Economic team pitches privatization of Pagcor, PCSO’s gaming functions

The government pushed to privatize the commercial functions of the Philippine Amusement and Gaming Corp. (Pagcor) and the Philippine Charity Sweepstakes Office (PCSO) as the country’s chief economist deemed some state-run corporations should stick to regulatory oversight and should no longer compete with the private sector.

“[Government-owned and controlled corporations] should adopt structural measures to address any identified anticompetitive behavior relating to their mandate and operations, since the private sector may be in a better position to carry out some of their commercial pursuits,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

“Transparency must be observed in procurement processes and procurement laws, rules and regulations should be applied equally and equitably to GOCCs and firms in the private sector,” added Pernia, who heads the state planning agency National Economic and Development Authority (Neda).

With regard to Pagcor and PCSO, Pernia told the Inquirer that the privatization of these GOCCs was “still under consideration and discussion.”

Neda had submitted for President Duterte’s consideration a draft executive order (EO) containing the proposed national competitiveness policy, which was aimed at “[enhancing] market competition by fostering an environment that facilitates entry of business players.”

As such, Neda was pushing for fair competition where state corporations could not dominate.

“GOCCs must examine their mandates and manuals of operations to ensure that competitive neutrality is maintained as they discharge their proprietary and commercial functions. Competitive neutrality requires that GOCCs operating as a business to compete with private firms on a level playing field, without any preferential treatment in commercial activities that would disadvantage the private sector,” Neda said.

Last week, Finance Secretary Carlos G. Dominguez III told the Senate finance committee chaired by Sen. Sonny Angara that the Department of Finance (DOF) was considering anew to make a push toward the privatization of Pagcor and PCSO’s gaming operations.

“We did an analysis three years ago. At that time, we believed if we privatized the industry—basically separating the regulatory function away from the operating function—we will probably generate P220 billion, that was the original estimate three years ago. As soon as I joined [the Duterte administration], that was one of the areas we took a look at immediately as a source of funds,” said Dominguez, who heads the economic team.

Asked by Sen. Franklin Drilon if P300 billion in additional government revenues per year would be a “conservative and fair estimate” once Pagcor and PCSO’s commercial functions were privatized, Dominguez replied: “I believe we could achieve that with no effort. [And] you correct the situation where you are watching yourself, regulating yourself.”

“The one-time privatization will lead you to make about P300 billion, and still can generate P300 billion a year,” Dominguez added.

For Dominguez, privatizing Pagcor and PCSO would be “a rational move.”