MANILA, Philippines - Dividends remitted by state corporations and financial institutions to the national government are on track to hit a six-year high this year, reflecting early reforms by the Aquino administration to better regulate government- owned and –controlled (GOCC) corporations.
From January to August, 74 GOCCs transferred a total of P29.022 billion worth of dividends the national coffer, the highest since the P36 billion recorded in 2009, latest data from the Department of Finance showed.
The amount represented a 21.09-percent increase from last year’s entire collection of P23.966 billion. It already surpassed the department’s target for this year of P6 billion, which was laid out in the 2015 budget.
“The continued increase in dividend remittance…is a concrete result of the GOCC reform agenda undertaken by the current administration through the Governance Commission on GOCCs (GCG),” GCG commissioner Angel Ignacio told The STAR.
Under the law, GOCCs are required to remit at least 50 percent of their annual net earnings as cash, stock or property dividends to the NG. Remittances, in turn, are recorded in the state balance sheet as revenues.
On the other hand, these state agencies receive government subsidies to help finance their operations, programs and projects. As of August, GOCC subsidies – reflected as expenditures on NG fiscal performance – went down seven percent year-on-year to P55.09 billion, Treasury data showed.
Dividends account for the bulk of total GOCC remittances to the government every year. State corporations usually transfer funds twice a year to national coffers.
In his State of the Nation Address in 2011, President Aquino himself lambasted GOCC executives for receiving huge bonuses despite their agencies underperforming. This led to the passage of RA 10149 or the GOCC Governance Act that established the GCG.
Since then, the amount of GOCC dividends have been sustained: from P28.705 billion in 2011, P24.587 billion in 2012, P18.516 billion in 2013, and P23.966 billion last year, figures showed.
As of August this year, GOCCs that remitted the highest dividends were Land Bank of the Philippines (P6 billion), the Philippine Amusement and Gaming Corp. (P5 billion), Food Terminal Inc. (P2.992 billion), Development Bank of the Philippines (P2.535 billion), Philippine Deposit Insurance Corp. (P2.130 billion), Philippine Ports Authority (P1.790 billion), Philippine National Oil Co. (P1.526 billion) and Philippine Reclamation Authority (P1.2 billion).
Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, said higher GOCC dividends is positive for the over-all public sector finances.
“Credit rating agencies normally look at the over-all picture, which includes the performance of state corporations. If GOCCs are profitable, that’s a good sign since it means the government will not have to shoulder their financial burden,” Neri said.
But for Astro del Castillo, managing director at First Grade Holdings Inc., more GOCC dividends do not entirely indicate good governance in GOCCs.