FINANCE Secretary Carlos G. Dominguez III urged the Governance Commission for Government-Owned and -Controlled Corporations (GCG) to improve its system in evaluating state-run firms “to avoid errors in public policy-making process.”
Dominguez, who sits as an-ex-officio member of the commission, issued the call after observing 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.
For instance, Dominguez pointed out that the evaluation by the Insurance Commission (IC) “contrasts sharply” with GCG’s assessment.
“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 in a speech during GCG’s 10th anniversary.
“I therefore call on my colleagues in the Commission to work towards correcting this irregularity,” he added.
Thus, Dominguez recommended that GOCC should refine its evaluation methods and include the findings of regulating agencies in assessing and rating GOCCs.
Moreover, the country’s finance chief said GCG is “not very sharp in analyzing financial statements of GOCCs” as it rated some government insurance companies “very highly” despite not adhering to international standards of accounting and reporting.
“This, I think, is a failure not only of the 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 also prodded GCG to 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.”
In the same speech, Dominguez also commended GOCCs for introducing reforms in the public corporate sector that, he said, led the Office of the President to abolish 29 GOCCs since 2011.
Among the reforms Dominguez said the GCG introduced included the “Corporate Governance Scorecard” and the institutionalization of a performance evaluation system. The former assesses state enterprises while the latter enables GOCCs “to become performance-driven corporations anchored on good corporate governance.”
“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.
He added the government corporate sector is an important tool for economic growth and development as the dividends collected from GOCCs also help the government fund priority programs and projects.
“The Duterte administration’s policy of instilling fiscal discipline among our GOCCs allowed us to collect an average of P57 billion in remittance annually from these firms. This is more than double the average annual collection of the past administration,” he said. “Their contributions proved to be very useful when we needed more money to fund the additional expenses to fight the pandemic.”
For GOCCs to remain relevant, Dominguez said they must “meet the highest standards of corporate governance, become sustainable business units, be prudent in the use of the taxpayers’ money and [be] efficient in the deployment of their assets.”
The Department of Finance has earlier proposed increasing the mandated dividend remittances of GOCCs to the national treasury from the current 50 percent to at least 75 percent of their net earnings in a bid to raise funds for a possible third economic stimulus program.