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Gov’t plans joint ventures to develop AFP land

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PENSION FUND SOURCE

Gov’t plans joint ventures to develop AFP land

/ 07:02 AM November 02, 2017

DEVELOPMENT PLAN Soldiers train at FortMagsaysay in Nueva Ecija,which covers 40,000
hectares of land. The Duterte administration is seeking to develop military land with the private
sector to raise funds for soldiers’ pension. —INQUIRER PHOTO

The Duterte administration plans to pursue joint ventures with the private sector in developing military land to raise additional funds for the uniformed personnel’s ballooning pension costs, according to Finance Secretary Carlos G. Dominguez III.

Dominguez told reporters recently that the land bank of the military was “quite impressive.”

“I think they own close to 200,000 hectares of land. Not all prime [property] but they have large camps… If you go to Fort Magsaysay [in Nueva Ecija], that’s 40,000 hectares. There is a big one also in Bukidnon,” Dominguez said.

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The administration, however, has yet to determine the total value of real property belonging to the military, he said.

In October, President Rodrigo Duterte urged the military to lease out its remaining land in Fort Bonifacio in Taguig City to raise more funds for its modernization program.

Trillions of pesos

The President said leasing out military land at Fort Bonifacio — the location of the headquarters of the Philippine Army and the Philippine Marines, and of the Bonifacio Naval Station — would raise “trillions” of pesos for the Armed Forces of the Philippines.

The government privatized 240 hectares of military land at Fort Bonifacio in the early 1990s to support the AFP modernization program. The privatized land is now the vibrant Bonifacio Global City.

Asked which properties would be disposed of, Dominguez said: “There is no particular schedule yet for which ones, but our idea is really not to sell — our idea is going to some kind of joint venture, so that there is continuing value that will be received by the [Bureau of the] Treasury.”

50% for AFP modernization

The Bases Conversion and Development Authority (BCDA) will be in charge of entering into joint ventures for the commercial development of military land, according to Dominguez.

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Under the BCDA charter, 50 percent of the proceeds from the disposition of land is remitted to the modernization program of the  AFP.

The funding for the ballooning pension costs may be taken from the remaining 50 percent of the proceeds, which currently are not allocated for any specific use, Dominguez said. “I don’t have the value, but it’s huge.”

“We intend to use military assets for military expenses,” said the finance secretary, adding that the leadership of the AFP was supportive of such a move “because it puts them on a more secure basis financially.”

Unless the government privatizes the military assets, “their problem cannot be solved,” Dominguez said.

Last month, Budget Secretary Benjamin E. Diokno said there was a need to pass a law that would  allow part of the proceeds from the disposition of properties to fund military pensions.

Diokno was optimistic that a sponsor in Congress for the proposed legislation could be found soon. “It’s really urgent,” he earlier said.

New pension system

The administration is also looking into a new pension system for uniformed personnel, possibly by including them under the coverage of state-run pension fund Government Service Insurance System.

For next year, P75 billion will go to uniformed personnel’s pension payments and could grow to up to 80 percent of the AFP’s annual budget if the problem is left unaddressed, according to Diokno.

The administration is worried about the ballooning pension of uniformed personnel that the interagency Development Budget Coordination Committee (DBCC) is pushing for a seed fund worth trillions of pesos that will generate income for retired military officers.

Retirement features

In its Fiscal Risks Statement 2017 report, the DBCC noted that the “problem” of escalating an pension cost for uniformed personnel was mainly attributable to the features present in all existing retirement laws of the uniformed services.

The features are:

Pension entitlement of a retiree is automatically adjusted based on the prevailing scale of base pay for similarly ranked active personnel.

Pension is noncontributory in nature hence the budget comes from the annual general appropriations of the government.

Early entitlement to pension benefits even before reaching the compulsory retirement age of 56. —Ben O. de Vera

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TAGS: AFP land, Carlos Dominguez III, military land, Rodrigo Duterte
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