MORE than four years ago, President Aquino signed into law “The GOCC Governance Act of 2011,” principally authored by Senate President Franklin Drilon.
The law was envisioned to be a game-changer: one that would not only stop the abuses within government-owned and -controlled corporations (GOCCs) but more importantly, to develop the potential of these GOCCs to be “significant tools for economic development.”
Toward this end, the law created a Securities and Exchange Commission-type commission called the Governance Commission for GOCCs (GCG) and mandated it as the “central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies” for the GOCC system.
The inaugural chair appointed by President Aquino for the GCG was former Ateneo Law School Dean Cesar L. Villanueva, ably assisted by a cadre of well-meaning commissioners and staff.
I took modest part in the formulation of the GCG Act and I have written about it several times on this column. This question now begs to be answered: Is the GCG Act, as implemented by the GCG, achieving its objectives?
My investigation indicated that from the moment they assumed office, the commissioners and staff of the GCG spent countless hours in putting up the right structure and framework. Several reform measures have already been implemented but far-reaching reforms have yet to come.
Among them are the proposed Compensation and Position Classification System (CPCS) and the Compensation Framework for Directors in the GOCC Sector, both of which are designed to help our GOCC sector attract and retain quality employees and directors who will help produce the results envisioned in the GCG Act.
Also being proposed by the GCG is the Integrated Corporate Reporting System (ICRS), a web portal that will serve as the central repository of all GOCC-related data to ensure transparency and from which the government can generate reports for correct decision-making relating to GOCCs.
Despite its relatively young age, the GCG Law is showing extremely encouraging results. For example, in line with the law’s mandate to rationalize the GOCC sector through abolition, privatization and streamlining of operations, the number of GOCCs has been reduced to 107 as of June 2015 from from 158 in 2011.
In 2013 and 2014, the abolition of 21 GOCCs saved the government some P1.3 billion. There are 178 more recommended for abolition.
On the other hand, six GOCCs that have the potential to generate significant revenues are being recommended for privatization.
Even with fewer GOCCs, total revenues from the sector increased from P908.73 billion in 2014 from P641.46 billion in 2010. In terms of percentage, GOCC contributes 13.59 percent to the government’s non-tax revenues.
As a result, the total comprehensive income of GOCCs, the net of subsidies and unrealized gains/losses, improved to P 257.96 billion in 2014 from P199.15 billion in 2012.
This, in turn, enabled our GOCCs to increase their dividend remittance to the national government to P131.86 billion. This dividend remittance, collected in only five years, is higher than the remittance of P127.51 billion from 1995 (when RA No. 7656 or the Dividends Law was first implemented) until June 2010.
A recent report also indicated that during the first seven months of 2015, subsidies to GOCCs slid by 17.6 percent to P46.29 billion from P56.168 billion last year. This meant savings of more than P10 billion.
Of course, the initial success of the GCG Law primarily rested on the shoulders of the people who were first appointed by President Aquino. Indeed, if there was one big advantage from the GCG experience, it was the appointment of highly competent people who have their hearts in the right place. Kudos to President Aquino!
We have a new game-changing law—this time primarily for the private sector—that we helped lawmakers put in place for more than two decades. It is called the Philippine Competition Act (PCA).
It mandates the creation of a GCG-type commission called the Philippine Competition Commission (PCC) to ensure fair competition in the market. It is an extremely powerful government body that is seen to have far-ranging impact on our economy.
As the PCA will principally regulate big businesses that will not take things sitting down (unlike the GOCCs that take the cue from the President of the Philippines), the PCA faces greater challenges than the GCG Law.
The PCC has yet to be organized and so the big question is: Will it be blessed with the same quality of inaugural officials and staff like the GCG?
Well, let’s wait and see!
(The author, former president of the Philippine Stock Exchange, is now a senior partner of ACCRALAW and the president of the Shareholders’ Association of the Philippines. The views on this column are exclusively his. He may be contacted at francis.ed.lim@gmail.com)