The Government Commission for GOCCs (GCG) should be able to handle additional GOCCs as a result of the Public-Private Partnership Act and Maharlika Fund Act, an economist-lawmaker said on Monday.
In a speech delivered during the flag-raising ceremony at the Governance Commission for GOCCs (GCG), Albay Rep. Joey Sarte Salceda recognized the critical role of the GCG in safeguarding the country’s fiscal stability.
“During the pandemic, the GOCC sector made significant contributions, serving as a vital rainy-day fund and providing over P315.52 billion to combat Covid-19. Today, I emphasized the importance of incentivizing good management and performance, as well as ensuring clarity on the Public-Private Partnership Act’s scope and mandates,” he said.
“You oversee a sector with assets equivalent to 55.7 percent of the entire economy, or more than P11 trillion, and revenues worth 10.35 percent of the economy, or more than P2 trillion. During the pandemic, the GOCC sector also proved to be the rainy-day fund of the government, when it remitted P91.7 billion in 2020, topping its previous historic high of P47 billion in 2019,” he said.
In 2022, he said the total remittance of GOCCs to the national Treasury would amount to P95 billion.
At the same time, while spending from the usual tax sources is determined through Congress’s power of the purse, Salceda noted that spending by GOCCs does not pass through congressional decision-making.
“We know that you are essential to fighting corruption, abuse of discretion, and mismanagement in our GOCC sector. At the same time, however, I would like to reorient the conversation to the role of GCG in promoting the national development objectives of GOCCs. That is especially more relevant as we create our first Sovereign Wealth Fund,” he said.
Salceda, a long-time financial analyst from the private sector, asked GCG to heed five key principles.
First, Salceda said that while GCG’s role in preventing management mistakes is key, “you must also advance your role in incentivizing good management and performance.”
“I urge you to complete a competitive incentives system that rewards good financial performance. That is a mandate you have under Section 10 of RA [Republic Act] 10149, your charter,” he said.
“Second, this is a mandate not yet fully exercised, but you are the McKinsey of our GOCC sector,” Salceda added.
The lawmaker said RA 10149 gives GCG the mandate to provide technical advice and assistance to the government agencies to which the GOCCs are attached in setting performance objectives and targets for the GOCCs and in monitoring the GOCCs performance vis-à-vis established objectives and targets.
“You are the GOCC sector’s management consultant. As such, I will support any effort from your office to establish a service that aims to improve the performance of GOCCs through management support and innovation,” he said.
Third, the solon said the GOCC sector is bound to become more expansive as Congress enacts the Public-Private Partnership Act, which will make the formation of joint venture (JV) agreements between government and the private sector easier.
The Revised JV Guidelines issued by the Commission on Audit require projects that involve the creation of a JV company to secure GCG’s approval. RA 10149 is also expansive enough that a JV where the government controls half the stake could be construed as a GOCC.
Fourth, Salceda said the government needs clarity on whether the GCG covers municipal enterprises.
“If it doesn’t, then we need a set of codified governing standards for municipal enterprises. With the Mandanas-Garcia ruling increasing the share of LGUs in the national budget from 3.5 percent of GDP to 4.8 percent of GDP, that universe of government corporations will become even bigger and more important,” he said.
Lastly, Salceda emphasized the need for GCG to complete its existing and potentially expanding mandates.
“I believe that the national discourse gets rightsizing completely wrong. Rightsizing must not always be downsizing. Agencies that take in more for the government than they spend should be expanded. As a fund manager back then, our simplest rule in portfolio management was to invest more in your winners—and GCG is a resource-winner for the government,” he said.