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Gov’t decides on one-time sale for Food Terminal privatization

Vol. XXI, No. 237 [ BusinessWorld Online ]
Thursday, July 3, 2008 | MANILA, PHILIPPINES

THE GOVERNMENT has decided to sell the sprawling Food Terminal, Inc. (FTI) complex in Taguig as a whole rather than by phases, under pressure to raise more money for projects to boost the economy as well as to plug the deficit.

Finance Undersecretary Crisanta S. Legaspi said a "substantial" portion of the 120-hectare FTI - previously valued at P15 billion - would be sold by the second half of the year. Details like the floor price, mode of disposition, and timing, however, still have to be ironed out.

"It will be a one-time disposition. Whoever is the winning bidder has to honor the lease contracts in the area. There are some areas covered by long-term lease," Ms. Legaspi told reporters.

"No one yet has signified interest [to bid]. Investors will be given time to conduct due diligence. We have yet to publish the terms and conditions of the sale including the details."

Ms. Legaspi said an outright sale would be better than a long-term lease as the government, which is looking at a P40-75 billion fiscal gap this year, needs to pump-prime the economy and fund investments in infrastructure and social services.

A one-time sale would also be simpler, she added.

Some 24 hectares of the agro-industrial complex have been declared a special economic zone while 41.49 hectares are covered by lease contracts. There are more than 300 firms in the FTI, mostly into electronics, food, transport, garments, and general warehousing.

The government has been trying to sell the FTI - formed in 1969 as the Greater Manila Terminal Food Market - since 1997. Nothing has happened since two failed bids in June and December 1997, when the complex was offered for sale at P155 per hectare.

The government needs to raise P30 billion from privatization as part of the projected P1.236 trillion in revenues needed to fund this year’s budget. Selling the FTI complex would cover half of the asset sales goal.

Aside from the FTI property, the government’s list includes a property in Tokyo’s Fujimi area and shares in Lopez-led power distributor Manila Electric Co. and in Eastern Telecommunications Philippines Inc.

In January, the government sold a 10% stake in Manila Electric Co. to the Government Service Insurance System for P8.9 billion. The government, meanwhile, has agreed to negotiate with Ongpin-led ISM Communications Corp. for the sale of the state’s 10.2% stake in Eastern Telecommunications after a failed bid in November.

Nine firms have submitted pre-qualification documents to bid for the long-term lease of the government’s prime property in Tokyo.

Finance Undersecretary Gil S. Beltran said the government can actually sell more assets depending on market prices. "It is just choosing the assets we want to sell or not. It depends on the price," he said.

Finance Secretary Margarito B. Teves last month said the government was open to selling more assets on top of the programmed privatization target. Its 40% stake in oil giant Petron Corp. is expected to be sold by November, pending approvals from President Gloria Macapagal-Arroyo and Philippine National Oil Co. — Ruby Anne M. Rubio

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