Corporate News

State agencies’ arrears rise past P100 billion

Posted on June 27, 2017

UNCOLLECTED dividends from state-owned corporations breached the P100-billion mark amid legal disputes, the Finance chief said.

GOCCs are required to declare and remit at least half of their income as dividends to the national government, pursuant to Section 3 of Republic Act No. 7656. BW FILE PHOTO
According to Finance Secretary Carlos G. Dominguez III, five government-owned and -controlled corporations (GOCCs) had arrears due in 2016 that totaled P110.23 billion.

These are Philippine Deposit Insurance Corp. (PDIC) with P46.5-billion unpaid dividends, Power Sector Assets and Liabilities Management Corp. (PSALM) with P29.87 billion in arrears, National Power Corp. (NPC) with P20.66 billion, Philippine Charity Sweepstakes Office (PCSO) with P6.89 billion and the Civil Aviation Authority of the Philippines (CAAP), which posted P6.31-billion dividend liabilities.

“Many of these have to do with legal discussions and some of them have to do with the fact that, the collections of PSALM for instance is quite low, so they have a lot of receivables and they haven’t moved as quickly as they should have,” said Mr. Dominguez.

“PDIC is a problem because they say they have a new charter, they are not supposed to pay dividends, and we are saying that first of all we have to divide it, there was a past dividend due and a current dividend due,” he said.

“And then they have to figure out the way they accounted for the surplus of their profits, therefore convinced the dividends they pay, should they allow what the practice was of provisioning or not. I mean it’s a long discussion, we inherit the discussion so we need to get a final conclusion,” added Mr. Dominguez.

GOCCs are required to declare and remit at least half of their income as dividends to the national government, pursuant to Section 3 of Republic Act No. 7656.

“But fortunately, we are making progress in these dividends,” said Mr. Dominguez.

Earlier this month, three GOCCs remitted their dividends to the Treasury bureau, amounting to P4.54 billion. These are Development Bank of the Philippines with P2.52 billion, the Philippine Ports Authority with P1.96 billion and Philippine National Oil Co. with P71.95 million.

The Finance chief noted that Land Bank of the Philippines (Landbank) was the only government corporation whose dividend liabilities had been waived as the state-run bank needed cash to comply with the liquidity ratio under the Basel 3 regime, as well as for branch expansion.

“Secondly the Landbank, we did not collect any dividends last year, because they need to boost up their capital for the requirement to open branches, and the Basel 3 required leverage ratio of 5%, so I said (instead of) us putting cash to them, we will allow them to not pay dividend,” Mr. Dominguez said.

The Bangko Sentral ng Pilipinas imposed a 5% leverage ratio -- well above the minimum 3% ratio under the Basel 3. The figure represents the general standard capital banks have to set aside to cover assets that are not weighted according to the risk they carry. Full compliance by banks is expected by Jan. 1, 2018.

In 2016, the government collected P28.89 billion in shares of dividends. As of April this year, P4.62 billion was collected, more than five times lower than the P26 billion in the same period last year. -- Elijah Joseph C. Tubayan