DOF orders GSIS, Landbank to assist PCIC

Published December 6, 2021, 2:19 PM

by Chino S. Leyco


The Department of Finance (DOF) has directed the Government Service Insurance System (GSIS) and the Land Bank of the Philippines to assist the Philippine Crop Insurance Corp. (PCIC) in managing the risks and enhancement of its investment portfolio.

Finance Secretary Carlos G. Dominguez III said the GSIS and Landbank should help the PCIC in determining ways of efficiently managing risks and enhancing its investment portfolio to ensure that taxpayers’ money used to subsidize the state-run firm’s operations are being spent well.

Dominguez issued the directive after finding out from PCIC’s recent presentation of the highlights of its operations that it has been spending 35 centavos for every peso that goes out of the company.

GSIS President-General Manager Rolando Macasaet said that compared to PCIC, the GSIS spends only around three to five centavos for every peso it gives out.

Dominguez, who chairs the Social Security Commission (SSC), said the Social Security System (SSS), for its part, spends about six centavos for every peso going out of the pension fund.

The PCIC also informed the PCIC’s board chaired by Dominguez that it has parked P6.8 billion of its cash assets mostly in Landbank and the Bureau of the Treasury, which Dominguez said could have earned more money had the firm placed them in other, higher-yielding investments.

Dominguez told PCIC President Jovy Bernabe to instruct the firm’s treasury office handling the corporation’s investments to coordinate with the GSIS in finding ways to increase the yield of PCIC’s P6.8 billion cash assets.

Dominguez said the GSIS is in a better position to assist the PCIC regarding this concern as it has been efficiently handling about P1 trillion in investments for the state pension fund and its members.

“Rolly (Macasaet) and (Landbank president and CEO) Cecille (Borromeo), can you take a lead on this. Let’s determine if we are doing the right thing here or do it in a way that is better,” Dominguez said after the PCIC’s presentation.

National Treasurer Rosalia De Leon pointed out that the cash being invested by PCIC comes from the subsidy provided by the government, thus, what they are investing in BTr is just like returning to the state coffers money that earns passively by incurring interest.

During the meeting, De Leon also reminded the PCIC that the source of its premium subsidies comes from the budget under the Agri-Agra Reform Credit Act, and once proposed amendments to this law are passed by the Congress and enacted, the firm would no longer be able to receive this allocation.

De Leon said that under the proposed amendments to the law, a portion of the penalties paid by the banks to make up for their non-compliance with the provision to extend at least 25 percent of their total loanable funds to agriculture and agrarian reform beneficiaries (ARBs) would no longer go to the PCIC.

The funds will instead be utilized for the lending operations of LANDBANK and the Development Bank of the Philippines (DBP) along with the Support to Parcelization of Lands for Individual Titling (SPLIT) Program of the Department of Agrarian Reform (DAR).

“So, in this case, the PCIC would need to have a more efficient operation so that they would be able to conserve their resources to be able to provide more insurance coverage for our small farmers,” De Leon said.

Macasaet proposed that the PCIC expand its base of paying clients so that the firm can generate income from its insurance operations.

 
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