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Monday, March 07, 2005
Echaves: Vat is the matter?
By Lelani P. Echaves
“OF THE 65,000 cooperatives in the country, about 50 percent are either already dead or dying.” So stated Mercedes “Ched” Castillo, regional training director for Region 7 of the Visayas Cooperative Development Center (Victo).
Why so, I asked, during last Saturday’s interview on Mom’s Radio 88.3 FM. Why did a great number of co-ops fail? For various reasons, said Zeny Novabos, chairman of the Victo board of directors. Mismanagement is one reason, she said, either for lack of management skills, or misuse of the co-op funds, primarily because of lack of internal controls.
From these lessons learned, Victo decided to include financial management modules like bookkeeping among the training modules for cooperatives, Castillo said. Correct information is needed for a co-op to stay on top of the situation, just so an intervention can immediately be made where needed. Also, internal controls have to be in place. For the co-op La Sociedad Cooperativa de los Empleados de Grupo Aboitiz (SCEGA), Novabos says the internal controls include making sure that the finances are discussed regularly during the monthly meetings.
Novobas, the chief information officer of the Aboitiz Construction Group Inc.-Metaphil Division, is also the chairman of the SCEGA board of directors. Founded in 1981, SCEGA has about 1,900 individual members from about 35 companies. While it began as exclusively for Aboitiz companies, SCEGA welcomed non-Aboitiz companies when the Atlas Mining Corp. in Toledo City laid off some employees. This move to reach out was meant to stave off the financial difficulties that often accompany job dislocations and outplacements. Presently, 20 percent of SCEGA’s membership is from non-Aboitiz companies.
Among the over 30,000 cooperatives nationwide, how should a company contemplating to join, decide which to choose? Most imperative is a serious check on the cooperatives considered, such as presence of internal controls, the composition of the board, and track records.
The guidelines are helpful. It is interesting to note that of the existing cooperatives about a hundred are in “the millionaire cooperative” category. In Cebu, this group counts in SCEGA, the Cebu CFI Community Cooperative, Perpetual Help Community Cooperative, Perpetual Help Credit Cooperative, Cebu People’s Multi-purpose Cooperative, and TMX Credit Cooperative, and a few others. Each of these co-ops has assets of at least P100 million.
This is not to mean, however, that the members are now wallowing in milk and honey. So, let not the bloodhounds of the government start chuckling, “So, Vat are we waiting for? Let’s get ze money.”
Cris C. Paez, NATCCO CEO, exhorts the Cooperative Code of the Philippines (Republic Act 6938). In recognition of the co-ops’ unique nature, they are not taxed. Besides, even in developed countries like the United States, the co-ops are not taxed, since they contribute to local and national development through savings, mobilization, provision of credit and marketing services, and through various development programs and projects.
Also, Rep. Guillermo Cua, party-list representative of COOP-NATCCO, stresses, “We all know that most co-ops are small and struggling. Even the bigger co-ops are big, only because thousands of less-advantaged Filipinos pool their hard-earned money in these co-ops.
In fact, a recent study of the top 300 savings and credit cooperatives shows that the average share capital and savings deposits (combined) is only P17,000 per member. This proves that even the bigger co-ops cater to poorer Filipinos.
Cua further emphasizes, “It is clear in the Cooperative Code that, in co-ops, there is no profit to tax because whatever surplus is generated by the co-op is returned to the members in the form of patronage refund and interest on share capital.”
(lelani88(at)yahoo(dot)com)
(March 7, 2005 issue)
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