Enhancing Good Government Through Public

Enterprise (Privatization) and Spatial

Information Management ( e-Government)

Alega – Braza – Gomez – Quintana – Ramos - Ras

The Private Sector
 Private sector refers to that part of the economy not controlled by the state but
that segment of the economy which is managed and operated by varying individuals
or business organizations aiming to gain profit in exchange of goods, use of
utilities/amenities and other services they competitively offer in the market place.

The private sector is that part of the economy which is run

by private individuals or groups, usually as a means of enterprise
for profit, and is not controlled by the state.
 It is a management organization known for efficiency (least costs
with great returns) and effectiveness (attainment of desired
outputs).

One acceptable and viable way in dealing with private sector is

through privatization of public goods, utilities, and services. By
privatization, we mean the transfer of the delivery of public services
to the initiative and control of the private sector.
Thrust and Mandates of Privatization
• Privatization is a government policy of transferring the agencies,
functions or assets of government into the hands and control of
the private sector.
• Whenever a public sector sells out government-owned corporations
to the private sector it then becomes public enterprise management.

• Public Enterprise Management is a “form of human activity

operated and managed by the state government or any public
authority.”
 Privatization

• In the Philippines, privatization becomes an area of public administration in

the 1980s.

• Involves the sale or lease of government assets like real estates,

telecommunications, public utilities, corporations, and the like to the private
sector.
 Privatization Process

The privatization process can be considered in three stages:

(1) feasibility,
(2) preparation and
(3) implementation of divestiture.
1. Feasibility

The choice of method will be driven by the objectives to be achieved from privatization –
both national objectives and specific objectives for individual enterprises – and a number
of factors.

2. Preparation

Involves a legal review both of the enterprise and the regulatory environment in which it
operates to identify possible impediments to privatization.

3. Implementation of Divestiture

Involves obtaining final Government approval for the sale, preparation of appropriate
contractual documents; and completion of sale.
 Various modalities of Privatization
1. Contracting Out service: While the government is still responsible for the
service it has someone else like a private contractor who provides the actual
service.

2. Public-Private Collaborations: A cooperative agreement between a

government and private organization may be formed in which both parties
assume some degree of mutual responsibility in operating a program or
service.

3. Franchising: A local government granting a garbage collection franchise to

contractor for a particular duration in a defined area or jurisdiction.
4. Load or asset shedding: When a government sells out a facility or
equipment or simply discontinues the provisions of a public service,
load shedding then exist.

5. Volunteerism: A local government in some cases may hand down

the provisions to volunteers to operate a particular public service.
 Regulatory Functions and Agency
• When a public service has been assigned to business contractors, the
function or regulation on the part of the government becomes
increasingly necessary.

• Governmental regulations may set operations standard, limits

business actions, restrict property tights, and affect incomes.

• “Regulation of certain economic and social activities in the public

interest through administrative agencies is a product of 19 th century
politics”
Privatization Efforts in the Philippines
 II. Ramos' Second
Wave Yet the Most
Powerful Privatization

Privatization Effort’s
in the Philippines

I. (Marcos and)
III. Erap and Gloria's
Aquino's First Wave of
Privatization Strategy:
Privatization in the
The Third Wave
Philippines
 First wave of privatization plan
• Privatization efforts were initiated during the Marcos Era.

• When Cory Aquino assumed presidency in 1986, she declared

Proclamation No. 50 – A, which provided the policy framework
for privatization. According to Ortille, the Cory Aquino period
was the first wave of privatization in the Philippines.

• APT was introduced but was later on replaced by Privatization

and Management Office (PMO).
• Cory Aquino declared Proclamation No. 50-A, as amended from Presidential
Proclamation No. 50.

1. Improve efficiency and provide better quality services

2. Focus government energies and resources on providing basic public goods
and services
3. Create a favourable investment climate
4. Broaden ownership base and develop the capital market
5. Generate revenues for priority government expenditures
• According to Ortille, the Cory Aquino period was the first wave of
privatization in the Philippines.

• The surrendered and sequestered assets from the friends and

relatives of deposed President Marcos.

• Asset Privatization Trust (APT) was created.

• In 2001, Privatization and Management Office (PMO).

 Second wave of privatization plan
• During the time of President Ramos, the bulk of privatization was
implemented under his leadership mantra, Philippines 2000.

• Amendment of the Build-Operate-Transfer law (BOT)

• RA 6957 was passed creating the Philippines Infrastructure

Privatization Program (PIPP)

• RA 7718 in 1994
 Third wave of privatization plan

• Estrada issued Executive Order 12 (EO 12) which reaffirmed the

role of the private sector in economic growth and expanded the
scope of privatization.

• In 2001, under the administration of Pres. GMA the Electric Power

Industry Reform Act (EPIRA) became a law.

• Privatization of postal services, health, housing, and the like.

Privatization in the Philippines:
Some Issues
• Privatization as a term refers to divestiture and non-divestiture
options open to the government.

• Its objective is to reduce state or public involvement in the nation's

economic activities through transfer of management control to
private enterprises.
1. Privatization was linked to job separation.

▫ Many employees are displaced primarily because of the

change of management.

▫ This is because the governing body will want to consider

whether it wants to stipulate as a condition of contract that
current workers will be rehired by the private company or
whether indeed it wishes to displace all employees and begin
again with new private sector employees.
2. Privatization is concerned with the pricing or utility rates of a
service being provided by the business sector.

▫ If there is monopoly of public good, pricing in the market is

not anymore dictated by the law of supply and demand.

▫ If competition does not exist for the operation of business,

then the benefits of privatization may be minimized.
3. Presence of political pressures

▫ The presence of political pressures could just easily "tend to

retain for the public sector functions where privatization
would make sense and to privatize tasks that would be better
left to government."
• For future privatization efforts of public utilities or government
corporations, it is important then that governments conduct
through analysis of the services to be contracted out to the private.

• A committee of administrators, citizens, other individuals and

employees involved in the service should be formed for such
purpose.
Government- Owned & Controlled
Corporations (GOCCs)
 Government- Owned and Controlled Corporations (GOCCs) is a
stock or non stock corporation whether performing governmental or
proprietary functions, whether is directly chartered by special law or,
if organized under the general corporation law, which is owned and
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 shock or of its outstanding voting
capital shock.

It is a term in the Philippines used to describe government-

owned corporations that conduct both commercial and non-
commercial activity.
 Ground Rules for GOCC’s
As a rule:

• They should perform and should deliver and they must perform well
according to the purpose for which they are created.

• Organized or bought as the case may be

• They should not become onerous to the government to maintain or operate.

• They should preform with efficiency and effectiveness.

 Fourfold Objectives

• To reduce the involvement of the state in the nation’s economic

activities

• To reduce the financial burden of the government of loss making

and inefficient GOCC’s and their assets

• To promote greater efficiency in government operations

• To raise funds from the sale of GOCC’s and their assets

 GOCCs’ Technical Reforms/Programs
• Improving Corporate Governance

• Creation of Effective Oversight Body

• Rationalization of GOCC’s Portfolio

• Review of the Performance Evaluation System

 Public Private Enterprise and
The emergence of e-Government
 e-Government defined
e-Government refers to the adoption of information and
communication technology and its application to achieve
efficiency.

Services and information are made available online without

spending time, energy and money to get it. e-Government helps
simplify processes and makes access to government information
more easily for public sector agencies.
 e-Government
• Consumers and producers today transact business in an open
market through the internet, which as we call it, the digital
government.

• e-Government has two phases:

Internal – refers to operations of the government itself
External – refers to the online services offered to citizens
 Private Sector and e-Government
• The private sector is recognized as a partner in the country’s
ICT development efforts.

• It could mean passing off the costs of design, development,

maintenance and risks to the implementing firm.

• It helped to simplify the complexities of massive bureaucracies

by leveraging the power of contemporary information
technologies.
Is it good to privatize?
   PROS CONS
Performance State-run industries tend to be bureaucratic. A democratically elected government is
accountable to the people through a legislature,
Congress or Parliament, and is motivated to
safeguarding the assets of the nation. The profit
motive may be subordinated to social objectives.
Improvements Conversely, the government may put off The government is motivated to performance
improvements due to political sensitivity and improvements as well run businesses contribute
special interests—even in cases of companies that to the State's revenues.
are run well and better serve their customers'
needs.
Corruption A state-monopolized function is prone Government ministers and civil servants are
to corruption; decisions are made primarily for bound to uphold the highest ethical standards,
political reasons, personal gain of the decision- and standards of probity are guaranteed
maker, rather than economic ones. through codes of conduct and declarations of
interest.
Accountability Managers of privately owned companies are The public does not have any control or
accountable to their owners/shareholders and to oversight of private companies.
the consumer and can only exist and thrive where
needs are met.
Employment There is more private money available for Due to the additional financial burden placed on
investments and consumption and more privatized companies to succeed without any
profitable and better-paid jobs will be created government help, unlike the public companies,
than in the case of a more regulated economy. jobs could be lost to keep more money in the
company.