Pag-IBIG Fund: Building Homes, Improving Lives

Alvin T. Claridades

When Pag-IBIG Fund saw the light of day nearly three decades ago, specifically on June 11, 1978 via Presidential Decree No. 1530, its primary object then was simply to address the countrys twin fundamental shelter concerns, that is, savings generation and housing provision for the lowly wage-earners, both in the public and in the private sectors. To the common man then, Pag-IBIG seemed to be no more than just a word connoting love or affection or simply another of those appellations to one of the countless pet projects of a forgettable regime that had a penchant to sloganeering and coining of acronyms and jargons to suit its political whims. With the passing of time, though, and with Pag-IBIG Funds having hurdled the tests of socio-political revolutions unscathed, its critics have found their early conceptions entirely misplaced.

Through the years, Pag-IBIG Fund has not only successfully achieved its original twofold objective; it has also catered to the diverse growing needs of its members both here and abroad through innovative and client-friendly loan programs and repayment schemes that have taken into account the fiscal capacity of each borrower-member and optimized the utilization of the provident fund it was tasked to manage and administer. Moreover, Pag-IBIG Fund has

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lived up to its name -- which aptly stands for Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industria at Gobyerno by effectively harnessing the active participation of the said key sectors in the provision of adequate and affordable housing to its members through sound savings and gainful investment schemes.

Today, Pag-IBIG Fund stands mightily proud and blissfully fulfilled, holding as it does the unsurpassed distinction of having performed better year after year at ensuring the prompt and efficient processing and release of various types of loans to millions of its members. Over the years, it has helped provide homes for the employees who are in need of financial assistance for that purpose and has thus been instrumental in putting roofs over the heads of its heretofore homeless members.

Income-wise, Pag-IBIG has posted, in 2003 alone, a whopping net income of P5.2 billion, enough to put the agency in 9th slot among the highest incomeearning companies in the entire country. This was an incredibly remarkable leap from the previous years (2002) earnings amounting to only P4.6 billion and catapulted the agency from its pitiful fiscal standing at the turn of the millennium to its current enviable topnotch fiscal position.

It is indeed worthy to note that by the end of fiscal year 2004, Pag-IBIGs net income ballooned further to around P6.6 Billion, up by P1.4 billion from its

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2003 total earnings or equivalent to a growth of nearly 25 percent, the highest level the Fund has so far posted in recent years. This unprecedented tremendous growth in its income and assets is primarily attributed to the unparalleled increase in membership contributions as well as to the upsurge in the agencys net earnings for the same period.

Likewise, in recognition of its increasingly strong capacity to meet its financial commitments relative to that of other Philippine corporates, Pag-IBIG Fund was recently assigned a corporate credit rating of PRS Aaa minus by the pioneer credit rating agency, Philippine Rating Services Corporation

(PhilRatings), a rating which is considered to be the highest possible rating on PhilRatings corporate credit rating scale. This means that Pag-IBIG has consistently performed as a profitable company with a fairly managed investment portfolio and a highly assured liquidity to meet all of its obligations to both its members and creditors.

The annual financial gains steadily earned by the Fund have been translated to direct benefits and financial assistance to its approximately 5.8 million members nationwide. Proof of this is the disbursement of no less than P8.87 billion to its 22,129 housing loan borrowers for the construction or purchase of 22,044 housing units for the first seven (7) months of the current

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year. Within the same period, an aggregate of nearly P3.4 billion was made available in provident claims.

Having allocated P22 billion for housing this year and eyeing to set aside P4 billion more for that purpose next year, Pag-IBIG Fund will undoubtedly continue to contribute immensely to the national governments serious efforts towards addressing the acute shelter needs of the country through its commendable accomplishments in housing finance. Its record-breaking fiscal performance is the primary consequence of the revolutionary policy changes adopted by the Pag-IBIG Board of Trustees pursuant to the policy directions set by the Arroyo administration, through the Housing and Urban Development Coordinating Council (HUDCC) under the chairmanship of Vice President Noli De Castro.

Among these innovative changes that have directly profited most of its low-salaried members are the lowering of the interest rates under its traditional home-lending programs, which now ranges to all-time lows of between six (6%) and twelve percent (12%) per annum, depending on the loan amount; the increase in loan-to-collateral ratio to as high as one hundred percent (100%) of the approved loan amount which has permitted homebuyers to secure loans without having to put up the usual equity; and, finally, the drastic reduction of the

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loan processing time and the trimming down of the list of documents required for that purpose.

Alongside its existing programs, a menu of novel financing schemes has recently been offered to its growing members to ensure the continuous and uninterrupted flow of the necessary funds and to make them available to private developers and project proponents purposely for the production of housing packages that will cater to the actual needs and affordability levels of Pag-IBIGs target clientele. Among these schemes are the Pag-IBIG City Medium-High Rise Buildings (MHRB) turnkey financing programs, the revised Group Land Acquisition and Developmental (GLAD) loan program, the Credit Facility for Private Developers, and the Housing Liquidity Bond Window.

These pioneering reforms and supplements to Pag-IBIGs existing housing programs have all but widened the carte du jour of housing loan packages available to its members and have to a large extent helped improve their ability to purchase homes with less strain on their measly budgets. Under the dynamic stewardship of its youthful President and Chief Executive Officer (CEO) in the person of Atty. Romero Federico S. Quimbo, Pag-IBIG Fund has emerged as the major financier of the national governments housing commitment to the formal sector and has, during the past couple of years, generated combined record earnings of P10.4 billion, easily propelling it to the top of the heap of leading

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corporations registering the highest net incomes for the said period. From 2001 to 2003, for instance, Pag-IBIG extended a total of P26.5 billion worth of housing loans to developers and end-users which is equivalent to approximately 108,000 housing units built or sold.

The effect of such financial upsurge is easily discernible in terms of the new vigor and renewed interest which the heretofore lethargic and passive private sector housing groups have demonstrated of late, owing to the confidence-building measures and policy changes consistently and continually adopted by Pag-IBIG Fund for the purpose of, among others, luring back potential private investors to housing production and encouraging their active participation therein. The other discernible consequence of such unrivaled fiscal growth is the high multiplier impact it bears on the nations economy pegged by economists at 16.6 such that, translated in terms of the real value of the actual amount poured into housing for the first trimester of this year alone, Pag-IBIG has virtually floated over P340 million worth of jobs and investments in the economic mainstream, directly benefiting a multitude of workers and

businessmen.

Among the more laudable specific policy changes recently adopted by the Fund which have clearly redounded to the benefit of and have gained tremendous acceptability from its members is the removal of equity for housing

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loans of up to P750,000.00. This would mean that for housing units valued at P750,000.00 or less, borrowers need not put up any equity as Pag-IBIG Fund will loan them the amount equivalent to the full value of the property. This is certainly a welcome improvement from the old guidelines where it was so provided then that the highest loan range where the 100% loan-to-collateral ratio was applied was from P225,000.00 up to P500,000.00.

Indeed, Pag-IBIG Fund, with all its cumulative accomplishments and completed housing programs and projects in all of its twenty seven (27) long years of existence, has gone a long way towards helping provide a strong shelter base specifically for the homeless formal sector employees. It has, to a great extent, successfully played the key role in helping ease the huge housing backlog by readily flexing its financial muscle to buttress and prop up the otherwise drooping governments home financing program. Having become the countrys biggest provident fund in terms of assets and income in its relatively young existence, Pag-IBIG has truly come of age and has emerged from its cocoon to become a leviathan among the sprites in the field of housing finance; a veritable case of primus inter pares.

In the years to come, though, Pag-IBIG Fund will inevitably have to tackle and be confronted with emerging issues of far-reaching implications to its viability as a financing institution as well as upon its existing programs. Questions such

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as the proposed increase in its members monthly contributions and the suggested exemption of Pag-IBIG from income tax and the salary

standardization law will continue to haunt its future leaders. But such will have to be addressed when the opportune time comes.

In the meantime, Pag-IBIG Fund will have no other recourse but to move on, and move on it should if it ever hopes to remain as among the few bankable and viable government financial institutions which have the innate capability and the necessary wherewithal to bring flickers of hope to the lives of many of our needy countrymen. True, it may not have everything it would take to accomplish all its multifarious goals but still, at the very least, it is moving on the right track towards attaining its corporate goals and vision.

To the unbelievers and cynics amongst us, Pag-IBIG may just be an inanimate word -- lacking in color, bereft of touch, yearning for depth. But to those of us whose lives the Fund has drastically changed and for the better at that Pag-IBIG will forever be love and affection personified in the nooks and crannies of our happy and contented homes and in the midst of our blissful and comfortable lives.

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