GCG open to possible abolition of under-performing GOCCs

Published October 7, 2020, 5:52 PM

by Hannah Torregoza 

The Governance Commission on GOCCs is open to the possible abolition of underperforming government-owned and controlled corporations (GOCCs) in the Philippines, its chair Samuel Dagpin, Jr. told a Senate panel on Wednesday.

During the Senate Finance subcommittee’s hearing on the proposed P192-million budget of the GCG for 2021, Dagpin said only 34 out of 118 GOCCs have so far passed the performance evaluation system of the GCG in 2018.

Asked by Senator Sherwin Gatchalian if these underperforming GOCCs are entitled to performance-based bonuses and other incentives, Dagpin assured they are not.

“These (underperforming GOCCs) will not receive performance-based bonus, while their directors will not receive performance-based incentives,” Dagpin said.

When asked by Gatchalian if it would be meaningful if the GCG considers abolishing these GOCCs “since they are not performing anyway,” the GCG chief they are studying their options.

According to Dagpin, part of the process of abolition is to consult the main government agency mandated to handle the said corporation.

“Because based on the law, for any privatization, merger, streamline, and reorganization, we are mandated to also consult the department or agency in which a GOCC is attached so that is based on our law,” Dagpin said.

Gatchalian, however, clarified he is not recommending the abolition of underperforming GOCCs, but is only frustrated why taxpayers are still subsidizing these corporations.

In 2019, the 118 GOCCs remitted a total of P47 billion to the government, according to Dagpin.

He pointed out that the subsidy provided by the government to GOCCs in 2019 was P201-billion, yet the 118 GOCCs were only able to remit a total of P47-billion only that same year.

“In other words, the government is still not getting its return on its money. One of the mandates of the GCG is to make sure that every subsidy that they are given comes back in the form of dividends,” the senator said.

According to Dagpin, the top three GOCCs receiving the highest government subsidy were PhilHealth, National Housing Authority (NHA) and the National Irrigation Authority (NIA).

Dagpin said the GCG is constrained to allow the underperforming corporations to continue due to their social impact.

“We have a big housing backlog to maintain…we have to support our farmers, we have a health crisis…That’s why these are really big subsidies with respect to social impact,” he pointed out.

Nevertheless, Dagpin said the GCG has the power to move for the abolition, merger and other reorganization steps of a GOCC if this is not financially viable.

However, he said, the GCG has yet to complete its liquidation report though it has already approved the abolition of a total of 30 GOCCs since 2012. This, he said, resulted to a P3.21-billion savings for the government in terms of operational expenses.

The GCG also approved three corporations for privatization while 25 GOCCs has been classified as inactive.