GOCC’s Present and Future of Public Corporation

Public corporations have numerous names in the Philippines such as government

corporation, public corporation, public enterprise, a state-owned enterprise, parastatal

corporation; the term "Government Owned or Controlled Companies" (GOCCs) is the official

terminology, according to 1973 Constitution. This phrase was employed in the study. The global

expression is the "public enterprise." They are expected to carry out governmental,

developmental, and commercial tasks and work in frontier markets where significant financial

outlays are necessary. The function of the GOCCs should be studied in respect to their

contributions toward sustainable economic growth, equitable distribution of wealth and total

human development. The extent of the role that GOCCs play in national development is

influenced by many factors, the most important of which are the legal and policy framework,

the "development" force, the political economy of the country and political change, and the

motives and rationale for establishing a GOCC. The legal basis for the creation of GOCCs is set

forth in no less than the 1973 Constitution itself stating “The state may, in the interest of

national welfare or defense, establish and operate industries and means of transportation and

communication, and, upon payment of just compensation, transfer to public ownership utilities

and other private enterprises to be operated by the government.

GOCCs have been set up and run because of genuine or alleged flaws or market failures.

They were developed to provide specific operations that are pioneering in nature, especially

where the required expenditure is substantial and the gestation period is lengthy. Prior to 1972

(the period of martial law), they were established in response to long-standing strategic needs,

such as those for postwar rehabilitation and restructuring, large-scale indivisible investments, a
fundamental industry with strong forward links, public sentiment to maintain the industry free

from foreign control due to its impact on the economy, and the private sector's unwillingness

or inability to provide the necessary capital to establish the industry. GOCCs later developed

into "important venues for the economic political influence. They were also mistreated and

employed in "laundry services and resources to put public funds in the hands of companions

and a select few. GOCCs face unique governance challenges that make the path to reform even

more difficult than the private sector. The national government has been implementing the

rationalization of GOCCs since 2001 in accordance with its goal to keep GOCCs' attention on

their primary duties and to fortify their budgetary plans. This would improve the way in which

GOCCs deliver their services to the public and help them achieve long-term viability. It would

also reform their organizational and financial processes. Performance audits are part of the

rationalization initiative, particularly for the GOCCs that are having financial issues. Depending

on this, the government will need to decide whether to eliminate, deactivate, consolidate,

regularize, or integrate functions to solve the issue. The GOCCs and its executives have

continued to be involved in controversy after a scandal involving, among other things, graft for

the theft of public funds, the payment of excessive salaries, the acquisition of properties

without authorization, and abuse of power. RA 10149, often known as the GOCC Governance

Act of 2011, was passed because of these apparent immoral abuses. The objectives of RA 10149

are to increase openness, create suitable compensation plans, disclose and evaluate operations

and finances on a regular basis, and establish a distinct line between GOCCs' regulatory and

proprietary activities. In order to make GOCCs more responsive to the demands of the public
interest, it was also intended to strengthen the role of the state in their governance and

management and to encourage financial viability and budgetary discipline in GOCCs.

Policymakers are currently making a deliberate effort to define the business sector's

function in development and rationalize it. But restructuring the sector is simply one of the

challenges. A full disclosure and transparency policy is now being embraced by government

agencies the government so that transactions and similar activities are now available to the

public through their websites. The future for GOCCs in the Philippines is bright if the proper

corporate governance principles, systems, and processes are in place; if the right managers are

infused with professionalism, love of country, and ethical administration; if vigilant monitoring

is provided by both the government hierarchy and the public served by GOCCs; and if the

environment is renewed to be receptive to new corporate paradigms. Within our lifetimes, they

may convert into effective agents of social and economic progress.

Analysis: