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Philippines
Thursday, March 28, 2024

Rent-to-own makes sense

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NOTING that the government has set aside P17.4 billion for property and equipment rental and leases in 2018, Senate President Pro Tempore Ralph Recto says the administration should explore “rent-to-own” options wherever feasible.

The suggestion makes sense, given that the government is one of the biggest property lessees today. In the 2018 national spending plan, the amount allocated to property and rental and leases is 33 percent higher than the P13 billion allocated for 2017 and more than double the P8.4 billion spent in 2016.

In some cases, government agencies have stayed in the same buildings so long that the rents accumulated over the years would have been enough to finance the construction of their own.

“There should be a plan in which chosen government offices can graduate from being renters to owners,” Recto said, noting that even the Senate is renting space from the Government Service Insurance System.

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Another way to save on rental costs is to consolidate national government agencies in regional centers in one place. Regional centers should also have their own convention and training facilities because they spend billions of pesos every year booking hotels and resorts for their seminars, to the point that some of these hotels have become de-facto government-subsidized enterprises.

These suggestions come amid a widening budget gap in the face of increased government spending. For the first half of 2017, the government posted a P154.5-billion budget deficit, higher than the P143.8-billion target for the period. Data released by the Bureau of Treasury showed a 28-percent increase in the budget deficit from 2016’s P120.3 billion. This resulted from a nine-percent increase in expenditures, which rose to P1.33 trillion, and a slower growth in revenues, which edged up to P1.17 trillion. For the year, the government has programmed a P482.1-billion deficit, which will rise to P523.6 billion in 2018.

Given the government’s ambitious infrastructure buildup, which should stimulate growth and create jobs, and the previous administration’s almost criminal underspending that resulted in the deterioration of key infrastructure, the widening budget deficit is not necessarily a bad thing.

But given the track record of the Bureau of Internal Revenue and the Bureau of Customs to miss revenue targets, some medium- and long-term savings by way of reducing rental and leasing costs can certainly help in lowering deficit spending. Besides, the battle cry to improve our national infrastructure isn’t “spend, spend, spend,” but Build, Build, Build.

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