Government to divide regulatory, commercial functions of GOCCs

MANILA, Philippines — The government wants to review the mandate of state corporations and separate their regulatory functions from their commercial activities, according to the National Economic and Development Authority (NEDA).

In an interview, Socioeconomic Planning Secretary Ernesto Pernia said government-owned and-controlled corporations (GOCC) must not have both regulatory and profit making functions as they create a conflict of interest for the entity.

To address this, Pernia said the government would push for changes in the mandate of state-owned firms and define each of them based on their primary functions.

“They have to be defined. If the key purpose of the GOCC is to earn income, then it should be just earning income and not regulation. In other words, just drawing the line between commercial activity or proprietorship and regulation,” he said on the sidelines of the Philippine Economic Briefing in Clark, Pampanga.

According to Pernia, these reforms would form part of the proposed National Competition Policy to be crafted by NEDA, in cooperation with the Philippine Competition Commission (PCC).

“We should do it right away because we are really anxious in getting the economy to sustain its performance and even accelerate,” he said.

Among the examples cited by Pernia is the National Food Authority (NFA), which is now embroiled in controversy after failing to maintain the appropriate buffer stock of rice.

“The NFA is both a regulator as well as a merchandiser because it has commercial activity, so it’s really a conflict,” he said.

The NFA is tasked to ensure the food security of the country and stability of rice supply. As a regulator, it processes the registration of grains businesses and oversees private sector importation of grains.

However, it also imports rice from other countries, purchases palay (unhusked rice) from local farmers, and sells its rice inventory to the public at a cheap price.

Pernia also mentioned the Philippine Ports Authority, which serves as a regulator and promotes the performance of the country’s ports.

NEDA is planning to craft a policy framework which will flesh out competition strategies in the country’s economic blueprint, or the Philippine Development Plan (PDP) 2017 to 2022.

One of the provisions of the PDP involves the review of the mandate, quality of services, and specific markets of GOCCs to ensure that their proprietary activities do not conflict

According to NEDA, the Governance Commission for GOCCs has conducted initial steps in reviewing profiles of state firms.

NEDA Undersecretary Rosemarie Edillon, said regulatory functions and proprietary functions of state firms should not be mixed, in compliance with Republic Act 10149 also know as the GOCC Governance Act of 2011.