Streamline GOCC list

The 2013 annual report of the Commission on Audit released last week is proof that much has to be done to reform the government corporate sector. Executives of state-run companies continue to enjoy high salaries and numerous perks, and even lower-ranking officials and employees are given benefits other than those provided by law.

The excess bonuses given to government-owned and -controlled corporations (GOCCs) during the Arroyo administration was one of the issues addressed by President Aquino after he came to power in 2010. A Senate inquiry into the 36-month compensation package at the Metropolitan Waterworks and Sewerage System (MWSS) led to the enactment of the GOCC Governance Act of 2011, which created the Governance Commission for GOCCs (GCG) to oversee the compensation of executives and employees in public firms.

In its 2012 report, the COA already noted that GOCCs still paid “bonus[es] and allowances and benefits to the board of directors and employees without or in excess of legal basis or proper authority.” The amount involved was P2.31 billion. Last week, it was again reported that the COA had ordered more than 30 GOCCs to return to the

Bureau of the Treasury some P1.6 billion in allowances, retirement pay and other fringe benefits unlawfully given to their employees. The Local Water Utilities Administration topped the list for having spent P436 million for the unauthorized allowances, incentives and benefits of its employees. Also found to have illegally disbursed funds were Duty Free Philippines Corp., Home Development Mutual Fund (more popularly known as the Pag-Ibig Fund), National Housing Authority, Development Bank of the Philippines, MWSS, National Transmission Corp., National Power Corp., and the Light Rail Transit Authority.

The report also said 10 GOCCs were found to have used agency funds to pay for the health insurance of their employees who were already covered by the state-owned Philippine Health Insurance Corp. Six other state agencies were found to have paid “unauthorized consultancy fees, honoraria, representation allowance, clothing allowance, bonus and incentives and other reimbursable expenses” to their consultants, lawyers and regional officers.

The bloated government corporate sector first took the limelight when Cory Aquino became president in 1986. Her administration, after finding that GOCCs during the Marcos regime had been draining government coffers, immediately ordered a restructuring that called for the merger of related companies, the privatization of those engaged in business activities, and the abolition of agencies with no public purpose.

After three more administrations, the government corporate sector remains bloated. The COA’s 2013 report covered the audit of the financial records of 596 GOCCs from January to December 2013. This is just too many.

Last March, President Aquino abolished six GOCCs and approved the abolition of several others as part of an ongoing crackdown on “nonperforming” or “unnecessary” firms operating under the bureaucracy. At that time, the GCG said it was “actively” monitoring 116 such corporations with the aim “to reduce [the number] to less than 100 by the end of 2014 through abolition, privatization or merger.”

The list of companies abolished or about to be abolished indicates the extent of the government’s involvement in obviously private-sector turf: Philippine Fruits and Vegetables Corp., San Carlos Fruits Corp., Philippine Agricultural Development and Commercial Corp., Bataan Technology Park Inc., PNOC Shipping and Transport Corp., Marawi Resort Hotel Inc., Philippine Aerospace Development Corp., Batangas Land Co., Kamayan Realty Corp., GY Real Estate Inc. and Pinagkaisa Realty Corp.

The streamlining of nonperforming or unnecessary GOCCs is a key objective in the GCG’s strategic roadmap to improving efficiency and transforming the government corporate sector into a significant tool for economic growth and development. We don’t know what’s taking the GCG so long to identify which among these GOCCs should be turned over to the private sector and which should be abolished.

The government should be reminded that it has no business in business. Studies have shown that it is best to let the private sector handle many of the activities where it has proven to be more efficient. The government, instead, should focus its resources on serving the public.