State asset sales face fresh headwinds

THE Philippines’ efforts to raise money from the sale of state assets face headwinds amid a dour external environment and the threat of a legal challenge to one of its privatization ventures.

Winston Garcia, president and general manager of state-run Government Service Insurance System (GSIS), said the pension fund would seek legal intervention in the sale of the Food Terminal Inc. (FTI) property to a “private sector entity that is close to the next administration.”

“I will contest the decision before the Ombudsman, especially when it will not be done in cash, when GSIS has a standing offer,” Garcia told reporters.

He said the pension fund wrote to the Department of Finance early last year to express GSIS’ interest in
the 12-hectare property for P7 billion in cash.

“It will be anomalous especially if they award it to a private sector entity because it is not subject to a COA audit, when my offer will be subject to a[n] audit,” Garcia said, referring to the Commission on Audit.

The government earlier said it is close to clinching a deal selling FTI’s Taguig property.

Finance Secretary Margarito Teves had said discussions were ongoing with a “seriously interested party” and was hopeful to finalize a deal within the week.

Early this year, the government cut the price tag for the property to a range of P9 billion to P10 billion, from P13 billion previously in a bid to speed up the sale of the asset.

Of the 120 hectares, only 70 hectares would be initially privatized since the remaining portions of the FTI property are either titled to state-run National Food Authority or occupied by tenants with live contracts.

When no bidders showed up during the August 8, 2009 auction, the government announced it would proceed with a negotiated sale with at least one of the three interested private developers.

Ayala Land Inc. (ALI) said it was still keen on the FTI property, but preferred to buy at a lower price.

Besides ALI, the other developers that showed interest in FTI were Robinsons Land Corp. and Century Properties.

GSIS earlier said the acquisition of FTI was no longer part of boardroom discussions.

The pension fund, however, resurrected its interest by offering to buy the property at P7 billion after the formal bidding failed.

Teves had said the agency preferred to sell the FTI to a private group instead of another state entity.

In a separate venture, the finance chief said the government would sweeten its proposal for the lease contract of a high-end property in Tokyo, Japan to attract qualified bidders.

Since the market condition in Japan has yet to improve, he is recommending to the next administration a possible reappraisal of the Philippines’ Fujimi property.

“We would likewise review the terms and conditions of the said lease contract,” Teves said.

The 50-year lease and development contract for the 4,361-square meter Fujimi property, located in upscale Fujimi Cho, Chiyoda-Ku, is among the assets that government wants to auction off during the first half at the latest to plug its budget shortfall.

Teves, however, said that June 30 is too close a deadline.

“We are hopeful that given the re-appraisal and improvement on the terms and conditions, we would be able to finally have its auctioned off within the year,” Teves said. –Lailany P. Gomez and Katrina Mennen A. Valdez, Manila Times