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.