Government wants bigger share of GOCC profits

MANILA, Philippines –  The Aquino administration will strive to get a bigger share of the profits of government-owned and controlled corporations (GOCCs) as part of efforts to contain the government’s budget deficit and boost the country’s fiscal position, Finance Secretary Cesar Purisima yesterday said.

“Today we endeavor to begin a tradition. A tradition of regular, sustainable and hopefully, increasing share of the National Government in GOCC profits,” Purisima said in Malacañang during the ceremonial turnover of dividends from GOCCs to the government.

Purisima also said that the Department of Finance (DOF) would also take a closer look in GOCCs to ensure good corporate governance.

“The era of board decisions, compensations and transactions crafted in secrecy, shielded from the glaring view of the public, hidden from the watchful eyes of a vigilant citizenry is over,” Purisima said.

Latest data from the DOF showed that in 2010, GOCCs and state-owned agencies remitted to the government a total of P7.606 billion, higher than the P7.472 billion remitted in 2009.

Of the amount, the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP), the country’s major government financial institutions remitted the biggest chunks of the pie.

Landbank remitted P3.62 billion last year while the DBP remitted P2.36 billion, data from the DOF also showed.

Dividends form part of the National Government’s total revenues.

Under Republic Act 7656 or the Dividends Law of 1994, government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs) are required to remit half or 50 percent of the income earned in each fiscal year to the National Government.

The remittance should be in the form of cash or in real estate properties with clean titles.

Purisima said that the government corporate sector has been a significant contributor to growth and development in the past.

However, he believes that the government can still generate more revenues from the assets of GOCCs.

Citing data from Goldman Sachs, Purisima said there is approximately $141 billion worth of assets of the GOCCs which the government can improve under a market-based operation.

 “Imagine what we can do if we make this a market based operation. If we bring this public, imagine what kind of valuations we can generate and what kind of profits we can make to help support the agenda of the national government. At cost on a return of equity of 15 percent on $41 billion, that’s about $6 billion as year in profit. So, we’re about P250 billion. Imagine what that can do to our deficit,” Purisima pointed out.

As such, he said the government would be studying how it can get a bigger share of GOCC profits.