Finance Secretary Carlos G. Dominguez III (Presidential Photographers Division)
MANILA — Finance Secretary Carlos G. Dominguez III has ordered top Department of Finance officials to come up with a plan to merge all state-run guarantee corporations into a single government guarantee system.
In a statement Monday, the DOF said Dominguez wanted to consolidate the DOF-attached Philippine Export-Import Credit Agency (PhilEXIM) with other state guarantee firms such as Home Guaranty Corp., Quedan and Rural Guarantee Corp., as well as Small Business Corp., citing that it can be done under Republic Act No. 10149 or the GOCC [government-owned and/or -controlled corporations] Governance Act of 2011.
The DOF website states that 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,” Dominguez was quoted by the DOF as saying during a recent executive
committee meeting with finance and treasury officials.
Dominguez noted that RA 10149 allows the Governance Commission for GOCCs (GCG) to merge, reorganize or streamline as well as abolish or privatize state corporations.
As such, the DOF said Dominguez ordered Finance Undersecretaries Antonette Tionko of the corporate affairs group, Bayani Agabin of legal services, Karen Singson of the privatization office, as well as National Treasurer Rosalia De Leon “to draw up a plan on how to carry out the proposed consolidation or merger.”
De Leon was quoted by the DOF as saying that “the merger would have to separate the old PhilEXIM structure from the new PhilEXIM” such that “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,” according to De Leon.
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.”
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 guarantee organization, fund raising through bond issuances could be easier, Dominguez had noted. “If you have one big solid one, you’re better off financially instead of having a lot of small ones.” SFM