MANILA, Philippines—Warning that privatization could fatten the campaign war chest of the Arroyo administration, Senate Minority Leader Aquilino Pimentel Jr. Monday advised it against any “midnight sale” of government assets during the remaining months of its term.
Pimentel particularly questioned Malacańang on its plans for the government-owned prime property in the Fujimi district in Tokyo, which houses the residence of the Philippine ambassador to Japan.
Based on a Department of Finance estimate, the real estate deal could earn P3 billion for the government, he said.
“To make up for its deficiency in tax collections, the Arroyo administration has been selling all kinds of assets, from its share holdings in Petron and Meralco to military camps or reservations apparently without due regard to the strategic importance of maintaining government stake in these corporate enterprises,” Pimentel said in a statement.
He said the administration, out of prudence, should desist from selling more state assets to allay apprehensions that such deals were part of the fund-raising campaign for administration candidates in the 2010 elections.
The Fujimi property is still on the list of government assets to be privatized despite a denial from Malacańang that the property is going to be developed commercially, according to the senator.
Pimentel said the government had planned to enter into an agreement with a private real estate firm to build a commercial multistory building on the Fujimi property, which was acquired by the government in 1943 through the efforts of then President Jose Laurel Sr.
National cultural heritage
However, the senator noted that the Philippine Ambassadors Association was against the demolition of the building and the conversion plan because the property was officially recognized as a “protected national cultural heritage.”
Pimentel said it was also “unfortunate” that the sprawling complex of the National Center for Mental Health and the Welfareville or Boys Town in Mandaluyong City, the premises of the national penitentiary in Muntinlupa City, the Home for the Aged in Quezon City, and the Philippine Postal Corp. were being sold by the government “in complete disregard of their importance in providing vital social government services.”
He said the government had already started the auction of the 103-hectare complex of the Food Terminal Inc. (FTI) in Taguig City, which is expected to generate about P14 billion; the remaining government stake in Petron Corp.; its holdings in San Miguel Corp.; and government shares in PNOC Energy Exploration Corp.
Last year, the government raised P90.6 billion from the privatization of state assets—reportedly the highest ever recorded income for such transactions. The biggest asset sold was National Transmission Corp., Pimentel said.
The government aims to generate about P80 billion from privatization this year, including the sale of power plants of National Power Corp., he said.
Budget deficit widens
Pimentel lamented that the government, instead of taking more aggressive measures to raise tax revenues and go after tax evaders, had chosen to dispose of state assets to meet expenditures and narrow down the budget deficit.
“Earnings from the sale of assets are being used to window-dress the government’s financial condition,” he said.
The Philippines looks certain to blow past its budget deficit target this year after the gap swelled to 95 percent of the total in the first nine months.
Still, the finance department is banking on asset sales and improved revenue in the fourth quarter to hit the 2009 deficit target of P250 billion, a record amount.
The deficit is 3.2 percent of Gross Domestic Product (GDP) and the government aims to reduce that to 2.8 percent of GDP in 2010, or P233.4 billion.
Negotiated sale of FTI
The government has had no success in disposing of assets lined up for sale so far this year. With two months to go to the end of the year, the chances of raising its target of P30 billion in funds from these sales seems slim.
In the latest attempt, no bidders turned up to buy the FTI complex. Malacańang is now trying a negotiated sale, although analysts say that may result in a lower price tag and stretched out payment terms.
A plan to sell a 40-percent stake, worth about P11 billion, in oil-and-gas explorer PNOC-Exploration Corp., has a greater chance of success given the recovery in equities, analysts say.
Pimentel noted that the privatization thrust was contrary to the advice of multilateral agencies such as the World Bank and the International Monetary Fund for the government to strengthen and focus on tax collection.
Misused
He said the proceeds of asset privatization were often misused and not spent on the purposes for which they were intended.
For instance, Pimentel said the privatization of Fort Bonifacio in Makati City and Taguig, as well as other military camps and reservations, was primarily intended to fund the modernization of the Armed Forces of the Philippines (AFP).
However, the AFP remains ill-equipped because funds intended for the modernization program were diverted to other projects and activities outside the purposes specified by law, Pimentel said. Reports from Philip C. Tubeza and Reuters
