labor Union — Trade Union Congress of the Philippines (ALU-TUCP), with which Juan Wing is affiliated, said that the newly-formed union is preparing to discuss issues like security of tenure, improved benefits, and fair wages for cabin crew.

“The union will negotiate for better wages and benefits, better working conditions, and better terms under the existing labor policies and regulations to improve… (the) working climate that would benefit the interests of both the union members and the management,” said TUCP President Raymond C. Mendoza in a statement on Sunday.

Mr. Shau said that the airline’s desire to provide all Cebu Pacific employees better labor rights has always been a top concern.

The JG Summit Holdings, Inc. unit said it practices are in line with the group’s engagement policy with its workers.

“(C)ebu Pacific believes that there is no differentiation between unionized and non-unionized employee groups when it comes to listening to and providing for the needs of our employees. In fact, JG Summit has a track record of maintaining open, transparent and mutually beneficial relationships with all 27 unions existing across the conglomerate,” he said. — Gillian M. Cortez

CTA rules San Miguel entitled to over P55-M excise tax refund

THE COURT of Tax Appeals (CTA) directed the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate to San Miguel Brewery, Inc. for P55.8 million due to erroneously-collected excise tax on the removals of “San Mig Light” (SML) in 2014.

In a 40-page decision dated April 11, the CTA special third division partially granted the initial P60.5 million tax refund claim of San Miguel Brewery as it was only able to establish its entitlement for a refund in the amount of P55.8 million.

“In fine, petitioner was able to establish that it is entitled to a refund or issuance of tax credit certificate corresponding to its erroneously, excessively, and/or illegally collected excise taxes due on the removals of SML in bottles and in cans for the period January 2, 2014 to December 29, 2014, but in the reduced amount of P55,797,176.63,” the CTA ruled.

San Miguel Brewery filed the petition with the Court, claiming that it overpaid the amount of P0.39 per liter for SML in bottle and can form and P4.29 per liter for SML in kegs after the BIR imposed a P21.39 per liter excise tax rate when it should have only paid P21 and P17 per liter on fermented liquor as stated in the Tax Code.

Under Section 143 of the Tax Code, Effective 2014, an excise tax of P17 per liter is imposed on fermented liquors with net retail price of P50.60 or less and P21 for those priced at more than P50.60.

San Miguel Brewery said it paid P20.57 excise tax rate for SML in 2013 as the BIR classified it as a variant of an existing product and a high-priced beer, under Revenue Memorandum Circular No. 90-2012, when it should have been paying P15.49 per liter only as a new brand. The BIR increased the tax rate to P21.39 in 2014 or an add-on of 4% as the required increase in the Tax Code.

The CTA noted that Supreme Court has previously ruled the SML is a “new brand” and not a “variant of an existing brand,” Pale Pilsen.

“Clearly, the previous classification of SML as a high-priced brand was invalid. Consequently, the imposition of P21.39 excise tax rate per liter on SML for the year 2014, based on the excise tax rate of high-priced brands of fermented liquor, was likewise erroneous,” the CTA ruled.

The CTA disallowed the alleged excise tax in the amount of P4.7 million representing SML in kegs because San Miguel Brewery failed to submit sworn statements, in the format required by existing rules and regulations, which declared its net retail price as basis for excise tax rate.

“Petitioner’s Schedule of Net Retail Price of SML Products did not qualify as the Sworn Statement as required under the rules, hence, the same could not be utilized as basis of the NRP of SML in kegs,” the court said.

“As discussed, the total excise tax claim on SML in kegs in the aggregate amount of P4,673,023.31 is disallowed; thus, only the excise tax claim on SML in bottles and cans in the sum of P55,797,176.63 may be refunded,” it added.

The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Associate Justice Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas

CTA affirms 2018 ruling granting Taganito partial VAT refund

THE Court of Tax Appeals (CTA) affirmed a December 2018 decision partially granting the tax refund claim of Taganito Mining Corp. concerning excess input value added tax (VAT) for 2014 worth P25.95 million.

In a seven-page resolution on April 12, the CTA special second division denied for lack of merit the separate motions for partial reconsideration filed by Taganito Mining and the Bureau of Internal Revenue (BIR).

“Wherefore, finding no cogent reason to reverse the ruling in the assailed Decision, petitioner’s Motion for Partial Reconsideration with Manifestation and Comment to Respondent’s Motion for Partial Reconsideration posted on December 28, 201(8) and respondent’s Motion for Partial Reconsideration filed on December 20, 2018 are denied for lack of merit,” the CTA ruled.

The CTA on Dec. 6, 2018 partially granted Taganito’s initial P28.9 million tax refund claim of excess VAT attributable to zero-rated sales in 2014, saying only the amount of P25.95 million was properly documented.

The tax appellate court denied the motion of Taganito which had asked the court to reconsider the disallowances by allowing it to present new evidence through a new trial. The mining company claimed that it did not have enough time to go over the findings of the independent certified public accountant (ICPA).

“To come now to the Court and request for a new trial to present additional evidence that may possibly result in the grant of the entire amount claimed is without legal basis as the petitioner was already given ample opportunity to present evidence to support its cause of action,” the court said.

Under the Revised Rules of Court, the grounds for filing a motion for new trial or motion for reconsideration are fraud or mistake that could have aggrieved one of the parties’ rights, and newly discovered evidence and be supported by affidavits of merits.

The CTA said that while Taganito submitted an affidavit, it did not meet the two grounds for the motion for new trial and reconsideration. It also found in the affidavit that it sought to present additional evidence due to “mere oversight” as some documents were not included in the supporting documents submitted by the ICPA.

“This Court finds that this would constitute ‘forgotten evidence’ which petitioner would like to present only after obtaining a partial grant of its claim for refund,” the CTA said. “Forgotten evidence is not a valid ground for a new trial as held by the Supreme Court.”

In denying the motion for reconsideration of the BIR, the CTA said the motion is similar to reading a discussion or lecture on requirements for claiming refund. It also said the BIR did not specify alleged errors in the decision or clarified his points, aside from stating that the court erred in partially granting the taxpayer’s claim.

“The scant contents of respondent’s Motion for Partial Reconsideration which did not provide the details of his plea for reconsideration nor pointed out the specific errors allegedly made by the Court, fails to pass the above test, hence it is considered pro forma and deserves little or no consideration by this Court,” it said.

The decision was penned by Associate Justice Catherine T. Manahan and concurred in by Associate Justice Juanito C. Castañeda, Jr. — Vann Marlo M. Villegas

Tax amnesties seen improving BIR data on delinquencies, land holdings

THE other goals of the government’s tax amnesty program include generating more information on delinquencies for the Bureau of Internal Revenue (BIR), a senior tax advisor said.

“I don’t think the amnesty, by itself, will significantly improve compliance. It will of course help clean up the BIR’s database on delinquencies,” Lina P. Figueroa, P&A Grant Thornton Tax Advisory and Compliance Principal and Technical and Training Group Head said in a mobile message on Sunday.

Ms. Figueroa said that more updated records for land can be expected once the amnesty on estate tax is implemented.

“I look forward to more updated records of land ownership as a result of the estate tax amnesty,” Ms. Figueroa said.

Marissa O. Cabreros, BIR Deputy Commissioner, said that the Bureau does not have a projected target for settlements to be generated by the amnesty, but hopes that taxpayers with delinquencies will avail of the program to start again with a clean slate, and will allow receivables to be converted into collections.

“We don’t know actually ano ang magiging turnout (what will be the turnout) but we are hoping that a lot of our delinquent taxpayers will avail because it would give them a clean slate, and at the same time our floating receivables, so to speak, will be converted kahit papaano (to whatever extent) to collections,,” Ms. Cabreros said in an interview on April 15.

Ms. Cabreros clarified that the tax amnesty returns filing on Apr. 24 are only for taxpayers with delinquencies, while the amnesty for estate tax can be expected in May.

“The RR (Revenue Regulations), just a reminder, is just (about) delinquencies. Remember that the law covers another form of amnesty, the estate tax amnesty, so soon we will have the draft regulation uploaded for comment by the public para soon ma-finalize din namin (so that we can finalize it soon), because remember, the law gives us until June 3 to make effective the respective RR pertaining to the entire tax amnesty law,” Ms. Cabreros explained.

“Most probably it will become effective by May,” Ms. Cabreros said.

Ms. Cabreros said that the BIR has completed the RR for tax amnesty on estate tax and will solicit public comment once it is uploaded. She said however that the process will be “more complicated” than the tax amnesty on delinquencies.

“Kung kaya naming matapos, hindi namin ima-max out ‘yung June 3 (If we can finish early we will not max out the June 3 deadline) but delinquencies came first because that’s easier and straightforward. Amnesty on estate tax is medyo (somewhat) complicated… it may involve several transfers of property,” Ms. Cabreros said. — Reicelene Joy N. Ignacio

Big data and dark data: Balancing the costs and benefits

Big data is starting to become a cliché among business executives, given that almost everyone is now leveraging big data in decision making. “Big data” was defined in 2012 by Gartner (a global research and advisory firm) as “high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.”

The term is often used to refer to predictive analytics or other methods of extracting value from data and information. What is often left out is its twin subset — dark data. Gartner coined the term and defines “dark data” as “the information assets organizations collect, process and store during regular business activities, but generally fail to use for other purposes.”

The digital world produces information in unprecedented proportions. Based on a study by Statista in May 2018, about 47 zetta bytes (1 zetta byte is about 1 trillion giga bytes) of data are expected to be generated by 2020. This number grows to 163 zettabytes in 2025 – almost 3.5 times in a span of five years! To put in perspective how exponential the growth of data worldwide is, only 2 zettabytes were generated in 2010. While structured information can be consumed for analysis out of the ocean of big data, portions of unstructured information, the dark data, will remain untapped.

The growing breadth of available data and the use of big data in business decisions and applications would mean commensurate growth in the investment needed to make sense out of the ocean of information. Revenue from big data and business analytics worldwide, according to a study conducted by Statista in August 2018, amounted to $149 billion in 2017 and is expected to reach $186 billion in 2019. Revenue from these businesses is expected to grow steadily at 12% year on year to about $260 billion in 2022. Clearly, more and more investment is going to leverage the power of big data and harness the benefits it brings to decision making. Investmenting in the right places also helps in maximizing yields.

Let us look into an industry where big data and data analytics have made a massive impact — the restaurant business. Gathering information ranging from customer demographics, behavioral data and shared customer interests, restaurant owners can develop smart and specific marketing activities for targeted customers. Customer profiles and point-of-sale information also help in developing best practices in maintaining on-time delivery, menu enhancement, customer segmentation, streamlining operations and improving customer experience.

A lot has been developed in this industry and big data has had a significant influence in effecting these changes. However, where does dark data go?

Big data is used in the practical world starting from determining what objective needs to be met — then almost instantaneously, followed by determining the what, why, how, where and when. This is where it gets tricky. One can start defining what they need and then look for it in the big data or start from the big data to see what it offers then see what benefits to explore. In either approach, handling volumes of big data may prove to be costly both on a technological and people resources level leaving no space for investment in harnessing dark data (i.e., emails, printed reports/statistics, hard copy files, CCTV footages among others).

Let’s take as an example a small restaurateur who aims to solve the single biggest issue identified by customer survey feedback — long waiting queues before waiters are available to take orders. Structured data were gathered to profile customers from the moment they enter the restaurant until an order is taken — demographics, time of day information, volume of customers, menu listing, number of waiters and ordering time. The restaurateur analyzed all this information and developed a streamlined menu and added waiters on identified shifts where customers are expected to peak. The expectation was to have the ordering time drop significantly and waiters will have a quicker turnaround for taking orders.

However, while the changes all made sense, there was no noticeable drop in ordering time. This made the restaurateur go back to the drawing board and prompted a check on how ordering was done in the past. The restaurant’s CCTV footage was reviewed and customer behavior was observed comparing the order-taking sequence in the past and present. The restaurateur noted that in recent footage, an average of three visits were made by waiters before an order was placed — the first was almost immediately after customers were seated, followed by two other visits with longer intervals. In older footage, there were only two visits on an average and with shorter intervals before an order was placed.

When the restaurateur investigated the interactions on the first visit and the driver of longer intervals in recent footages, it was found out that the reason had to do with their free WIFI services. Customers would ask for the WIFI passwords in the first visit of the waiter and set their phones up before they turned their attention to the menu and actually started making an order decision. The reason for longer order time had less to do with number of waiters, volume of customers and menu. The restaurateur could have saved time by analyzing the dark data in the form of CCTV footage first rather than going straight to big data that was easily analyzed.

The realization of the root causes of the customer behavior made it easier to address the problem. The restaurant now has WIFI password information readily available on all their tables.

Investing in big data is an edge and balancing it with investments in converting dark data will make it more effective. Breaking the constraints in analyzing dark data may require more investment but it equally provides the power of the comparative — seeing clearly what was different in the past can make better and more informed decisions.

The comfort of having masses of information and the capacity of analyzing it may cause dark data and its potential to be neglected. Swimming into deep open waters just because you can may not be the wisest. But navigating these waters with the knowledge of the past brought by dark data could mean your true edge in the digital world.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Shane Dave D. Tanguin is a Partner of SGV & Co.

Analysts: Dynasts to complicate federalism drive

By Arjay L. Balinbin
Reporter

THE switch to a federal system is still possible but dynasts will resist the inclusion of an anti-dynasty provision in the federal constitution, according to analysts.

“Political clans will most likely reject very specific provisions that will negatively affect their own power and succession plans,” Natividad Cristina J. Gruet of the University of Asia and the Pacific-School of Law and Governance said in a phone message on Saturday when sought for comment.

Julio C. Teehankee, a member of the Consultative Committee to Review the 1987 Constitution, said at a forum on April 5 that “a federal shift is still possible, but the electoral calculus of 2019 and 2022 will make the passage of a ban on political dynasties…impossible.”

He noted that there are at least 317 political families that dominate both national and local politics, with 70% of local government officials becoming dynastic by 2040.

Ms. Gruet said, “The public support for federalism will most likely depend on whether President Duterte will spend his political capital strongly promoting the final draft, assuming it includes an anti-political dynasty provision.”

“However, local politico mobilization will also be equally integral to positive perception and acceptance. This is where the anti-political dynasty provision will be crucial.”

Last March, Mr. Duterte said that he was in a hurry to strike a deal with Moro National Liberation Front (MNLF) Chairman Nur Misuari. They both agreed to create a panel composed of five MNLF members and five from the government to discuss federalism.

Also sought for comment, Ateneo Policy Center senior research fellow Michael Henry Ll. Yusingco said via e-mail on April 14: “RBH (Resolution of Both Houses) No. 15 is clear proof that dynastic politicians will not hesitate to hijack the federalism agenda to perpetuate themselves in their positions of power. And can we really expect things to change in a federal system with political dynasties lording it over the regions?”

He added: “I deeply believe that for a federal system to work in the Philippines, it must also feature a self-executing constitutional mechanism regulating political dynasties. One example of this kind of federal structure is the Bayanihan Federalism draft constitution made by President Rodrigo Duterte’s Consultative Committee on constitutional reform.”

“[G]iven that by and large voters have no deep and overt aversion against voting for dynastic candidates, does this mean they will be open to accepting a federal structure without a self-executing constitutional provision regulating political dynasties? Indeed, [this] query points to a very relevant subject for a survey poll.”

Mr. Yusingco also noted that the reign of dynastic politicians “has led to the enculturation of a myopic and parochial local governance mindset, very clearly demonstrated by incumbent local politicos who can only be bothered by short-term projects that have an immediate and perceptible impact (i.e. basketball courts and waiting sheds).”

Also in an interview on April 5, lawyer and historian Michael O. Mastura said: “The anti-dynasty debate is a deviation from the main agenda which is the shift to federalism. Anyway, we will see how it works differently in a federal set-up.”

Citing the RBH No. 15 authored by House Speaker Gloria Macapagal-Arroyo and 21 other legislators, he said: “The least controversial it is, the more federal we go; because if you start with a dynasty debate, then you will already have an opposition.”

He said the dynasty debate is necessary but it has to be understood “within the context of the structural levels of federalism.”

“You see, it is a federal set-up with layers of structures. So right then and there, this dynasty can still be avoided or in some cases can be tolerated because there is no way to legislate that. Can you legislate an anti-dynasty? No, I don’t think so,” Mr. Mastura explained.

For his part, Mr. Yusingco said: “I also recognize that other federalism proponents may not have the same view as mine. And it is a pity that whether a self-executing provision regulating political dynasties is indispensable in a federal constitution has not been directly debated upon by federalism advocates.”

For that reason, he said, it would be “very difficult” to say at this point whether the public will accept a federal constitution without an anti-dynasty provision.

Political history assistant professor Marlon B. Lopez of the Mindanao State University-Tawi-Tawi College of Technology and Oceanography said via chat on Saturday: “It is vital that we discuss first who wields the power that will be devolved. The matter is not about whether the public will accept it or not but who will debate about it.”

“Dynasties exist and thrive. People became accustomed to it. Dynasties were present even before the Spaniards came but in a very different setting. Back then, one’s ability should be proven. Today, a surname is the ticket to power,” he said, adding that a “genuine” anti-political dynasty law can never be expected “so long as our leaders come from few families.”

“We can never start a debate on dynasty because of the people who will debate about it….” Mr. Lopez also said.

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