 which have become more of an extra-baggage will soon be deactivated.){kind=link}
THE GOVERNANCE Commission for Government-Owned and Controlled Corporations (GOCCs) hinted at deactivating 21 state-run companies which have become more of an extra-baggage, eating up limited government resources.
In a news article which first came out in the Business Mirror, GCG chair Marius Corpus said that the central oversight body is speeding up the abolition process for the state-owned corporations.
Among those to be abolished are: CDCP Farms Corp., National Agri-Business Corp., Philippine Agricultural Development and Commercial Corp., Philippine Sugar Corp., Quedan & Rural Credit Guarantee Corp., Zamboanga National Agricultural College-Rubber Estate Corp. and Northern Foods Corp., for the agriculture sector.
Under the development and real estate sector, soon to go extinct are: the Alabang-Santo Tomas Development Inc., Human Settlements Development Corp., PNOC Development and Management Corp., First Cavite Industrial Estate Inc. and Partido Development Administration.
For the utilities sector are: Panay Railways Inc.; North Luzon Railways Corp.; PNOC Shipping and Transport Corp.; and, Disc Contractors, Builders and General Services Inc.
For the energy and materials sector are PNOC Alternative Fuel Corp. and Philippine Forest Corp.
The list also includes: the Technology Resources Center in the education sector; the AFP-Retirement and Separation Benefits System and Philippine Veterans Investment Development Corp. for the financial sector.
While there is no specific number of state-run corporations targeted for closure this year, Corpus told Business Mirror that the GCG deactivates these entities first as the abolition process takes time.
“The process usually takes a longer period of time because of legal requirements and the tedious liquidation process. What the GCG initially does for a non-performing GOCC is to deactivate its operations to prevent further losses and preserve assets,” he explained.
GCG data showed that as of end-June, 30 non-operational, inactive or deactivated GOCCs are slated for closure, merger or privatization.
Corpus said the GCG may recommend merger of GOCCs with overlapping functions or the privatization of those that can best be served by the private sector.
As of end-June, 11 firms had been dissolved, one had been privatized, three had been merged and one had been disposed of by the Privatization and Management Office.
Last Saturday, Finance Secretary Frederick Go told the paper that about 10 percent of over 100 GOCCs should be closed to free up public resources for the government’s programs and services.
Go said the government has provided as of end-June a total of P114.576 billion in subsidies to state-run firms to help them perform their mandated government functions and cover operating expenses. The latter includes salaries and maintenance and other operating expenses.
He said that most of the country’s GOCCs remain in good condition, citing record dividend remittances to the national government.
The government expects to collect P147.15 billion in dividends from GOCCs this year, strengthening public finances and helping expand investments in infrastructure, education and healthcare, among others.
GOCCs are required to declare and remit at least 50 percent of their annual net earnings as dividends to the national government as provided under Republic Act No. 7656 or the Dividend Law.
At the GOCC caravan last year, Go lauded the state-owned and managed firms for their continued effort and commitment to expanding investments in infrastructure, education, healthcare, and other programs that support our country’s progress.
GOCCs serve as public-service and economic instruments owned by the state, delivering essential public goods, managing critical infrastructure, stabilizing market prices, and generating non-tax revenues through commercial or developmental activities in areas where private enterprise may be absent or unviable.
Among their core functions include a) providing basic utilities, social security, housing loans and healthcare services delivery to citizens; b) pioneer vital industrial, agricultural or transport projects that drive regional and national growth; c) remitting cash dividends and earnings to the national treasury to help fund public infrastructure and social programs without imposing new taxes and d) regulating or buffering essential supplies like food, power and financial credit during economic shifts or emergencies.
As of 2022, there were 219 GOCCs, which receive subsidies and pay dividends to the national government. A GOCC is a stock or a non-stock corporation, whether performing governmental or proprietary functions, and is directly chartered by a 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, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock.
Aside from overseeing GOCCs, the GCG serves as the government’s central advisory and oversight body over the public corporate sector. The GCG, among other duties, prepares for the President a shortlist of candidates for appointment to GOCC boards.
GOCCs receive from the government “subsidies” and “program funds.” Subsidies cover the day-to-day operations of the GOCCs when revenues are insufficient while program funds are given to profitable GOCCs to pay for a specific program or project.
In the 2013 fiscal year, the national government gave ₱71.9 billion pesos to GOCCs in subsidies, nearly twice the ₱44.7 billion programmed into the budget. In 2014, ₱77.04 billion was spent on GOCCs by the national government, 3% of which was classified as subsidies and 97% was classified as program funds.
In 2013, on “GOCC Dividend Day,”, the Philippine government received ₱28 billion in dividends and other forms of remittances from the 2012 operations of 38 GOCCs.
Under Republic Act No. 7656, all GOCCs are required to “declare and remit at least 50% of their annual net earnings as cash, stock or property dividends to the National Government.”
In 2013, the Commission on Audit report said that of the 219 profitable GOCCs, only 45 remitted a full 50% share of their dividends to the national treasury, leaving 174 others with unremitted government shares, amounting to more than ₱50 billion.
Dividends remitted were only one-tenth (1/10) of the total required by law according to the commission.
This trend continued and has been bleeding the government coffers dry instead of beefing it up. Clearly, the GOCCs also became the employment pool of politicians’ relatives and friends.