APO: From bad debts to big profits

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PROFESSIONALISM and competence has turned around a little known agency that used to be a dumping ground for political protégés.

Before the elections in 2010, I wrote about the APO Production Unit, Inc., a government corporation that was blatantly abused by the men and women tasked to manage it. It was turned into a milking cow, and used to print campaign materials for relatives of its officials.

Five years later, the corporate officers of APO called my attention to the agency’s present condition and bragged about how they managed to make a 180-degree turn from a debt-ridden into an income generating entity.

In 2011, APO realized a net income of P20.7 million, the first time in 11 years of losses.


In 2013, the corporate officers said, the agency has started remitting to the national treasury 50 percent of its income. In April 2014, it issued a check for P2.7 million to the Bureau of Treasury, and another P2 million in April this year as its contribution to the national government.

APO, by its corporate nature, does not receive even a single centavo from the national government.

For 2015, the agency is given a challenging sales revenue target of P1.08 billion, from P680 million last year. With a state-of-the-art security printing facility on a three-hectare property at the LIMA Technology Center in Malvar, Batangas, APO may not be far from achieving the revenue goal.

It will soon start producing the e-passport using the latest printing technologies and adopting high-end security features to ensure the credibility of the travel document.

With over 7,000 square meters of production area, the facility houses a data center, fiber optic data lines, CCTV system, K9 Unit, and state of the art security printing system.

It produces excise stamps for the Bureau of Internal Revenue (BIR) as well as the Internal Revenue Stamp Information System (IRSIS), a security software that tracks and traces tobacco products.

APO stands for ‘Asian Productivity Organization,’ the name of the Japan-based group that had helped start it in 1967 as an outfit that would serve the information and training needs of Asian countries.

Japan’s APO and the Philippine government jointly created the production unit through a Memorandum of Agreement (MOA) on June 24, 1971.

Under the MOA signed by then NEDA Director General Gerardo Sicat and the Japan-based APO Secretary General Morisaburo Seki, the Philippine government was to “assume full responsibility to operate the Unit on a self-sustaining basis effective 1st July 1971 onwards.” Manila was also to continue granting the unit “exemption privileges on all imported printing supplies and materials, equipment and other items needed for its productions operations.”

Consequently, then President Ferdinand Marcos signed Letter of Instruction No. 197, directing NEDA to make APO a self-sustaining, non-stock, non-profit corporation. The order also enabled the unit to “solicit and accept printing jobs with other agencies of, or corporations owned or controlled by the Government.”

In November 1972, APO Production Unit, Inc. was incorporated and registered with the Securities and Exchange Commission (SEC) as a non-stock, non-profit corporation.

The move to make the unit self-sufficient was a result of funding running out from the joint contributions of the United States Agency for International Development (USAID) and Manila. It was also aimed at sparing the organization in Japan and the Philippine government from any financial burden stemming from the firm’s operations.

Since then until 2010, APO Production Unit seemed to have served mostly the whims of government appointees placed at its helm, and who have insisted that the government corporation is “private” whenever such a label suits their needs.

And after so many years of confusion over its identity, APO has now defined itself as a government corporation as reaffirmed in RA 10149, or the 2011 budget law. APO is one of three recognized government printers of highly-sensitive security documents and government forms. The other two are the Bangko Sentral and the National Printing Office (NPO).

Through the years until 2010, APO was shuffled from one government agency to another. It is now comfortably under the Presidential Communications Operations Office (PCOO).

When the present seven-man board took over the agency in November 2010, it was confronted with various complaints from the employees union, ranging from union busting to graft, filed in different venues from the National Labor Relations Commission (NLRC) to the Office of the Ombudsman. So far, four major cases had either been dismissed or denied.

Despite protests from union members, APO chairperson Milagros Alora said the management remained focused on resuscitating the corporation to avert a shutdown if it would continue operating on losses.

The board’s decision to allow management to transfer part of the corporation’s account to the Asia United Bank (AUB) was a major issue to the union.

“But we had to do it because no government bank would lend us. AUB was my former client and it was the only bank that trusted us and extended loan to us on my pleading,” Alora said over lunch a few days ago. The engagement was for short-term loans to bridge the gap between collections and to finance raw materials for on-going printing jobs.

Another difficult decision it made was to lay off people. “We had to streamline, computerize operations and upgrade workers’ skills to make them at par with those in the private sector,” said General Manager Gerardo H. Aldaba.

APO has paid more than half of its long standing obligations such as the payment for the 2008 BIR taxes amounting to P48 million and local business taxes to the local government.

To meet the need for capital projects in the face of financing shortage, the board approved lease-purchase agreements that enabled the company to immediately acquire new equipment for urgent jobs and paid for with the income from the projects done using the same equipment and machines.

With the innovative steps taken to improve operations, APO has earned the trust and confidence of more government agencies that have security printing requirements. Among its new accounts are the BIR, DFA, Social Security System (SSS), Department of Trade and Industry (DTI) and Land Transportation Office (LTO).

Alora said the Governance Commission for Government Owned or Controlled Corporations (GCG) which supervises APO was impressed with its turn around and has made APO its poster boy in good and effective governance.

The NPO can be turned around in the same way that the APO had been turned from a company in bad debts into one that is earning big profits. The NPO plays an important role in the conduct of national and local elections as it is deputized by the Commission on Elections (Comelec) to print the official ballots and other election paraphernalia.

Just five days ago, The Manila Times published a story about government prosecutors asking the Sandiganbayan to suspend NPO Director Emmanuel Andaya, Chief Administrative Officer Sylvia Banda, Printing Operations Chief Antonio Sillona, Budget Officer Bernadette Lagumen and Printing Office Assistant Chief Ma. Gracia de Leon Enriquez who were accused of giving unwarranted benefit to JI Printers Inc. by authorizing the allegedly illegal award of a printing deal worth P3.6 million to the company in 2011 through a negotiated procurement.

The anomalies at the NPO, which is far bigger than APO, are too much to swallow, including one that involved the awarding of a contract for the repair of an elevator to a printing company.

It was a classic case of the less-publicized APO Production Unit traversing the administration’s Tuwid na Daan while its big neighbor, the NPO, opts to take the crooked path.

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