GOCCs for sale

For Blogwatch.ph

In keeping with its twisted austerity vow, the Aquino administration sharply cut state subsidies to government-owned and -controlled corporations (GOCCs) and government financial institutions (GFIs) in its first three months. For the millions of Filipinos who demand adequate social services from the government, this is certainly not a welcome sign.

Recent data from the Bureau of Treasury reveals that the government cut its subsidies to GOCCs and GFIs by almost half, from P4.14 billion in the second quarter to P2.21 billion during the third quarter. This amount is also smaller compared to what was disbursed during the same quarter last year which stood at P5.58 billion. The report however did not provide a breakdown of subsidies for each GOCC.

What is troubling is that such drastic cut was done in the spirit of President Benigno “Noynoy” Aquino III’s anti-corruption crusade rather than as consequence any comprehensive performance review of GOCCs. Worse, the huge cut serves as a prelude for the enactment of the 2011 budget, which contains a sharp 40.7 percent cut on allocations to GOCCs.

In his budget message, President Aquino said the reduction in allocations to GOCCs is “in view of the need to rethink government support of questionable GOCC programs.” Aquino pointed out the National Food Authority (NFA), Light Rail Transit Authority (LRTA), and Metro Rail Transit Corporation (MRTC) – which are ironically providers of basic social services – as examples of what he describes “questionable GOCC programs.”

That was not the first time Aquino put such vital GOCCs in a bad light. It can be remembered that in his first State of the Nation Address (SONA) last July, the President also put the NFA and MRTC, plus the Metropolitan Waterworks and Sewerage System (MWSS) and the National Power Corporation (Napocor), in the hot seat. Again, it should be noted that these public corporations are vital to the delivery of social services, regardless of the alleged corrupt schemes of their executives.

Dangerously enough, the Aquino administration stretched its corruption expose in GOCCs to legitimize its abolition plan of some state firms. In September, Malacañang warned that some GOCCS that are either losing money or have huge debts need to be abolished in the name of teaching them “discipline.” At least 14 GOCCs were immediately put under tight monitoring following the Palace pronouncement:

1. Philippine Economic Zone Authority (PEZA)
2. Local Water Utilities Administration (LWUA)
3. Light Rail Transit Authority (LRTA)
4. Metropolitan Waterworks and Sewerage System (MWSS)
5. National Development Corp. (NDC)
6. National Electrification Administration (NEA)
7. National Food Authority (NFA)
8. National Housing Authority (NHA)
9. National Irrigation Administration (NIA)
10. National Power Corp. (Napocor)
11. Philippine National Oil Co. (PNOC)
12. Philippine National Railways (PNR)
13. Philippine Ports Authority (PPA)
14. Home Guarantee Corp. (HGC)

Obviously, these GOCCs are mandated to deliver and manage the country’s basic social services and resources – electricity, water, oil, railways, housing, ports and rice. The NFA, for instance, helps stabilize rice prices by providing subsidies to farmers. NEA, meanwhile, is mandated to implement electrification programs in remote areas where private power firms do not dwell. Abolishing these GOCCs essentially paves the way for the private takeover of basic social services.

Sen. Ralph Recto has pointed it out quite correctly during the budget hearings at the Senate: “In purging non-performing GOCCs, we may have to take into account, albeit on a very limited basis, some state enterprises that were bestowed the unique mandate of delivering basic services to our people.”

Moreso, the Aquino government’s abolition glaringly points to the immediate consequence of mass retrenchment of government employees, estimated to be at 28,000. As aired by state workers’ group Confederation for Unity, Recognition and Advancement of Government Employees (Courage), the abolition plan will lead to increase in unemployment,” apart from removing the “already meager services the government provides to the public.

Apparently, Cagayan de Oro Rep. Rufus Rodriquez showed more prudence and reason than the President in choosing what GOCCs to abolish. In House Bill No. 2867, he listed a number of GOCCs which are questionable by their very names. Some of the state firms included are Banaue Hotel and Youth Hostel, BCDA Management and Holdings Inc., Cottage Industry Technology Center, DBP Data Center Inc., DBP Maritime Leasing Corp., Freeport Service Corp., and GY Real Estate Inc.

It appears that the President is never really serious in weeding corruption out of state enterprises. He is actually solely bent on completely weeding these GOCCs out of the government’s control, portraying them as havens for the corrupt to legitimize as well as to set the stage for what is apparently a mega-sale of social services to private corporations.

In fact, a closer examination of President Aquino’s Executive Order No. 7 (EO 7) will clarify the fate of GOCCs. EO 7 is actually more than just about the suspension of allowances, bonuses and other perks of GOCC executives as how the myopic media reportage describes it. Section 9 of EO 7 also imposes a moratorium on increase in salaries, allowances and benefits not just of executives but also of the thousands of rank-and-file employees in GOCCs and GFIs.

Furthermore, EO 7 calls for a “rationalization of compensation,” which essentially means reduction of compensation of all GOCC and GFI employees. Quite suspectingly, this measure, as well as the salary hike moratorium, is aimed at making GOCCs and GFIs more palatable to prospective private corporations in line with the government’s full-blown privatization plan. The lower the salary grades, the more attractive the GOCC becomes to profiteers.

Aquino’s deceptive anti-corruption rhetoric against state firms becomes more astounding when juxtaposed with the Asian Development Bank’s neoliberal prescription on GOCCs. As contained in its policy and advisory technical assistance paper released in 2008, the ADB recommended the expedited privatization of LRTA, MRT, PNR, NDC and HGC – the same state firms listed by the Aquino government in the 14 “underperforming” GOCCs.

All these indicators clearly show that under this deceitful administration, basic social services are headed straight to the arms of corporate profiteers rather than to poor Filipinos. But things should not be made easy for this regime and for its private partners. Collectively, the people must rise up in protest against this devious scheme.


3 thoughts on “GOCCs for sale

  1. Hi Carlos! After reading this article I felt helpless not only because there is truth in your words but because it is our current situation in our office. In the coming months we will be joining the hundreds of Filipinos who are unemployed. Soon we will be deprived of our source of living and worse we can’t do anything about it. We have worked for the government for years with honesty and integrity but it seems that our service is not equally reciprocated not even by the government itself who should protect us.We are left helpless and with no choice but to accept the fate of our office…they forgot that we are Filipinos too and we are taxpayers too…we are like any Filipino who dreams of having a better life.

    • Sad. 😦 Perhaps we must remind this government that if not for its employees, it would not function effectively after all. If they will pursue the privatization and retrenchment, isn’t it justified to rise up in protest? We can do something. We can spread this expose to all our colleagues, put up maybe an online campaign to draw support vs GOCC privatization. From thereon, we can plan bigger things.

    27 April 2011

    Hi Carlos! Please help us voice out our grievances.
    Thank you so much for your time.


    We, the members of the United Employees of NORTHRAIL – Federation of Free Workers Chapter, composed mainly of the 70 laid off employees of the North Luzon Railways Corporation have been saddened by the suspension of the contractual obligations between NORTHRAIL and the China National Machinery and Equipment Corporation (SINOMACH). We were made to understand that the main reason behind our “temporary layoff” is the said suspension of the NORTHRAIL-SINOMACH Contract.

    The suspension became effective on March 28, 2011. As a repercussion, the NORTHRAIL Board of Directors/ Management issued formal notices to 70 employees that their employment will be “suspended temporarily starting May 1, 2011” in the assumption that the said 70 employees are holding positions that are directly affected by the suspension of the Contract and will no longer be necessary during the suspension. The Board of Directors/ Management invoked Article 286 of the Labor Code of the Philippines as basis of the lay-off of personnel. Said 70 employees include regular and project employees and most are holding technical positions that up to this day are providing their continued service to NORTHRAIL.

    We are surprised by the developments that The Philippine Star and Business Mirror have recently reported. Both reports say that “the contract between the North Luzon Railways Corporation and Chinese Contractor SINOMACH for the rehabilitation of the NORTHRAIL will proceed after the Department of Transportation and Communications cleared it from allegations of anomalies in its execution.” The DOTC Undersecretary for Railways, Glicerio Sicat, was even quoted saying that “there won’t be a cancellation of contract with the Chinese Group”.

    This is a positive development for us because the basis for our temporary layoff was the suspension of the contract. Hence, it is just rational for us to conclude that we will be immediately reinstated.

    Further, according to the reports, Secretary Jose “Ping” De Jesus of the DOTC said that the “employees of NORTHRAIL will be trimmed by 76 due to “overstaffing”. Northrail will reduce its manpower by almost half from 168 to 92”. He also pointed out that “those who were laid off served non-technical positions.”

    It seems that the Honorable Secretary was misinformed. Contrary to his quoted statement, 46 out of the 70 laid-off employees or 66% are holding technical positions mostly from the Project Management Office. Only 24 came from support services. As a matter of fact, in one of the Technical Departments that has 21 employees only the manager was retained.

    Moreover, if it was due to overstaffing then why did the management apply Article 286 of the Labor Code where in fact Article 283 would have been more appropriate? Why give false hope to us who were made “sacrificial lambs?” Now, we are really confused as to what the real basis of our being laid off was. We are kept in the shadows of darkness without a hint of light. Where is transparency when even our own Board of Directors/ Management cannot face us with the truth? Does “management prerogative” give them the right to experiment on the lives of workers?
    We want our Board of Directors/ Management to know that since the onset of this suspension of contract we have suffered anxiety and sleepless nights. We have been deprived of our peace of mind because come Labor Day we will be jobless. It is so ironic that what we will be celebrating on May 1 will be futile for us.

    We think that the NORTHRAIL Board of Directors/ Management has wrongfully judged us because we believe that our positions are important in the completion of the NORTHRAIL Project.

    We ask the NORTHRAIL management to tell us the truth because what are at stake here are not only our careers but our children’s future.

    And finally, we ask the NORTHRAIL management to immediately “lift the layoff” and recall the 70 employees given the fact that the contract with SINOMACH will push through.

    We are ordinary employees like most Filipinos, voicing our grievance and hoping to be heard. We seek for the truth and we invoke our right to social justice.
    “To an employee a job is everything. Its loss involves terrible repercussions – stoppage of the schooling of children, ejectment from leased premises, hunger to the family, a life without any safety net. Indeed, to many employees, dismissal is their lethal injection.”



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