Government Owned & Controlled Corporation

PSI HERMAN LUMANOG,MMPA

Doctor of Public Management

Pamantasan ng Lungsod ng Manila

Presented by:

Presidential Decree No. 2029

A stock or a non-stock corporationwhether performing governmental orproprietary functions, which isdirectly chartered by a special law or,if organized under the generalcorporation law, is owned orcontrolled by the government directlyor indirectly through a parentcorporation or a subsidiarycorporation.

Owned and controlled by the state supposed to address market failures and correct imperfections.

Presently 158 GOCC

• 84 Chartered

• 74 registered under the SEC

Executive Order No. 64 of 1993

A corporation created by special lawor incorporated and organized underthe Corporation Code and in whichgovernment, directly or indirectly, hasownership of the majority of thecapital stock.

Why GOCC are created? And Why?

Grounded on the idea that marketfailures do exist and government needsto intervene to protect public interest.

The use of corporate vehicle recognizedas efficient means to mobilizedgovernment assets.

History of GOCC in the Philippines

Mid 50’s and early 60’s GOCC disastrous financial performance

37 GOCC in 1965

During president Marcos first 10 years, GOCC reach up to 120 in 1975

303 GOCC in 1984

And in 2010 there is 604 GOCC’s in which 446 are operational water districts.

There is no central agency tasked to monitor and supervise the activities of the government corporate sector or the GOCC’s

Executive Order No. 936

• Authorized the privatization of GOCC’s

• (that resulted to only 158 GOCC’s today.)

Presidential Proclamation No. 50

• Creation of GCMC ( Government Corporate Monitoring Committee.)

Conditions in where GOCC operate

In cases where private sector is unwilling or unable to provide goods and services vital to the society such construction of large infrastructure i.e. roads & ports;

When there is a need to create bias in favor of disadvantage sector of the society in a free market such as distribution of staples and sugar;

To spur the development of strategic activities with wide ranging economic impact; and

When there exist natural monopolies which government want to control to protect the consuming public.

Groups of GOCC

Cluster A - Financial institutions

Cluster B - Public Utilities, Industrial, area development, agricultural, trading, promotional

Cluster C – Social, Cultural and Scientific

How do GOCC’s performance impact the government

Section 3 of R.A. 7656 require all GOCC to remit 50% of annual net earning in cash, stock or property dividends to national government.

35.7 billion collected from GOCC in 2009 or 25.3% of total non-tax revenue

GOCC’s constitutes expenditures, they deemed to be entitled to financial support in form of subsidies, equity infusion & lending.

23.8 billion of financial aid or 1.7% in government budget in 2009.

Al-Amanah Islamic Investment Bank of the Philippines

(ISLAMIC BANK)

Bangko Sentral ng Pilipinas (BSP)

Bases Conversion Development Authority (BCDA)

Cebu Ports Authority (CPA)

Clark Development Corporation (CDC)

Cottage Industry Technology Center (CITC)

Center for International Trade Expositions and Missions

(CITEM)

Cultural Center of the Philippines (CCP)

Development Academy of the Philippines (DAP)

Development Bank of the Philippines (DBP)

DBP Data Center, Inc. (DCI)

Duty Free Philippines

Employees' Compensation Commission (ECC)

Food Terminal Incorporated (FTI)

Fiber Industry Development Authority (FIDA)

Government Service Insurance System (GSIS)

Home Development Mutual Fund (Pag-IBIG)

Home Guaranty Corporation (HGC)

John Hay-Poro Point Development Corporation

Integrated Bar of the Philippines (IBP)

Instructional Materials Corporation (IMC)

Laguna Lake Development Authority (LLDA)

Land Bank of the Philippines (LBP)

Light Rail Transit Autority (LTRA)

Livelihood Corporation (LIVECOR)

Local Water Utilities Administration (LWUA)

Lung Center of the Philippines (LCP)

Mactan-Cebu International Airport Authority (MCIAA)

Manila International Airport Authority (MIAA)

Masaganang Sakahan, Inc.

Metropolitan Waterworks and Sewerage System (MWSS)

Metro Manila Transit Corporation (MMTC)

National Agribusiness Corporation (NABC)

National Dairy Authority (NDA)

National Development Company (NDC)

NDC Maritime Leasing Corporation (NLMC)

National Electrification Administration (NEA)

National Food Authority (NFA)

National Home Mortgage Finance Corporation (NHMFC)

National Housing Authority (NHA)

National Irrigation Administration (NIA)

National Livelihood Support Fund (NLSF)

National Kidney and Transplant Institute (NKTI)

National Power Corporation (NAPOCOR)

National Tobacco Administration (NTA)

National Transmission Corporation (TRANSCO)

North Luzon Railways Corporation (NorthRail)

Northern Foods Corporation (NFC)

Natural Resources Development Corporation (NRDC)

Occupational Safety and Health Center (OSHC)

Overseas Workers Welfare Administration (OWWA)

People's Credit and Finance Corporation (PCFC)

PEA Tollway Corporation (PEATC)

Philippine Aerospace Development Corporation (PADC)

Philippine Amusement and Gaming Corporation

(PAGCOR)

Philippine Center for Economic Development (PCED)

Philippine Charity Sweepstakes Office (PCSO)

Philippine Coconut Authority (PCA)

Philippine Convention and Visitors Corporation (PCVC)

Philippine Crop Insurance Corporation (PCIC)

Philippine Deposit Insurance Corporation (PDIC)

Philippine Economic Zone Authority (PEZA)

Philippine Export-Import Credit Agency (PHILEXIM)

Philippine Health Insurance Corporation (PHILHEALTH)

Philippine Heart Center (PHC)

Philippine International Convention Center (PICC)

Philippine International Trading Corporation (PITC)

Philippine Institute for Development Studies (PIDS)

Philippine Institute of Traditional and Alternative Health

Care (PITAHC)

Philippine National Oil Company (PNOC)

PNOC Alternative Fuels Corporation (PNOC AFC)

PNOC Energy Development Corporation (PNOC EDC)

PNOC Exploration Corporation (PNOC EC)

PNOC Development and Management Corporation

(PDMC)

PNOC PNOC Shipping and Transport Corporation

(PNOC STC)

Philippine National Railways (PNR)

Philippine Ports Authority (PPA)

Philippine Postal Corporation (PHILPOST)

Philippine Postal Savings Bank, Inc. (PPSB)

Philippine Retirement Authority (PRA)

Philippine Reclamation Authority (formerly Philippine

Estates Authority)

Philippine Rice Research Institute (PRRI)

Poro Point Management Corporation (PPMC)

Power Sector Assets and Liabilities Management

Corporation (PSALM)

Philippine Tourism Authority (PTrA)

Quedan Rural Credit and Guarantee Corporation

(QUEDANCOR)

Radio Philippine Network, Inc. (RPN)

Small Business Guarantee and Finance Corporation

(SBGFC)

Social Housing Finance Corporation (SHFC)

Social Security System (SSS)

Subic Bay Metropolitan Authority (SBMA)

Sugar Regulatory Administration (SRA)

Technology and Livelihood Resource Center (TLRC)

Trade and Investment Development Corporation of the

Philippines (TIDCORP)

Zamboanga City Special Economic Zone Authority

(Zamboanga Freeport Authority)

GOCC Governance Act of 2011(Republic Act No. 10149)

Consolidation of Senate Bill no. 2640 & House Bill No. 4067

Central advisory, monitoring and oversight body with authority to formulate, implement and coordinate policies concerning GOCC’s and related corporation.

GCG powers & function

Evaluate the performance & determine the relevance of the GOCC, to ascertain whether such GOCC should be organized, merged , streamlined, abolished, or privatized.

Classification of GOCCs

Filing criminal & administrative charges of its directors/employees

Conduct periodic study, examination, evaluation & assessment of performance of GOCCs.

Review function of each the GOCC and, upon determination that there is conflict between regulatory and commercial functions of a GOCC

Prepare semi-annual progress report to be submitted to the President & Congress.

The GCG has the power and function to ascertain whether a GOCC should be:

- Reorganized;

- Merged;

- Streamlined;

- Abolished; or

- Privatized

RATIONALIZING THE GOCC SECTOR

GCG composition

The GCG is composed of 5 members.The chairman with the rank of CabinetSecretary and two members with therank of under secretary shall beappointed by the president

The secretaries of the Dept. of Budget& Management and Department ofFinance shall act as ex officiomembers.

R.A. 10149 require full disclosure of all GOCC through a website and grant unrestricted public access

Latest annual audited financial reportwithin 30 days from receipt

Audited financial statements inimmediate 5 years

Quarterly, annual report & trialbalance

Current corporate operating budget

Disclosure & audit requirements

Complete compensation package of all board members & officers

Travel

Representation

Transportation and any form of allowances or

expenses.

• Local & foreign borrowings

• Performance scorecards & strategy maps

• Government subsidiary & net lending

• All borrowing guaranteed by the government

• All information GCG requires

Exempted of the coverage of R.A. 10149

Bangko Sentral ng Pilipinas

State Universities & Colleges

Cooperatives

Local water districts

Economic zone authorities

Research institution

Directors/Trustees/Employees

Compensation and Position classification system for GOCC officers & employees

Subject to Phil president approval

Additional incentives

No incentives shall be granted unless GOCC

has fully paid taxes for which its liable

Position, Titles and Salary Grade

Directors/ Trustees appointment & term of office

The appointive director shall be appointed by the President of the Philippines

Shall meet the fit & proper rule according to

GCG

Term of office of appointed director shall be 1 year (unless sooner remove for a cause)

Limit to compensation, per diems, Allowances and incentives

CONCLUSION

The GOCC act of 2011 establishes theframework for reforms in the publiccorporate sector. It is designed toreform the government corporatesector, improve corporate governanceof GOCCs, and exact from themefficient and effective public service.