Duty Free Fiesta Mall to be closed, relocated as restrictions against Covid-19 widen losses

Duty Free Philippines’ Fiestamall

DUTY FREE Philippines Corp. (DFPC) projects a turnaround in its finances by 2025 with more people traveling across the globe and visiting the Philippines.

DFPC officials led by its Chief Operations Officer Vicente Pelagio A. Angala recently made a presentation of the firm’s financial status and projects to Tourism Secretary-designate Christina Garcia Frasco, who chairs the government firm. In a post on its Facebook page, the Department of Tourism (DOT) said one of the issues covered in the meeting between Frasco and DFPC officials include “the pending closure and possible relocation of the Corporation’s Custom Bonded Warehouse and its flagship store—the Fiesta Mall—as a consequence of the negative economic effects of the pandemic.”

A trip to the Fiesta Mall represents a “coming home” of sorts for balikbayans, who shop for appliances, groceries, home accessories and apparel, along with liquor items, as a bonding activity with their families.

But Angala said they were optimistic that sales of the government firm “will return to its more than US$200 million (P11 billion) level by 2025,” on projections of a global tourism recovery by the International Air Transport Association.

Last year, DFPC’s revenue fell to $35 million (P1.93 billion) as pandemic travel restrictions continued to keep tourists away from the country. Minus expenses, the government firm’s loss widened by 47 percent to P558 million, according to a report by the Commission on Audit. In 2019, the government firm recorded sales of P11.86 billion, netting a profit of P470.36 million after expenses.

Profits fund tourism projects

FOR her part, Frasco shared some mechanisms to possibly save government resources and maximize revenues of DFPC “such as government-to-government lease, if not the utilization and rental of other DOT-attached agency properties. She also shared the possibility of public-private partnerships to make the Duty Free outlets globally competitive and profitable for the agency.”

In a Viber message, the DOT chief told the BusinessMirror: “Of course, any financial hardships for any government agency are a matter of grave concern and moving forward, I fully intend to ensure that the attached agencies improve both their performance and revenue stream.”

The financial health of DFPC is important as under Republic Act 9593 (Tourism Act of 2009), at least 50 percent of its annual profits are supposed to be remitted to the Office of the DOT Secretary to fund tourism programs and projects. Of the remitted amount, 70 percent shall be given to the Tourism Promotions Board, the marketing arm of the DOT.

Appeal for NG funding

THE deepening of DFPC’s losses has made it necessary to appeal to the national government for funding assistance, by fully subscribing to the firm’s P500-million authorized capital. (See, “Duty Free PHL appeals for funding assistance from NG,” in the BusinessMirror, June 27, 2022.)

Under the previous administration, there were discussions on the possible privatization of DFPC, similar to how duty free stores are run in most countries, except the Middle East. This was already given the go-signal by the Department of Finance.

Also, there were plans to expand the list of concessionaires at the DFPC retail stores as these were seen as being monopolized by the same group of suppliers of merchandise goods for many years, under different administrations. (See, “DOT chief: Duty Free firm’s privatization possible,” in the BusinessMirror, September 5, 2019.)

Earlier, DFPC management also planned to streamline its organization to be able to record higher profits.

DFPC currently operates stores at the following: Fiesta Mall in Parañaque; the Ninoy Aquino International Airport terminals 1, 2 and 3 in Pasay; and, the international airports in Davao, Kalibo, Clark, Iloilo and Bacolod (Silay).


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