MALACAÑANG has green-lit Home Guaranty Corporation (HGC) and the Philippine Export-Import Credit Agency (PhilEXIM) as it continues to rationalize the operations of state-owned firms.
The Palace has issued Executive Order No. 58, signed by President Rodrigo R. Duterte on July 23, which approves the merger of the HGC and PhilEXIM, with the latter as the surviving entity.
Under the order, the government also mandated the transfer to PhilEXIM of the guarantee functions, programs and funds of the Small Business Corporation (SBC), the administration of the Agricultural Guarantee Fund Pool (AGFP) and the Industrial Guarantee and Loan Fund (IGLF).
PhilEXIM will be renamed Philippine Guarantee Corporation to reflect the merged guarantee functions it will take on.
The EO noted that the transfer of guarantee functions to the PhilEXIM will prevent redundancies, standardize policies, processes and procedures for similar initiatives, facilitate approvals, lower costs and help the government monitor these programs better, among others.
PhilEXIM is an attached agency of the Department of Finance (DoF) and was created to provide guarantees to facilitate foreign loans for the needs of export-oriented industries, public utilities and those registered with the Board of Investments.
Meanwhile, HGC, an attached agency of the Housing and Urban Development Coordinating Council, guarantees the payment of mortgages, loans, and other credit facilities and receivables arising from residential contracts.
For its part, the SBC assists micro, small and medium enterprises in finance and marketing, among others. Meanwhile, the AGFP is designed to mitigate risks in agriculture lending, while the IGLF is a re-lending and guarantee fund for SMEs.
The DoF was tasked to implement the merger and transfer of the guarantee functions, programs and funds in consultation with the related agencies the order said.
The EO must be implemented within one year from its effectivity, it said.
Under the order, the authorized capital stock of the PhilEXIM will be increased to P50 billion from P10 billion.
“The equity contributions of the National Government to the HGC, IGLF and AGFP, shall be transferred to the PhiEXIM to form part of its paid-up capital. Subject to prior coordination with the Department of Budget and Management,” the EO said.
Any balance in the required paid-up capital will come from the government’s budget.
The EO also provides for the separation incentive pay for all qualified officers and employees to be affected by the merger, in addition to retirement or separation benefits allowed under existing laws and regulations.
Ahead of the merger, PhilEXIM Vice President Rovi M. Peralta said the firm’s expanded coverage could favor more SMEs which the agency was initially meant to serve.
“When we were created, we were supposed to cater to the SMEs. However, business evolved and then it shifted to more on the priority projects which are big projects,” Ms. Peralta said last week.
She noted that the priority sectors include agricultural modernization, manufacturing, infrastructure and supply chain logistics, among others.
“So we will be able to tap more the small and medium with the consolidation that will happen soon,” she added. — with a report from J. C. Lim