At least 15 “strategically important” domestic corporations badly hit by the pandemic-induced recession are expected to benefit from the government’s plan to rehabilitate them through a state-run holding firm.
During a Senate hearing on Thursday, Land Bank of the Philippines assistant vice president and chief market economist Guian Angelo Dumalagan said at least P10 billion in equity would be injected into state-run lenders Landbank and Development Bank of the Philippines (DBP) under the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic recovery (Guide) Act to address solvency issues of large as well as micro, small and medium enterprises (MSMEs), and save up to one million jobs.
Dumalagan said that in Landbank’s portfolio, 15 large firms might qualify, including three in the transport and logistics sectors, three in energy, two in property, one in construction, one in health care, and the rest in other sectors including food and beverage. He declined to identify these struggling corporations.
For the part of DBP, vice president Mario Rey Morales said the special holding company to be formed by the two lenders’ joint venture could serve five to 10 of its existing corporate clients.
In the case of MSMEs, Dumalagan said 58,000 small businesses stood to benefit once the Guide bill was passed into law.
The Guide bill will infuse P7.5 billion into Landbank and P2.5 billion into DBP so they can establish the special holding firm that will assist in rehabilitating strategically important companies suffering from solvency problems amid the pandemic. Morales said the Landbank-DBP joint venture would be dissolved once the distressed firms recover from slump and the lenders recoup their investments.
Citing Philippine Statistics Authority data, National Treasurer Rosalia de Leon noted that P1.5 trillion worth of output was slashed from the Philippines’ nominal gross domestic product last year amid the country’s worst post-war recession, with the transportation and storage as well as accommodation and food service industries shrinking the most, by 31.2 percent and 44.7 percent, respectively. De Leon said these two sectors shed not only a combined P391 billion in output, but also 1.3 million workers in 2020. INQ