Privatization or bargain sale

Under the guise of pursuing the privatization goal, the current administration is reportedly planning to hold a bargain sale of some of its business interests and assets. Apparent economic reasons range from trying to finance additional spending as a means to accelerate economic growth, to breaching a swollen budget deficit.

There is an expression of optimism by some government officials that now is a good time to revive the government’s aggressive privatization stance, last displayed during the time of Ramos when budget surpluses were posted due to windfall from asset sales. The government’s finance team says it could divest some P50-billion worth of assets over time to solve the deficit problem.

Of course this amount is small compared to the total divestment of the Ramos administration. In fact, it represents even less than the amount generated by the two assets sold by the FVR government: a 60 percent in Petron Corp. that yielded about P25 billion, and 10 hectares in Fort Bonifacio that sold for about P35 billion.

Yet, this early, there are confusing signals from the finance department as to how government really intends to spend the money it expects to earn from the privatization and divestment efforts in the next two years.

Preparing for a change in mind?

Finance Secretary Jose Isidro Camacho says that any revenues from privatization in excess of the P1-billion target this year would be used to finance expenditure items not included in the proposed General Appropriations Act of 2003.

Camacho’s stance raises some concern as it espouses increased spending a year before the 2004 elections, suggesting that any additional expenditures may be used as pre-election spending or campaign buffer funds for an incumbent who has declared she had no intentions of running.

Of course, any dutiful government official would point to Mrs. Arroyo’s repeated assurances that she would not run for president in 2004. But then again, she could always say she is changing her mind.

Desperation act to reduce budget deficit

Finance Undersecretary Eric Recto, however, clarifies that the proceeds from sale of government assets would be booked as revenue and thus would be used to reduce the budget deficit estimated to hit P202 billion this year.

The government, once more showing its despondency, looks like it is attempting to draw on what remains of its latent strengths to push a crawling economy forward during the last leg of the race.

Thus any amount of money will do. Never mind if the equity and property markets that crashed after the 1997 Asian crisis has still not recovered as of today. No matter how loud the government’s sales pitch is for privatization, market conditions aggravated by internally generated uncertainties certainly will not perk up the pace of any divestment effort.

Dredging the pits

According to the finance department, included in the list of assets to be privatized (or to be cashed in) amounting P50 billion or more are at least P15-billion worth of assets held by the Presidential Commission on Good Government (PCGG) and at least P35 billion of property owned by the National Government.

The PCGG assets comprise an 18-hectare lot (on which stands the Payanig sa Pasig mini carnival) worth about P10 billion, a four-hectare property in Tagaytay worth P500 million, smaller pieces of land like one in Baguio worth another P500 million, a 40-percent stake in Eastern Telecommunications Philippines, Inc. worth P450 million, a stake in Philippine Communications Satellite, and the television stations IBC-13 and RPN-9 worth a combined P3 billion.

Overseas, the Philippines has two pieces of properties in New York and one each in Washington, San Francisco, Chicago, Houston, and Seattle worth more than $30 million. The government also owns four pieces of real property in Japan, two each in Tokyo and Kobe.

Offering bargains at taxpayers’ expense

Whatever government’s agenda, to put on the open market some of its assets at a time when the world is waiting for the bottom to cave in is a sure way of winding up at the losing end of a fire sale. In the first place, nobody at this time would buy unless it’s a bonanza bargain.

Given the expected huge budget deficit problem this year of P202 billion, raising less than P50 billion does not solve much. Which brings us to the theory that perhaps it is not really the budget deficit that is behind this move to cash in on some government-owned assets or to renew privatization effort.

Whichever way you look at it, whether this privatization is intended to plug part of the deficit or to pump prime a sagging economy, we taxpayers end up the loser in this impending mega-bargain sale.

Cheating LPG users on TV

"Isyung Kalakalan at Iba Pa" on IBC-13 News (5 p.m. and 10:30 p.m., Monday to Friday) ends this week the discussions about how users of LPG are being cheated. Starting Monday next week, we will review the major problems confronting the agriculture sector, a sector that needs to be nurtured as the economy continues to flounder. Watch it.

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