Press Release
September 8, 2010

GOCC czar needed - Recto

The post of a task master or a "GOCC czar" that would oversee the performance of government corporations (GOCCs) and government financial institutions (GFIs) should be created and be put in-charge of ensuring that dividends from their annual incomes be remitted to the national government.

"The GOCC czar will do nothing but to pressure GOCCs to perform at par and give out dividends at the end of each fiscal year," Sen. Ralph Recto said over radio station DZRH on Wednesday.

"Some GOCCs need adult supervision. It is time for the President to assign a Big Brother who would watch over their operations," he said.

Recto said the designation of a GOCC czar would be needed after the executive branch is finished ridding itself of losing and idle GOCCs and GFIs following the Senate probe's on the 'fat cats" in these government instrumentalities.

He noted the GOCC czar could be plucked out of President Aquino's present crop of economic managers or advisers "but a new appointee whose sole job is to be chief overseer of these GOCCs would be most preferable."

"President Aquino is expected to name more advisers. Now tell me, what is more important than one who can supervise the big public sector corporate world?" he said.

Recto said a GOCC czar "could crack the whip in making GOCCs efficient and fiscally accountable so that government can reap the gains in the form of higher and regular dividends," the senator said.

Another task for the "presidential pointman" on GOCCs, Recto proposed, "is for him to help in selecting the right people for the board seats and management positions in these government firms, so that only those who are qualified can occupy these."

"He would ensure that competence, not connection; professional ability, not political affiliation; would guide the hiring process," Recto said.

Recto said he has already requested the Department of Finance (DOF) to make an income inventory of all the GOCCs starting from last year and its target combined net income for the current year up to 2011.

"What we see right now is that dividends turned over by these GOCCs have been shrinking over the years while their combined liabilities or even subsidies are piling up," Recto, Senate ways and means chair, said.

He said GOCCs were created to help augment revenues of government and ease reliance on taxes and not to engage in cyclical losses.

The DOF has estimated the existence of at least 736 GOCCs, fourteen of which are closely watched or monitored for being heavily dependent on subsidy or advances from the government.

From 2000 to 2004, the government extended P80.4 billion in subsidies to the GOCC sector.

Subsidies this year is seen to grow to P36.71 billion from the P17.439 billion rolled out in 2009.

For the period January to June this year, a total of P7.466 billion in subsidies have already extended to GOCCs and GFIs.

At least 52 GOCCs registered losses in 2008, according to DOF data, with the National Food Authority (NFA) posting the highest net loss followed by Light Rail Transit Authority, Napocor, Bases Conversion Development Authority, and Metropolitan Waterworks and Sewerage System.

Recto stressed that except for 2009 wherein the GOCC sector doubled its dividend remittances to the national coffers, the annual dividend turn-over has been declining as shown in 2008 when GOCCs turned over only P11.872 billion from its goal of P15.1 billion.

He said his office is currently inquiring if the P4 billion dividend goal given to GOCCs this year is just "preliminary" or "a conservative joke."

Under the Dividends Law of 1994 - also known as Republic Act 7656 - GOCCs and GFIs are required to give half of their yearly income to the government to help raise funds for spending.

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