Finance Secretary Carlos G. Dominguez III has ordered top finance officials to come up with a plan to merge all state-run guarantee corporations into a single government body.
In a statement Monday, the Department of Finance (DOF) said Dominguez wanted to consolidate attached agency Philippine Export-Import Credit Agency (PhilEXIM) with other state guarantee firms such as Home Guaranty Corp., Quedan and Rural Credit Guarantee Corp. and Small Business Corp., saying this was possible under Republic Act No. 10149 or the GOCC (government-owned and/or -controlled corporations) Governance Act of 2011.
PhilEXIM has been tasked to “stimulate, increase and develop the export of goods and services, and to facilitate investment in strategic sectors for the country’s development by extending guarantees, insurance, credit and related technical assistance services to viable enterprises.”
In general, guarantee corporations guard customers or investors against financial losses.
“We have a GOCC law so we can put them all in one organization and then just create a new one without necessarily going to Congress,” said Dominguez during a recent executive committee meeting with finance and treasury officials.
Dominguez said RA 10149 allowed the Governance Commission for GOCCs (GCG) to merge, reorganize or streamline as well as abolish or privatize state corporations.
In May, Dominguez told reporters on the sidelines of the Asian Development Bank’s 50th annual meeting that all of the government’s guarantee operations “technically were losing” money.
Under one organization, fund raising through bond issuances would be easier, Dominguez had said.
Finance Undersecretaries Antonette Tionko of the corporate affairs group, Bayani Agabin of legal services, Karen Singson of the privatization office and National Treasurer Rosalia De Leon were tasked “to draw up a plan on how to carry out the proposed consolidation or merger.”
Should the plan push through, De Leon said “the old PhilEXIM would mainly be a collecting agency in charge of handling the existing assets of the firm while the new PhilEXIM would be a new corporation that would exclusively handle guarantee services.”
“The budget of P500 million of the existing PhilEXIM would be carried over to the new corporation, but another P500 million would be needed as fresh capital infusion to comply with Bangko Sentral ng Pilipinas requirements and enable the new PhilEXIM to grow,” De Leon said.
For her part, Singson was quoted by the DOF as saying that “the GOCCs involved in the plan would have to take a ‘write down’—which means a reduction of the book value of their respective assets—before the consolidation can take place.”