By Genalyn Kabiling, July 25 2018; Manila Bulletin
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President Duterte has approved the creation of a single entity handling government guarantee system by consolidating the Philippine Export-Import Credit Agency (PhilExim) and other state guarantee firms.
In Executive Order No. 58, the President authorized the merger of PhilExim and Home Guaranty Corp. (HGC) and transferred the guarantee functions of the Small Business Corporation (SBC) and administration of the Agricultural Guarantee Fund Pool (AGFP) and Industrial Guarantee and Loan Fund (IGLF) to PhilExim.
PhilExim, the surviving entity, will be renamed as the Philippine Guarantee Corporation (PHILGUARANTEE) “to reflect the centralized nature of the merged guarantee functions.”
EO 58 said the merger and transfer of functions and programs will “benefit from economies of scale, prevent operational redundancies, standardize policies and processes for similar guarantee programs, and facilitate timely approvals and lower administrative costs.”
The reorganization will also attain a more efficient allocation of government contributions with the pooling of resources under guarantee mechanisms.
“Under a centralized approach, the National Government will have a more comprehensive oversight of its guarantees to effectively identify, monitor and control risks, implement necessary measures to manage risks and provide appropriate capital against those risks,” the order read.
The Department of Finance has been designated to implement the merger and transfer of guarantee functions and programs in consultation with the Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), Department of Agriculture (DA), Housing and Urban Development Coordinating Council (HUDCC), and the Department of Trade and Industry (DTI).
The President has directed government agencies to promptly take such action to fully implement the EO provisions within one year from its effectivity.
The same EO also increased the capital stock of PhilExim to P50 billion from P10 billion. The equity contributions of the national government to the HGC, IGLF and AGFP will be transferred to PhilExim to form part of paid-up capital.
PhilExim and SBC have also been directed to submit its proposed restructuring plan within a year for review and approval. All qualified officers and employees affected by the merger may also avail of the separation pay and other benefits.
The order, signed last July 23, takes effect upon publication in the Official Gazette or in a newspaper.
PhilExim, an attached agency of the DOF, provides guarantees to promote the entry of foreign loans into the country for development purposes.
HGC, attached to the HUDCC, guarantees payment of mortgages, loans and other credit facilities arising from financial contracts for residential purposes.
SBC, attached to the DTI, is assigned to implement comprehensive policies and programs to help micro, small and medium enterprises in finance and information services, training and marketing, among others.
AGFP, supervised by DA, is intended to mitigate risks involved in agriculture lending and facility credit in the agriculture sector.
IGLF, under the supervision of DBP, is a relending and guarantee program for small and medium enterprises.