RP may close 15 state corporations

RP may close 15 state corporations

Associated Press, Manila, Phillipines

The Philippine budget secretary threatened on Sunday to close 15
money-losing and debt-strapped government corporations if steps
are not taken to improve their bottom line.

President Gloria Macapagal Arroyo is grappling with a
burgeoning foreign debt, a huge budget deficit and rising oil
prices, which analysts say might lead to a financial meltdown in
three years, similar to Argentina's when it defaulted on its
massive public debt in 2001.

Budget Secretary Emilia Boncodin said the 15 state-run
companies have incurred heavy losses because of low revenues,
insufficient operational funds and loss-making subsidiaries.

The troubled companies include the Light Rail Transit
Authority, which operates a popular commuter rail service in
Manila, and Philippine National Railways, which runs an
antiquated commuter system in the capital. Tobacco and coconut
businesses, farm irrigation, housing and a television network are
also included.

Boncodin urged the corporations to sell off assets and
increase fares or service rates to boost revenue and cut losses.
Otherwise, the government will be forced to merge the losing
businesses with more profitable ones, or scale down operations,
she said.

"We can also abolish the non-performing government-owned or
controlled corporations altogether, if the administration sees no
visible effort among its officials to turn these corporations
around," Boncodin said in a statement.

"The national government is no longer willing to subsidize
inefficiently run corporations," she said.

However, Boncodin assured employees "there would be no mass
layoffs," without saying whether they would be given other work
if state-run corporations are shut down.

Arroyo has asked Congress to approve new tax bills to raise 80
billion pesos (US$1.4 billion), including one that increases the
"sin tax" on products such as cigarettes and alcohol.

At the same time, she has ordered tough cost-cutting steps
within the government.