PRESIDENT Rodrigo Duterte has ordered a substantial reduction in the dividend rates of the state-run Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) to be remitted to the national government to support its financial viability.
Under Executive Order (EO) 89 signed by Duterte, the dividend rate of LBP is adjusted to zero and 10 percent for 2016 and 2017, respectively, from the current 50 percent of annual net earnings .
For the DBP, its dividend rate is adjusted to zero for 2017 from 50 percent of its annual net earnings.
In a text message following the release of the EO, Finance Secretary Carlos Dominguez III said the adjustments would improve the capital position of the government-owned financial institutions and eventually help them "better fulfill their mandates."
"To support the viability and mandate of Land Bank of the Philippines and the Development Bank of the Philippines, their liquidity, capital position, medium-term plans and programs were considered in the determination of their respective reasonable dividend rates on net earnings for selected years," EO 89, inked on August 28, reads.
Upon the recommendation of Dominguez, the downward adjustment of the dividend rates of LandBank and DBP us made "in the interest of national economy and general welfare."
Under Republic Act 7656, all government-owned and -controlled corporations (GOCCs) are mandated to declare and remit at least 50 percent of their income to the national government.
The President, however, is allowed by law to adjust the percentage of the annual net earnings to be declared and remitted by a GOCC.
EO 89, which was released to the media on Monday, September 2, takes effect immediately. (SunStar Philippines)