The Organisation for Economic Co-operation and Development (OECD) advocated for an examination of state-owned enterprises’ operations amidst a blending of their regulatory and commercial responsibilities.
In a policy document titled, “Supporting State-Owned Enterprises Reform in the Philippines,” the OECD highlighted the necessity of a distinct division between these roles to alleviate potential conflicts of interest.
“Such overlapping responsibilities emphasize the ongoing requirement for meticulous functional evaluations of each government-owned and -controlled corporation (GOCC) activities to ensure competitive neutrality and prevent market distortions,” it stated.
Among the GOCCs fulfilling dual obligations are the Philippine Amusement and Gaming Corporation (PAGCOR), the Philippine Ports Authority (PPA), the Civil Aviation Authority of the Philippines, and the Laguna Lake Development Authority. These organizations function both as commercial entities and as regulators.
“The Philippine Competition Commission (PCC) holds the authority to investigate anti-competitive practices, although it has not yet initiated enforcement actions against GOCCs,” the OECD remarked.
The OECD also encouraged the administration to enhance collaboration among agencies, particularly between the Governance Commission for GOCCs (GCG) and the PCC, to improve the identification and prevention of anti-competitive activities.
“Evaluating public procurement procedures that tend to benefit state-owned enterprises, including via direct government contracts, could assist in addressing competitive neutrality,” it added.
According to the law, GOCCs are governed by the Philippine Competition Act (PCA) of 2015 and the GOCC Governance Act of 2011. The latter statute requires a “clear distinction” between its roles to establish a fair competitive environment with the private sector engaging in similar commercial endeavors.
Despite legal mandates, these overlapping roles persist. The OECD noted in a 2021 report that the Philippine Development Plan identified chronic government-owned monopolies, government-sanctioned monopolies, and government control over the entry and growth of market competitors.
The OECD observed these issues in sectors such as electricity transmission, water distribution systems, and build-and-operate agreements for transportation facilities, including road services, railways, and air and sea transport.
However, several GOCCs have already indicated the necessity to eliminate their dual functions.
PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco previously stated that the GOCC is committed to separating its functions as regulator and operator by 2026.
“By decoupling, we will be able to demonstrate to the world that we are just, and that there is no conflict of interest,” he commented during a press conference in February.
Last year, business associations and members of the Joint Foreign Chambers (JFC) called for the enactment of a Senate bill aimed at dividing the commercial and regulatory roles of the PPA.
House Bills 1400 and 8055, which propose to differentiate the regulatory and commercial functions of the PPA, are still under consideration in Congress.
The PPA stated it has initiated the separation of its regulatory and operational roles by privatizing port operations under the Port Terminal Management Regulatory Framework.
Meanwhile, the OECD revealed that the number of GOCCs has begun to decrease, with only 119 remaining, holding total assets of P11.6 trillion, down from 158 GOCCs in 2011.
It further noted that the size of the portfolio will reduce to 117 following the anticipated privatization of the Davao International Airport Authority and Maharlika Investment Corporation.
The OECD also emphasized that state-run banks like the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) are prospective candidates for listing on the Philippine stock exchange.
“As of March 2025, there were no listed GOCCs in the Philippines, although some GOCCs possess the potential to become listed,” the OECD remarked. — Aubrey Rose A. Inosante
