Public enterprises 101

For a fuller understanding ofpublic enterprises, a subject offered at a state university in Diliman — PA 261 — tackles the Philippine Public Enterprise System. It covers the nature of public enterprises, the relationship between the government and the public enterprise sector, issues of managerial autonomy, public accountability, and the role of the state in the economy.

The disciplinary lens points and shoots at “government-owned and controlled-corporations” with a critical focus. The semester-long course culminates in a class output — scoped and framed — according to three trajectories.

Should the GOCC under study be privatized, merged, or abolished using scientific evidence and performance scorecards as metrics? For example, there are nonperforming or dormant GOCCs that the President may have to abolish. Republic Act 10149, the law that created the Governance Commission for GOCCs is mandated to evaluate the performance of GOCCs and determine their relevance with current national development goals and economic realities.

For another, there was once a move for the merger of LandBank with the Development Bank of the Philippines on the premise that their functions and purposes are duplicities, overlapping, or redundant. For still another, the

“Has DBP even undertaken an agency action plan to comply with CoA’s points?

move for the privatization of IBC13 during PNoy’s term was due to negligence and mismanagement.

The Governance Commission is the central policy-making and regulatory body to safeguard the state’s ownership rights and ensure that the operations of the GOCCs are responsive to the needs of the public. Any initiative altering the configuration of any GOCC must, at least, be made known to the Commission.

FM Jr. has recently signed Executive Order 8 which orders that “the percentage of net earnings to be declared and remitted by the Development Bank of the Philippines to the National Government for CY 2021 is adjusted from 50 percent of its annual net earnings to zero percent.” It is issued to support the capital position of the DBP, allow it to comply with BSP regulations, and sustain its role in the economic recovery of industries.

This “zero-adjusted dividend” amounts to a waiver or exemption bankspecific to DBP. One can’t help but wonder if this form of Pareto efficiency — “an economic situation wherein it is impossible to make one party better off without making another party worse off” — could be called a flash of genius by our economists or a classic case of jumping the gun?

Note with care that prior to CY 2021, DBP’s net income for year-end 2020 decreased by 30.4 percent to P3.9 billion from P5.60 billion in 2019. The CoA Auditor’s report alone for years ended 31 December, 2020 and 2019 on results of audits of DBP’s accounts is cause for concern.

In light of EO 8, the “zero-adjusted percentage” or the equivalent value of a supposedly 50 percent net earnings for CY 2021 will not go to the national government but hauled back to DBP’s vault to put its affairs in order.

However, since DBP is a government-owned and controlled corporation within the policy and regulatory reach of GCG, it probably must communicate its revenue track with the Commission as a member of the family. Has DBP even undertaken an agency action plan to comply with CoA’s five-point recommendations of prior years?

In terms of present status, DBP has undergone “agencification” aimed at intensifying the mandate reposed to it under RA 8523 toward increased resilience in the agricultural value chain. The wisdom of EO 8 is indicatively compatible with the President’s concurrent capacity as Secretary of the Department of Agriculture.

Pray that the new order is never meant to be a bad precedent, strategically designed as it is to fill the

“gaps” in the agricultural sector and enabling our agricultural and industrial enterprises to hit the ground running. Since it’s timebound (CY 2021 only) and a case of management-by-objective, let the plan take off and seamlessly succeed.

Let there be no occasion for another GOCC after DBP to leverage for the same exemption lest it results in our collective peril.

“RA 10149 is mandated to evaluate the performance of GOCCs and determine their relevance.