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DOT considers other options to raise DFPC profit

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DOT considers other options to raise DFPC profit

Home Boracay Informer’s News DOT considers other options to raise DFPC profit

THE Department of Tourism (DOT) is exhausting all means to increase the profitability of the Duty Free Philippines Corp. (DFPC), as it also studies the possibility of franchising the latter’s retail stores.

DOT Undersecretary for Tourism Regulation, Coordination, and Resource Generation Arturo P. Boncato Jr. told the BusinessMirror, a “joint technical working group [TWG] ” has been created to study the feasibility of franchising the operations of DFPC. This was upon instruction by Tourism Secretary Bernadette Romulo Puyat via Department Order  2019-74 issued in July. The board of DFPC, a government-owned and -controlled corporation, is chaired by the DOT  chief.

This also includes the possibility of privatizing DFPC, which Romulo Puyat earlier disclosed to this paper.  (See, “DOT chief: Duty Free firm’s privatization possible,” in the BusinessMirror, September 5, 2019.) Boncato mentioned that Section 90 of Republic Act 9593 (Tourism Act of 2009) states “the DFPC shall operate without prejudice to any privatization in the future, subject to existing laws on privatization and procedures on public bidding.”

In an email, Boncato said these efforts are “all in line with the DOT’s current efforts to direct the DFPC towards more sustainable and gainful operations and business growth.” He said  executives of both DOT and DFPC are members of the TWG. “The TWG’s main deliverable is a roadmap towards franchising.  We have been instructed to have a framework for this roadmap by the end of September 2019.”

Under Chapter 6, Section 90 of RA 9593’s Implementing Rules and Regulations, “DFPC shall have the exclusive authority to operate or franchise out stores and shops that would sell, among others, duty- and tax-free merchandise, goods and articles, in and within the vicinity of international ports of entry, [tourism enterprise zones],” and other areas as may be identified by the DFPC Board, the DOT official said.

RA 9593, or the Tourism Act of 2009, reorganized the DFPC, making it a separate entity. It was previously under the Philippine Tourism Authority (now the Tourism Infrastructure and Enterprise Zone Authority). Under the same law, 50 percent of DFPC’s income is remitted to the DOT, of which 75 percent goes to the tourism promotions fund.

The Commission on Audit (COA) took the DFPC to task for financial irregularities and missteps that resulted in possible opportunity losses.

In the latest report issued in June, COA noted that DFPC did not submit its financial statements and books for calendar year 2018, a failure it traced to the delay in the rollout of its new accounting system and lack of qualified personnel to handle it.

State auditors recommended that DFPC determine if the Bids and Awards Committee could be held liable for the delay in procurement of the P37.85-million ERS-Ms Dynamic AX Solutions accounting system “and hold them accountable.”

COA said DFPC “could have saved on preoccupancy rent expenses amounting to P144.305 million and other related costs had it properly/judiciously planned its project of opening a Duty Free store outlets (sic) at the Ninoy Aquino International Airport (Naia) Terminal 3 before entering into a Lease Concession Contract with the Manila International Airport Authority…”

DFPC leased mall space at the Naia 3 in November 2014, but the store opened only in June 2018.

State auditors said DFPC also failed to submit 405 disbursement vouchers worth P852.325 million and 1,135 disbursement vouchers worth $62.162 million for post audit.

Last year, state auditors found DFPC didn’t record in its 2017 books  P346,446.80 in merchandise that were withdrawn through gate pass slips and delivered to the DOT. The COA also found that DFPC released some P3.36 million worth of goods—signature bags and shoes, inverter refrigerators, LED television sets, coffee machines, etc.—as corporate giveaways.

Source: https://businessmirror.com.ph/2019/09/10/dot-considers-other-options-to-raise-dfpc-profit/

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