Finance Secretary Carlos Dominguez III has directed the Privatization Management Office (PMO) and the Philippine Deposit Insurance Corp. (PDIC) to discuss with state-run banks and the Commission on Audit (COA) ways to relax stringent auditing rules that have long hobbled government efforts to dispose of its idle assets, the Department of Finance (DOF) said in a statement on Tuesday.
Dominguez said a COA circular requiring the sale of unproductive state assets at their appraised values has hampered, rather than facilitated, efforts by the government to dispose of these idle properties.
The PMO, which is attached to the DOF, said the PDIC, Land Bank of the Philippines (LandBank), Development Bank of the Philippines (DBP) and the Bangko Sentral ng Pilipinas (BSP) are among the state agencies that have been unable to sell many of their idle but serviceable properties because of COA Circular 89-296 issued 30 years ago, which states that such assets should be divested either through public auction, negotiated sale, barter, or transfer to other government agencies based on their “appraised value(s).”
“I want a meeting organized with the COA, mainly with the representatives from PMO, PDIC, the banks -- the two (state) banks we have. The central bank may want to participate,” Dominguez said at a recent DOF executive committee (Execom) meeting. “Tell them that this COA requirement that we sell at market value isn't working because we just keep on adding to the titles particularly with the PDIC, and we're just getting overwhelmed.”
Chief Privatization Officer Gerard Chan reported to Dominguez during that Execom meeting that the PMO alone has some 28,000 land titles to dispose of, while the PDIC has around 23,000 more.
Chan said the PMO, though, is not covered by the 30-year old COA circular. This was made clear by the state audit agency in a memo issued on Nov. 20, 2017, which states that "COA Circular 89-296 does not apply to foreclosed assets held by PMO and sold in the ordinary course of business" and "the assets/properties held by the PMO pursuant to Proclamation No. 50 and sold in the regular course of its business are not within the purview of COA Circular 89-296."
Dominguez said that rather than continue imposing an ineffective set of rules to dispose of idle assets, the government would be better off selling them at discounted prices that would attract more buyers, which then would be able to redevelop these properties for productive or commercial use.
“The objective is to ask COA to cooperate with us and propose ways of turning these assets into cash, because cash helps the economy. Selling it even at a discount allows (these assets) to be redeveloped and used. Right now, it's just an expense,” Dominguez said.
Unproductive or idle state assets, Dominguez said, only add to the state’s financial burden, considering that taxes have to be paid and personnel have to be hired to keep these properties serviceable.
Dominguez instructed Chan to determine the number of land titles and properties held by the DOF, LandBank, DBP and other state agencies and government-owned and controlled corporations (GOCCs) in preparation for the planned discussions with COA officials.