DBP seeks exemption from remittance of dividends to government

MANILA, Philippines — State-run Development Bank of the Philippines (DBP) has asked the Department of Finance (DOF) to exempt it from remitting dividends to the national government to enable the bank to put more resources in funding infrastructure projects.

In a statement, the DBP said it has requested to be exempted from remitting 50 percent of its net earnings for fiscal year 2018 to the national coffers, as required under Republic Act 7656 or the Government -Owned and -Controlled Corporations (GOCC) Dividend Law.

“While the bank’s financial ratios remain strong and stable, dividend relief has been requested to ensure DBP’s capability to support the priority programs of the National Government under the Build Build Build initiative,” the DBP said.

The DOF, in a separate statement, said Finance Secretary Carlos Domingues agreed to the request of DBP president Emmanuel Herbosa for the dividend relief.

If approved, this would not be the first time the DBP is exempted from paying dividends.

Last year, President Duterte reduced the dividend rate for DBP to zero percent from 50 percent for its earnings in 2017. The Land Bank of the Philippines was likewise granted an exemption for its earnings in 2016 and 2017.

Meanwhile, Dominguez has called on the DBP to invest in real estate investment trust (REIT) or to provide financing support to REIT-backed projects.

Dominguez expects a capital boom in the real estate sector next year with the formation of more REITs which could be a potential market for the DBP.

“I want you to be big experts in dealing with big construction companies, in dealing with large road toll projects, that should be your expertise,” Dominguez told DBP during a recent meeting. “With the REIT Law in place, we have expanded your market. More capital is coming in to people who know how to use it.”

Republic Act No. 9856 or the REIT Act of 2009 was designed to enable real estate firms to place their assets in stock corporations where the public can invest in by purchasing shares in these businesses. 

The shares of the company can also be traded at the Philippine Stock Exchange (PSE).

The DOF said this would provide an alternative and secure investment instrument for middle-income families and overseas Filipino workers (OFWs), while providing real estate companies a cheaper source of capital as they help develop the Philippine capital market.

Last January, the DOF, Securities and Exchange Commission and the Bureau of Internal Revenue released the amended rules and regulations of the law.