Senator Drilon hits ‘grossly inadequate’ rescue package for distressed companies

The P10-billion rescue package to assist distressed small and medium enterprises and strategically important companies (SICs) is grossly inadequate, Senate Minority Leader Franklin M. Drilon said Wednesday.

“It is a drop in the bucket. I question the priorities of this government insofar as allocating funds is concerned. We see the need to assist these very critical SICs. These are companies that can save the employment of our people,” Drilon said during a Senate hearing on the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery Act (Guide bill).

“Yet, we allocate only P10 billion, which is one-half of the P19.5 billion that the government allocated to the anti-insurgency fund,” he added.

“That is what concerns me – the priorities that we have insofar as our efforts to revive the economy,” he lamented.

The principal objective of the GUIDE is to give necessary access to credit and financial assistance to micro, small and medium enterprises (MSMEs) and strategically important companies (SICs), affected by the COVID-19 pandemic, he noted.

However, Drilon questioned the sufficiency of the amount considering that the country suffered a 9.5 percent economic contraction in 2020, equivalent to P1.5 trillion, and an unemployment rate of 4.5 percent, equivalent to 4.5 million jobless Filipinos, due to the pandemic.

“Given all of these, I raise questions on the sincerity of the administration in helping these strategically important companies. Will it make a dent? The P10 billion rescue package is a joke, especially if you look at it in the context of the P19.5 billion this government allocated to the anti-insurgency fund,” said Drilon, calling the anti-red fund a source of “pork barrel”.

Drilon said the measly amount speaks volume of the seriousness of the government in helping distressed enterprises and corporations and putting back the economy on its feet.

He cited the newly signed US$1.9 trillion stimulus package as an example.

“If we are going to assist, let us provide more direct assistance,” he said. “We should extend more assistance provided that there are more safeguards. We should assist our companies more because they are the generators of the economy and they provide employment.”

Drilon said there is clearly a need for the government to provide more meaningful interventions to help these companies, save jobs and revive the economy.

Drilon also said that the government should put more funds from the national budget instead of utilizing the funds of the Land Bank of the Philippines and the Development Bank of the Philippines.

Under the measure, DBP and Landbank will be authorized to invest in, or enter into a joint venture agreement to incorporate a special holding company (SHC). The SHC is intended to assist in the rehabilitation of strategically important companies (SIC) affected by COVID-19 pandemic which are experiencing temporary solvency issues. The bill provides for a capital infusion of P7.5 billion to LBP and P2.5 billion to DBP.

Drilon said using the existing funds of the state banks poses risks to their financial positions.

“I hope that the subcommittee can review the proposed structure of the special holding company, review the total financial exposure of the government in incorporating this, and check the finances of the LBP and DBP. We should also place more safeguards in the bill to ensure that the people’s money is protected,” he concluded.