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Gov’t revives plan to sell Duty Free stores

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Gov’t revives plan to sell Duty Free stores

Hurdles include P1.4-B tax debt, legal constraint
Tourism Secretary Ramon Jimenez Jr. FILE PHOTO

Tourism Secretary Ramon Jimenez Jr. FILE PHOTO

The Aquino administration has revived plans to sell Duty Free stores as part of efforts to streamline the bureaucracy by unloading underperforming assets.

While privatizing Duty Free Philippines Corp. (DFPC) faces several legal and financial constraints, it has the support of the finance and tourism departments as well as President Aquino’s approval.

“We would like to assure the Department of Finance that the Department of Tourism will comply with the President’s directive to privatize DFPC,” Tourism Secretary Ramon Jimenez told Finance Secretary Cesar Purisima last January in a letter, a copy of which was obtained by the Inquirer.

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As an attached agency to the DOT, Duty Free runs a chain of retail stores selling tax-free goods at international airports in the country. These stores cater to people entering and leaving the Philippines. DFPC also operates Fiesta Mall, a retail facility that targets “balikbayans” or new arrivals to the country.

These two stores operate with two goals: To provide extra services for tourists and to be an additional stream of foreign currency income for the government.

DFPC’s privatization is a directive of President Aquino “as espoused by the DOF,” Jimenez’s letter read.

This proposal dates to as early as the administration of former President Estrada, but it never pushed through.

Jimenez noted that issues that might hinder DFPC’s sale. First was the special authority DFPC enjoys that allows the sale of untaxed goods. The DOT said a law might be passed to transfer this privilege to whichever company agrees to acquire DFPC.

The state-owned firm also owes P1.45 billion in income taxes to the Bureau of Internal Revenue. This tax liability was upheld by the Supreme Court last October and brings DFPC’s net asset value to “zero or even negative,” Jimenez said.

The DOT also called on the DOF to assure that, if the sale pushes through, DFPC employees who may be let go be properly compensated to avoid labor problems.

“Thus, the DOT is willing to cooperate with the Governance Commission for government-owned and -controlled corporations on the indicative timetable for DFPC’s privatization,” Jimenez said.

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TAGS: Business, duty free stores, Government, Privatization
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