CHAPTER 7: Enhancing Good Government Through Public Enterprise (Privatization) and Spatial

Information Management (e-Government)

What are Private Sectors?

- Private Sectors refer to the parts 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
marketplace.
What are Public Sectors?
- Economic resources under these are owned and controlled by the government while goods and services
are delivered at uniform rates and standards.
Public Enterprise Management
- A form of human activity operated and managed by the state government or any public authority.
- An undertaking where the investment is owned and controlled by any public government organization
whether national or local.
Privatization
- A government policy of transferring the agencies, functions, or assets of government into the hands and
control of the private sector.
- In the Philippines, privatization becomes an area of public administration in the 1980s.

Various modalities of privatization:

1. Contracting Out Services
- The most popular alternative service delivery agreement.
- The government is still responsible for the service; however, it has someone else like a private
contractor who provides the actual service.
- This is usually done by an ITB.

What is an ITB?

An ITB, or an Invitation To Bid, is an open market competition among interested contractors to post the lowest or highest bid,
as the case may be, that in the process usually gets the job.

- Can also be done by an RFP or a Request for Proposal.

What is an RFP?

This mechanism works by inviting all qualified groups to present a proposal to government that provides in details how the
group would perform a service, with least costs on the government but with maximum efficiency on the part of the service
provider/interested group.

2. Public-Private Collaboration
- A cooperative agreement between a government and a private organization may be formed in
which both parties assume some degree of mutual responsibility in operating a program or a
service.

3. Franchising
- The granting of a franchise to a contractor for a particular duration in a defined are or jurisdiction.

What is a Franchise?

The right of the government sector to grant a program or a service on an exclusive basis to private individuals/groups in a
defined locality.

4. Load or Asset Shedding

- Government sells out a facility or equipment or simply discontinues the provision of a public
service.
 5. Volunteerism
- Handing down the provision of a service to volunteers to operate a particular public service.

Regulatory Functions of the Government

- When services are contracted out, they do not set aside or diminish the government’s supervisory
functions.

What are Regulatory Agencies?

- Refer to organizations that are charged with regulating not just newly privatized sectors but also any
aspect of social life where a public interest is held to be at stake.

Roles of Public Administration

Shively (1997) stressed that in an organizational and administrative setup, managerial control helps us organize
better public administration. Hence, we should organize public administration in a manner that would maximize
some desirable traits:

1. Honest, accurate translation of political leaders’ decisions into more specifically designed policies.
2. Flexibility in dealing with special cases at the point of delivery.
3. Flexibility should not be arbitrary. Arbitrary actions taken capriciously without regard to the truly
important circumstances of a case should be prevented.
4. Feedback of expert advice, active imagination, and assertive inquiry on the part of the administrators.
5. Efficiency.

PRIVATIZATION EFFORTS IN THE PHILIPPINES

First Wave of Privatization Plan

Privatization efforts were initiated during the Marcos Era.

However, according to Ortille, the Cory Aquino period was the first wave of privatization in the Philippines.
- This is because when Cory assumed presidency in 1986, she declared Proclamation No. 50-A, which
provided the policy framework for privatization.

 Cory’s Proclamation No. 50-A;

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.

This led to the government getting rid of properties it owned but that weren't making any money.

These properties were taken over because they couldn't pay back the large amounts of money they borrowed from
government banks, especially during tough economic times between the 1960s and early 1980s including the economic
crisis in 1981.

 Included in this wave were the surrendered and sequestered assets from the friends and relatives of deposed
President Marcos Sr.
 The APT was created.
 In 2001, the PMO replaced APT.
Second Wave of Privatization Plan

 It was during the time of President Ramos (1992-1998) when the bulk of privatization was implemented
under his leadership mantra, “Philippines 2000”.

In short, Philippines 2000 was a mantra to encourage and speed up private companies getting involved in providing
social services and building infrastructure.

 The Amendment of the Build-Operate-Transfer Law (BOT)

What is a BOT?

The Build-Operate-Transfer (BOT) Law is a way for the government to partner with private companies to build big
projects like roads or power plants.

The company builds and runs the project for a set time to make a profit. Once that time is up, the project goes back to
the government. It's a way to get big things built without using a lot of government money upfront.

- The amendment was made to make the law more flexible.

 RA 6957 was passed creating the PIPP or the Philippines Infrastructure Privatization Program.
- This allowed the entry on the Independent Power Producers (IPPs) into the energy sector.

 RA 7718 in 1994 signaled the “second wave” of privatization.

- This expanded the PIPP in the country, which covered other infrastructure sectors (e.g., transport and
water) through a package of government incentives including the liberalization of specific industries.

The “second wave” of privatization started with the power sector and the success it came with and was then replicated
through the expanded BOT Law in other areas of infrastructure.

Third Wave of Privatization Plan

The third wave of privatization started in the periods of Estrada and Arroyo.

 Estrada’s Executive Order 12.

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

 In 2001, under the administration of President GMA, the Electric Power Industry Reform Act (EPIRA)
became a law.
- This paved the way for the privatization of the country’s-‘crowned jewel’—NAPO-COR.

This wave involves the 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.
2. Privatization is concerned with the pricing or utility rates of a service being provided by the business
sector.
3. Presence of Political Pressures
- The presence of political pressures could 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.
What are Government-Owned and Controlled Corporations?
- GOCCs is a stock or a non-stock corporation, whether performing governmental or proprietary functions,
which 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 most of its outstanding capital stock or of its outstanding voting
capital stock.

 Ground Rules for GOCCs:

 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 shouldn't be a financial burden for the government to sustain or manage.
 They should perform with efficiency and effectiveness.

 GOCCs and its fourfold objectives:

1. To reduce the involvement of the state in the nation’s economic activities.
2. To reduce the financial burden of the government of loss making and inefficient GOCCs and their
assets.
3. To promote greater efficiency in government operations; and
4. To raise funds from the sale of GOCCs and their assets.

 GOCCs Technical Reforms/Programs

1. Improving Corporate Governance
2. Creation of Effective Oversight Body
3. Rationalization of GOCCs’ Portfolio
4. Review of the Performance Evaluation System

Public Private Enterprise and the Emergence of e-Government

 What is e-Government?
- Refers to the adoption of information and communication technology and its application to
achieve efficiency.
- The e-Government has two phases:
a. Internal - refers to operations of the government itself.
b. External - refers to the online services offered to citizens.

 E-Government in the Philippines

- Using e-Government readiness indicators such as the availability of national websites,
telecommunication infrastructure provisions, and human capital indexes reveal that the Philippines is
ranked sixth in Asia.
- The Philippines had laid down various strategic programs and initiatives, an example is the
Government Information Systems Plan (GISP).
- In the Philippines, e-Government is seen as a tool by which limitation of time, distance, and cost are
reduced thereby enhancing citizens’ access to government services.
- In addition, e-Government contributes to citizen empowerment by making information about
government processes and decisions easily available, and to allow information sharing among people and
organizations, and between citizens, and the civil service.

 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.