By removing the requirement on the state-owned Land Bank of the Philippines, or LandBank, to periodically remit dividends to the government, President Ferdinand "Bongbong" Marcos Jr. expects lending to the farm sector to increase.

Marcos issued Executive Order 43 on 11 October, made public on Saturday, which slashed to zero the dividend rate of LandBank from the current 50 percent of its annual earnings.

"The adjusted dividend rate set forth in section 1 of this order is applicable only to the LandBank for calendar year 2022," the EO read.

The reduction was made "in the interest of national economy and general welfare" upon the recommendation of Finance Secretary Benjamin Diokno.

Republic Act 7656 states that all government-owned or -controlled corporations must declare and remit 50 percent of their annual net earnings in cash, stocks, or property dividends to the national treasury.

But the same law also authorizes the President, upon the recommendation of the Finance secretary, to adjust the percentage of annual net earnings to be declared by a government-owned or -controlled corporation "in the interest of national economy and general welfare."

Stronger bank eyed

According to the EO, Marcos ordered the removal of the dividend requirement to support LandBank's capital position and maintain its compliance with the Bangko Sentral ng Pilipinas' regulations on capital adequacy requirements.

The order also expands the LandBank's role in the economic recovery of industries adversely affected by the coronavirus pandemic.

The LandBank and the Development Bank of the Philippines remitted P50 billion and P25 billion, respectively, to the Bureau of the Treasury as initial capital of the Maharlika Investment Fund.