FEEDBACK: The 2013 annual report of the Commission on Audit released last week is proof

that much has to be done to reform the government corporate sector. Executives of state-run
companies continue to enjoy high salaries and numerous perks, and even lower-ranking officials
and employees are given benefits other than those provided by law.

The excess bonuses given to government-owned and -controlled corporations (GOCCs) during
the Arroyo administration was one of the issues addressed by President Aquino after he came to
power in 2010. A Senate inquiry into the 36-month compensation package at the Metropolitan
Waterworks and Sewerage System (MWSS) led to the enactment of the GOCC Governance Act
of 2011, which created the Governance Commission for GOCCs (GCG) to oversee the
compensation of executives and employees in public firms.

In its 2012 report, the COA already noted that GOCCs still paid bonus[es] and allowances and
benefits to the board of directors and employees without or in excess of legal basis or proper
authority. The amount involved was P2.31 billion. Last week, it was again reported that the
COA had ordered more than 30 GOCCs to return to the

Bureau of the Treasury some P1.6 billion in allowances, retirement pay and other fringe benefits
unlawfully given to their employees. The Local Water Utilities Administration topped the list for
having spent P436 million for the unauthorized allowances, incentives and benefits of its
employees. Also found to have illegally disbursed funds were Duty Free Philippines Corp.,
Home Development Mutual Fund (more popularly known as the Pag-Ibig Fund), National
Housing Authority, Development Bank of the Philippines, MWSS, National Transmission Corp.,
National Power Corp., and the Light Rail Transit Authority.

The report also said 10 GOCCs were found to have used agency funds to pay for the health
insurance of their employees who were already covered by the state-owned Philippine Health
Insurance Corp. Six other state agencies were found to have paid unauthorized consultancy fees,
honoraria, representation allowance, clothing allowance, bonus and incentives and other
reimbursable expenses to their consultants, lawyers and regional officers.

The bloated government corporate sector first took the limelight when Cory Aquino became
president in 1986. Her administration, after finding that GOCCs during the Marcos regime had
been draining government coffers, immediately ordered a restructuring that called for the merger
of related companies, the privatization of those engaged in business activities, and the abolition
of agencies with no public purpose.

After three more administrations, the government corporate sector remains bloated. The COAs
2013 report covered the audit of the financial records of 596 GOCCs from January to December
2013. This is just too many.

Last March, President Aquino abolished six GOCCs and approved the abolition of several others
as part of an ongoing crackdown on nonperforming or unnecessary firms operating under the
bureaucracy. At that time, the GCG said it was actively monitoring 116 such corporations with
the aim to reduce [the number] to less than 100 by the end of 2014 through abolition,
privatization or merger.
The list of companies abolished or about to be abolished indicates the extent of the governments
involvement in obviously private-sector turf: Philippine Fruits and Vegetables Corp., San Carlos
Fruits Corp., Philippine Agricultural Development and Commercial Corp., Bataan Technology
Park Inc., PNOC Shipping and Transport Corp., Marawi Resort Hotel Inc., Philippine Aerospace
Development Corp., Batangas Land Co., Kamayan Realty Corp., GY Real Estate Inc. and
Pinagkaisa Realty Corp.

The streamlining of nonperforming or unnecessary GOCCs is a key objective in the GCGs

strategic roadmap to improving efficiency and transforming the government corporate sector into
a significant tool for economic growth and development. We dont know whats taking the GCG
so long to identify which among these GOCCs should be turned over to the private sector and
which should be abolished.

The government should be reminded that it has no business in business. Studies have shown that
it is best to let the private sector handle many of the activities where it has proven to be more
efficient. The government, instead, should focus its resources on serving the public.

Read more: http://opinion.inquirer.net/80045/streamline-gocc-list#ixzz3QrFkv1tT

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GOCCs in the Philippines

Al-Amanah Islamic Investment Bank of the Philippines

Aurora Pacific Economic Zone and Freeport Authority
Authority of the Freeport Area of Bataan
Bangko Sentral ng Pilipinas
Bases Conversion Development Authority
Cagayan Economic Zone Authority
Center for International Trade Expositions and Missions
Central Bank-Board of Liquidators
Cottage Industry Technology Center
Credit Information Corporation
Cultural Center of the Philippines
Development Academy of the Philippines
Development Bank of the Philippines
Duty Free Philippines Corporation
Employees Compensation Commission
Government Service Insurance System
Home Development Mutual Fund
Home Guaranty Corporation
Human Settlements Development Corporations
Land Bank of the Philippines
Local Water Utilities Administration
Lung Center of the Philippines
 Metropolitan Waterworks and Sewerage System
National Dairy Authority
National Development Company
National Electrification Administration
National Food Authority
National Home Mortgage Finance Corporation
National Housing Authority
National Irrigation Administration
National Kidney and Transplant Institute
National Livelihood Development Corporation
National Power Corporation
National Tobacco Administration
National Transmission Corporation
Natural Resources Development Corporation
Nayong Pilipino Foundation, Inc.
Partido Development Administration
Peoples Credit and Finance Corporation
Philippine Amusement and Gaming Corporation
Philippine Center for Economic Development
Philippine Charity Sweepstakes Office
Philippine Childrens Medical Center
Philippine Coconut Authority
Philippine Crop Insurance Corporation
Philippine Economic Zone Authority
Philippine Fisheries Development Authority
Philippine Heart Center
Philippine International Trading Corporation
Philippine National Oil Company
Philippine Postal Corporation
Philippine Retirement Authority
Philippine Rice Research Institute
Philippine Sugar Corporation
Philippine Veterans Investment Development Corporation (Phividec) Industrial Authority
Power Sector Assets and Liabilities Management Corporation
Quedan & Rural Credit Guarantee Corporation
Small Business Corporation
Social Security System
Southern Philippines Development Authority
Subic Bay Metropolitan Authority
Sugar Regulatory Administration
Technology Resource Center
Tourism Infrastructure and Enterprise Zone Authority
Tourism Promotions Board
Philippine Export-Import Credit Agency
Zamboanga City Special Economic Zone Authority & Freeport
major function:

AN ACT TO PROMOTE FINANCIAL VIABILITY AND FISCAL DISCIPLINE IN

GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS AND TO STRENGTHEN
THE ROLE OF THE STATE IN ITS GOVERNANCE AND MANAGEMENT TO MAKE
THEM MORE RESPONSIVE TO THE NEEDS OF PUBLIC INTEREST AND FOR OTHER
PURPOSES

What are GOCCs?

Government-owned and controlled corporations (GOCCs) are stock or non-stock corporations
established by a special charter or law for the interest of everyone and subject to the test of
economic viability. It is owned or controlled by the government directly, or indirectly through a
parent corporation or a subsidiary corporation.
The GOCCs are directly under the Government Corporate Monitoring and Coordinating
Committee which is responsible for monitoring, coordinating, and conducting performance of all
GOCCs.
--

These are corporations created or established by a special charter or law in the interest of the
common good and subject to the test of economic viability.

They are directly under the Government Corporate Monitoring and Coordinating Committee,
which has the primary responsibility to monitor, coordinate, and conduct performance evaluation
of all Government-owned and Controlled Corporations (GOCCs).

What's New ??

More than half of the national government's P5.34 billion financial assistance to GOCCs during
the first half of 1996 went to basic services, such as food, electricity, water and transport.

Latest data show the national government extended P2.82 billion worht of cash advances, equity,
and subsidy to six GOCCs -- National Food Authority (NFA), National Electrification
Administration (NEA), Manila Waterworks and Sewerage System (MWSS), Local Water
Utilities Administration (LWUA), Philippine National Railways (PNR), and Light Rail Transit
Authority (LRTA).

NFA received P1.12 billion in equity and subsidy, the largest amount of assistance given to
GOCC. NEA got P650 million in cash advances and subsidy, MWSS, P298 million; LWUA,
P288 million; PNR, P264 million; and LRTA, P203 million.
issues: In keeping with its twisted austerity vow, the Aquino administration sharply cut state
subsidies to government-owned and -controlled corporations (GOCCs) and government financial
institutions (GFIs) in its first three months. For the millions of Filipinos who demand adequate
social services from the government, this is certainly not a welcome sign.

Recent data from the Bureau of Treasury reveals that the government cut its subsidies to GOCCs
and GFIs by almost half, from P4.14 billion in the second quarter to P2.21 billion during the third
quarter. This amount is also smaller compared to what was disbursed during the same quarter last
year which stood at P5.58 billion. The report however did not provide a breakdown of subsidies for
each GOCC.

https://chrocarlos.wordpress.com/tag/privatization-of-goccs-philippines/

--issue: Government-ownedand-controlled corporations were initially created as solutions to market

imperfections. It is ironic therefore, that in recent years, they have come to be seen as problems that
need to be fixed. With the tight fiscal situation of the government, reforming the countrys public
corporate sector becomes all the more necessary.

GOCCs are important sources of income for the national government (NG). Under Section 3 of Republic
Act 7656, all GOCCS are required to declare and remit at least 50 percent of their annual net earnings as
cash, stock or property dividends to the national government. Exempted from this rule are GOCCs,
which administer real or personal properties or funds held in trust for the use and the benefit of its
members. This includes the Government Service Insurance System (GSIS), Home Development Mutual
Fund (HDMF), Employees Compensation Commission (ECC), the Overseas Workers Welfare
Administration (OWWA), and the Philippine Medical Care Commission.

GCG MEMORANDUM CIRCULAR NO. 2012 07 CODE OF CORPORATE GOVERNANCE FOR GOCCS

II. ROLE OF GOCCS IN NATIONAL DEVELOPMENT SEC.

4. GOCCs as the States Economic Tools for Development. The State recognizes the potential of GOCCs
as significant tools to pursue economic development, and as a means to promote growth by ensuring
that their operations are consistent with national development policies and programs.28