P80-billion gov't assets up for sale
Manila (21 October) -- The Department of Finance has identified P80 billion worth of assets as up for disposition next year, preparing to compensate for any slips in tax collection that would threaten its balanced budget goal. Finance Secretary Margarito B. Teves, briefing reporters on the government's fiscal situationer, on Wednesday said the following were being eyed for sale in 2008:
Holdings in San Miguel Corporation; Holdings in Manila Electric Co. (Meralco); Holdings in Philippine National Oil Co.-Exploration Corp. (PNOC-EC); Food Terminal Inc.; The New Bilibid Prison property; and The Fujimi property in Japan.
Mr. Teves said these should fetch around P80 billion, larger than the P30 billion programmed from privatization in 2008. The government's stakes in San Miguel and Meralco are estimated to be worth some P50 billion and P8 billion, respectively, while the Fujimi property is said to likely fetch P3 billion.
Officials are still determining how much the state owns in PNOC-EC, while appraisals for the Food Terminal and the Bilibid are being updated. Finance Undersecretary Gil S. Beltran, in an interview, said the P30 billion programmed from state asset sales next year — equivalent to 2.4% of the P1.236 trillion in total revenues required in 2008 — took into account expected proceeds from the sale of state holdings in Meralco and PNOC-EC, and the Fujimi property.
The Finance department was also compiling a list of other assets for disposition, he said, not only to generate additional revenues but also to improve services by transferring them to the private sector. These assets exclude those for disposition by the Presidential Commission on Good Government and the Private Sector Assets and Liabilities Management Corp., which follow their own privatization programs.
Mr. Teves has said that should tax collection become problematic again next year, the government would resort to state asset sales to plug revenue gaps. What is important, he stressed, is coming come up with the funds to finance the government's programs and still hit the balanced budget goal for 2008.
The focus on improving tax collections, Mr. Teves stressed, remained. The government has gone on a asset sale spree this year to offset shortfalls incurred in the first semester by the bureaus of Internal Revenue and Customs.
It programmed P25.6 billion in privatization proceeds this year, equivalent to 2.3% of this year's P1.119-trillion total revenue requirement, but has accumulated around P44 billion through the auction of the old Iloilo airport and holdings in Philippine Telecommunications Investment Corp., Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) and the Philippine National Bank.
The sale of its remaining 40% share in PNOC-EDC, scheduled to be completed before yearend, is expected to fetch P32-36 billion. The government must produce P75.5 billion from privatization under the Finance department's "medium case scenario," which projects a P37.7-billion shortfall by the tax bureau and a P12.1-billion deficiency by the Customs bureau by yearend.
Under the "worst case scenario" where the tax bureau's shortfall is projected to bloat to P45 billion, and to P15 billion in the case of the Customs bureau, asset sales should generate P85.7 billion. The deficit is assumed to settle at P33 billion in the medium case scenario and at P63 billion, this year's ceiling, in the worst case scenario.
Fiscal data as of September showed the tax and Customs bureau's shortfall at P45 billion and P12 billion, respectively. Lilian B. Hefti, tax bureau chief, has stressed that her target was to contain her agency's tax collection gap at P38.6 billion by yearend, the same figure notched at the end of the first semester by her predecessor.
Napoleon L. Morales, Customs bureau chief, has said he would try to deliver his agency's full-year target by December. Critics have warned against state asset sales as a revenue-generation tactic as gains from such are unsustainable. The House think tank, the Congressional Planning and Budget Department (CPBD), in a recent study added its voice by pointing out the need for the tax and Customs bureaus to rev up performance. Otherwise, the government would miss its balanced budget target next year.
"To finance the President's social payback agenda and balance the budget by 2008, the Executive must go back to basics — increase tax collections," the CPBD said this month. "Proceeds from privatization may help improve the fiscal situation but it is, at best, a short-lived measure as sale of assets is a one-off deal." (Phil-Central Newsletter) [top]