Finance Secretary Carlos Dominguez III has urged the Governance Commission for Government-Owned and -Controlled Corporations (GCG) to incorporate the assessments made by regulatory agencies in evaluating the performance of state-run firms to further improve its oversight functions and avoid errors in the policy-making process of the government.
Dominguez made the call after he observed several instances of “incongruence” between the evaluation done by the GCG on government-owned and -controlled corporations (GOCCs) against those made by agencies regulating these firms.
He said that “great strides have been achieved” in improving the performance of GOCCs, which now remit an average of P57 billion in dividends annually to the Bureau of the Treasury (BTr), but improvements should still be made on the part of the GCG in its evaluation of these state-run firms.
President Duterte’s p0licy of instilling fiscal discipline among GOCCs has led to these much-improved dividend collections, which is more than double the average annual collection of the past administration, Dominguez said.
As ex-officio member of the GCG, Dominguez called on the Commission to adopt his recommendation in refining its evaluation methods and factoring in the findings of regulators in assessing and rating GOCCs.
“We have GOCCs that are also evaluated by their regulatory agencies. As Secretary of Finance, I happen to be the ex-officio Chairman of eight GOCCs and director of 20 state corporations. Some of these GOCCs are regulated by agencies attached to the Department of Finance (DOF). I have, therefore, noticed the incongruence between the evaluation made by the GCG against those made by regulatory agencies. This should not be the case,” Dominguez said during last week’s virtual celebration of the GCG’s 10th anniversary.
Dominguez cited the case of the Insurance Commission (IC), whose review of the performance of some government insurance corporations contrasted sharply with the assessment by the GCG.
“The discrepancies could cause confusion among the regulated and reviewed state enterprises. More seriously, they could bring forth errors in policies for the government,” Dominguez said.
“I therefore call on my colleagues in the Commission to work towards correcting this irregularity,” he added.
Dominguez also pointed out that the GCG has rated some government insurance companies very highly even though they did not adhere to international standards of accounting and reporting.
“This, I think, is a failure not only of COA (Commission on Audit) but also of the GCG. So, I urge you to strengthen your ability to analyze the financial statements of each and every GOCC,” he said.
Dominguez said the GCG should make its review methodologies relevant to the industry sectors to help it identify factors peculiar to each GOCC “and, ultimately, come up with a scorecard that accurately measures the achievement of the vision, mission, and mandates of GOCCs.”
He commended the GCG for introducing “valuable governance reforms” in the public corporate sector, which has led the Office of the President (OP) to abolish 29 GOCCs since 2011.
“Since the creation of the GCG in 2011, we have brought order into what was once a largely unregulated sector in the government. Ten years ago, the GOCC sector was a mess. The functions and mandates of many public corporations were unclear or overlapped. They were, after all, defined by the politics of the day when they were created,” Dominguez said.
Among the reforms introduced by the GCG were the Corporate Governance Scorecard that assesses state enterprises, and its move to institutionalize the Performance Evaluation System to enable GOCCs to become performance-driven corporations anchored on good corporate governance, Dominguez said.
“In an earlier period, corporate governance was not yet the essential principle as it is today. Many public enterprises were sinkholes for taxpayers’ money. They were badly managed and, most of the time, constantly operated at a loss. There was also no mechanism for accrediting officials and no means to keep them accountable,” he added.
Dominguez said this is why the GCG plays a crucial role in safeguarding the government’s ownership rights and ensuring that the operations of GOCCs are transparent and responsive to the needs of the public.
“In its 10th year, I congratulate the GCG for the work it has done. I look forward to a higher level of vigilance and quality of oversight in the coming years,” Dominguez said.
“The Department of Finance stands ready to assist the GCG to achieve our shared goal of transforming our GOCCs into performance-oriented enterprises and significant contributors to our economic growth,” he added.
Dominguez said the government corporate sector is an important tool for economic growth, and state-run corporations are expected to perform both government and business functions, and to fulfill their mandate to provide essential services to the Filipino people.
He pointed out, for instance, that the dividends remitted by GOCCs to the BTr, as mandated by law, proved to be “very useful when we needed more money to fund the additional expenses to fight the pandemic.”
Dominguez said the past five years of the Duterte administration have shown what improved governance and financial discipline can do to an economy and the whole country.
“After a year of battling the pandemic, the Philippines continues to maintain its financial balance. Due to the successive tax and structural reforms implemented since 2016, our fiscal fundamentals remained solid. We did not suffer the kind of fiscal downturn that typically accompanies an economic crisis,” Dominguez said.
“These sound policies of fiscal discipline and good governance are what we want the GCG to instill in our GOCCs,” he added.
Dominguez said that for GOCCs to remain relevant, they must meet the highest standards of corporate governance, become sustainable, be prudent in the use of the taxpayers’ money, and efficient in the deployment of their assets.
-oOo-
