NG urged to press dividend collections from state-run firms to boost revenues

The National Government (NG) should step up efforts to collect dividends from state-run firms in order to help boost revenues, a former Finance official said.

Former Finance Undersecretary Romeo Bernardo, in a recent report on the Philippines’ fiscal position, said fiscal managers have been lenient in collecting dividends from government-owned-and-controlled corporations (GOCCs) and other state-owned firms.

“Under their charters, many state-owned firms are supposed to remit at least half of their net income to government, but fiscal managers have been lenient in collecting these amounts,” Bernardo and co-author Margarita Gonzales said in a Sept. 26 report of private think-tank GlobalSource.

Bernardo and Gonzales, nevertheless, said the country’s strong economic performance will continue to bolster fiscal performance.

“These include the balance of payments (BOP) strength, as numbers for the first eight months showing a surplus of $6.75 billion with good results on the currency, at least in terms of containing debt; resulting higher liquidity coupled with fiscal health helping to bring down domestic interest rates; continued strength of remittances with a positive impact on growth; and a recent US Federal Reserve) cut warding off fears of a hard landing in one of the country’s biggest export markets,” they said in the report.

Latest data showed that dividends remitted by state-run firms in the first half of 2007 stood at P5.529 billion, higher than the target for the period of P4 billion.

The January to June figure, however, was lower than the P5.833 billion posted in the same period last year.

Under Republic Act 7656 or the Dividends Law of 1994, GOCCs and GFIs (government financial institutions) are required to remit half or 50 percent of the income earned in each fiscal year to the NG. The remittance should be in the form of cash or in real estate properties with clean titles.

Major contributors include the Development Bank of the Philippines (DBP), National Power Corp. (Napocor), Land Bank of the Philippines (Landbank), the Bangko Sentral ng Pilipinas (BSP) and Metropolitan Waterworks and Sewerage System (MWSS).

Last year, GOCCs and GFIs contributed a total of P16.25 billion or almost three times the P5.66 billion recorded in 2005.

The Finance department has been urging state-owned firms to increase their dividend remittances to the government to help plug its yawning budget deficit. It hopes to contain the deficit at P63 billion this year.