Move on nonperforming state firms put on hold amid economic crisis

THE GOVERNMENT is not inclined to abolish any state-run firm while the country is reeling from an economic slowdown, since this would lead to job losses, the Finance department said.

"None. None for now. Because of the crisis, we cannot close any corporation," Finance Undersecretary Jeremias N. Paul said in a chance interview last Tuesday.

Mr. Paul, who heads the department’s corporate affairs group, claimed that they are already undertaking reforms to improve the management of government-owned companies.

Separately, Finance Secretary Margarito B. Teves said timing should be considered in deciding whether a state entity should be shuttered, given that the government is trying to preserve jobs to mitigate the impact of the global downturn.

Least cost

The Finance chief, however, maintained that in the long-run, the operation of state-owned firms should not be burdensome to taxpayers.

"In terms of what needs to be done over the long-term, we still go by the principle that we have to maintain GOCCs (government owned and controlled corporations) at the least cost possible to taxpayers," Mr. Teves said.

He added that the abolition of GOCCs may take time as this would have to undergo the usual process of legislating new measures.

"Abolition would require congressional approval since these GOCCs were created by Congress," Mr. Teves said.

The government aim is to make GOCCs financially independent.

For now, however, it is continuously providing them funding support to enable them to invest in areas that are not usually attractive to the private sector like rural electrification and socialized housing.

Earlier, Manila-based multilateral lender Asian Development Bank (ADB) scored the government for its supposed failure to reduce bleeding state firms, noting that some of these are suffering from weak institutional and regulatory frameworks.

ADB also urged the government to dissolve nonperforming corporations or to privatize them to ensure that these are not eating much funds from the government coffers.

Mr. Teves had previously said that his department will assess the performance of state-owned firms to see if they should be retained or deactivated.

He said he will not hesitate to recommend to Congress the closure of firms that pose burden to the public, whose taxes are being used to support their operations.

Subsidies double

Last month, the Finance Department reported that subsidies disbursed to state-run firms in the first half almost doubled from last year.

This, as the government also spent on infrastructure and social services to help prod private consumption and other economic activity amid the global slump that is not expected to ease until later next year.

Funds released to GOCCs and government financial institutions (GFIs) totaled P6.98 billion in the first six months, up by 90% from P3.67 billion last year.

On a month-on-month basis, subsidies extended to GOCCs and GFIs reached P1.95 billion in June, more than double the P942 million disbursed in May.

The top recipients of national government funds as of June were the National Housing Authority (P2.37 billion), National Home Mortgage Finance Corp. (P900 million), National Irrigation Administration (P892 million), National Electrification Administration (P509 million) and Philippine National Railways (P349 million). Other top recipients were the Philippine Coconut Authority (P322 million), Philippine Rice Research Institute (P210 million), National Livelihood Development Corp. (P200 million), the National Kidney Transplant Institute (P143 million), the Cultural Center of the Philippines (P128 million), the Philippine Children’s Medical Center (P126 million) and the Philippine Heart Center (P120 million). — Alexis Douglas B. Romero

Source: bworldonline.com