GOCCs-Lecture-2.pptx Government - owned and controlled corporation

Government - owned and controlled corporation

1. Government-owned and controlled corporation ( gocc ) VICTORIA P. VALENZUELA, DPA, FRIPA Professor

2. THE PHILIPPINE PUBLIC CORPORATE SECTOR The international term used to describe the government corporation phenomenon is “public enterprise” while in the Philippines, the phrase used is “Government-Owned or Controlled Corporation” or GOCC.

3. What are GOCCs? Presidential Decree (PD) No. 2029 A stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or, if organized under the general corporation law, is owned or controlled by the government directly or indirectly through a parent corporation or subsidiary corporation.

4. Executive Order No. 64 of 1993 E xpanded the definition of GOCC as follows: “... a corporation created by special law or incorporated and organized under the Corporation Code and in which government, directly or indirect, has ownership of the majority of the capital stock.”

5. WHY GOCC ARE CREATED? AND WHY? G rounded on the idea that market failures do exist and government needs to intervene to protect public interest. The use of corporate vehicle recognized as efficient means to mobilize government assets.

6. HISTORY OF GOCC? 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 GOCCS in which 406 are operational water districts

7. There is no central agency tasked to monitor and supervise the activities of the government corporate sector of the GOCC’s Creation of GCMC (Government Corporate Monitoring Committee) Presidential Proclamation No 50 Authorized the privatization of GOCCs (that resulted to only 158 GOCCs today

8. 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;

9. Conditions in where GOCC operate 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.

10. Groups of GOCC Cluster A - Financial institutions Cluster B - Public Utilities, Industrial, area development, agricultural, trading, promotional Cluster C – Social, Cultural and Scientific

11. SECTORAL CLUSTERS PHILIPPINE PE’S ARE GROUPED ACCORDING TO THE FOLLOWING SECTORAL CLUSTERS: FINANCIAL - RESPONSIBLE FOR THE FORMULATION AND IMPLEMENTATION OF POLICIES IN THE AREAS OF MONEY/BANKING AND CREDIT - PROMOTE AND ACCELERATE SOCIO-ECONOMIS DEVELOPMENT COMPOSED OF MAJOR GOVERNMENT FINANCIAL INSTITUTIONS (GFIs) OR BANKS – Bangko Sentral ng Pilipinas Development Bank of the Philippines and Al- Amanah Islamic Investment Bank of the Philippines (ISLAMIC BANK) GOCCs engaged in insurance, financing, real estate acquisition and development Government Service Insurance System (GSIS) Social Security System (SSS) .

12. PUBLIC UTILITIES ENGAGED IN ENERGY, FINANCING, COMMUNICATIONS, TRANSPORTATION AND WATER FUNCTIONS. Examples: PNOC, NPC, NEA, MWSS, PNR, LRTA, MIAAPP, LWUA ENGAGED IN NUCLEAR POWER PLANT FACILITATE THE FAST AND SAFE DELIVERIES OF POSTAL SERVICES. INTEGRATE AND COORDINATE THE PLANNING, DEVELOPMENT, CONSTRUCTION, AND OPERATIONS OF RAILROADS AND LIGHT RAIL TRANSPORT SYSTEM

13. 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.

14. List of gocc in the Philippines 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) 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)

15. List of gocc in the Philippines 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) Integrated Bar of the Philippines (IBP) Instructional Materials Corporation (IMC) Laguna Lake Development Authority (LLDA) Land Bank of the Philippines (LBP) Light Rail Transit Authority (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)

16. 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.  

17. List of gocc in the Philippines 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)

18. List of gocc in the Philippines PNOC Alternative Fuels Corporation (PNOC AFC) PNOC Energy Development Corporation (PNOC EDC) PNOC Exploration Corporation (PNOC EC) PNOC Development and Management Corporation (PDMC) 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) 

19. List of gocc in the Philippines 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)

20. 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.

21. GCG powers & function 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.

22. RATIONALIZING THE GOCC SECTOR The GCG has the power and function to ascertain whether a GOCC should be: - Reorganized; - Merged; - Streamlined; - Abolished; or - Privatized

23. GCG composition The GCG is composed of 5 members. The chairman with the rank of Cabinet Secretary and two members with the rank of under secretary shall be appointed by the president The secretaries of the Dept. of Budget & Management and Department of Finance shall act as ex officio members .

24. Disclosure & audit requirements R.A. 10149 require full disclosure of all GOCC through a website and grant unrestricted public access Latest annual audited financial report within 30 days from receipt Audited financial statements in immediate 5 years Quarterly, annual report & trial balance Current corporate operating budget

25. 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

26. Exempted of the coverage of R.A. 10149 Bangko Sentral ng Pilipinas State Universities & Colleges Cooperatives Local water districts Economic zone authorities Research institution

27. Exempted of the coverage of R.A. 10149 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

28. 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

29. CONCLUSION The GOCC act of 2011 establishes the framework for reforms in the public corporate sector. It is designed to reform the government corporate sector, improve corporate governance of GOCCs, and exact from them efficient and effective public service.

30. END! THANKS FOR LISTENING!!