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Title SALIENT FEATURES OF THE GOCC GOVERNANCE ACT (R.A. 10149) Comm. Rainier B. Butalid 9 October 2013.

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Presentation on theme: "Title SALIENT FEATURES OF THE GOCC GOVERNANCE ACT (R.A. 10149) Comm. Rainier B. Butalid 9 October 2013."— Presentation transcript:

1 Title SALIENT FEATURES OF THE GOCC GOVERNANCE ACT (R.A ) Comm. Rainier B. Butalid 9 October 2013

2 2 Slide Title 1.Size of the Philippine GOCC Sector As of end-December 2012, there are 125 GOCCs under the GCG jurisdiction : 71 with Special Charters 54 registered under the SEC 2.GOCC Sector Profile The 125 covered GOCCs have the following financial profile as of December 2012: Total Assets : P5.134 Trillion or over US$125 Billion Total Liabilities : P2.805 Trillion Total Net Worth : P2.329 Trillion Total Net Income : P Billion GOCC SECTOR OVERVIEW

3 3 Slide Title 3.Classification of the 125 covered GOCCs ClassificationNo. of GOCCs Government Financial Institutions33 Trade, Area Development and Tourism 29 Educational and Cultural 8 Gaming 2 Energy and Materials 15 Agriculture, Fisheries and Food 16 Utilities and Information-Communications 22 Total125 GOCC SECTOR OVERVIEW

4 4 Slide Title Total Assets of the Government Corporate Sector (In Billion Php) GOCC SectorAs of Dec Government Financial Institutions2,834 Trade, Area Development and Tourism 247 Educational and Cultural 5 Gaming 48 Energy and Materials 1,506 Agriculture, Fisheries and Food 56 Utilities and Information-Communications 438 Total5,134 GOCC SECTOR OVERVIEW

5 5 Slide Title Significant number of GOCCs burdened by non- commercial functions and therefore needed government financial support SUPPORT2012 AMOUNT (IN BILLION PHP) Subsidy Equity0.900 Net Lending TOTAL Source: Bureau of the Treasury (Amounts are exclusive of GOCCs outside the GCG’s coverage) GOCC SECTOR OVERVIEW

6 6 Slide Title GOCC GOVERNANCE ACT OF 2011 A N A CT TO P ROMOTE F INANCIAL V IABILITY AND F ISCAL D ISCIPLINE IN G OVERNMENT -O WNED OR – C ONTROLLED C ORPORATIONS AND TO S TRENGTHEN THE R OLE OF THE S TATE IN ITS G OVERNANCE AND M ANAGEMENT TO M AKE T HEM M ORE R ESPONSIVE TO THE N EEDS OF P UBLIC I NTEREST AND FOR O THER P URPOSES

7 7 Slide Title COVERAGE Applicable to all GOCCs, GICPs/GCEs, and government financial institutions, including their subsidiaries, but excluding: (a) The Bangko Sentral ng Pilipinas; (b) State Universities and Colleges; (c) Cooperatives; (d) Local Water Districts; (e) Economic Zone Authorities; and (f) Research Institutions.

8 8 Slide Title THRUSTS OF THE NEW PARADIGM 1.Directors and Officers of GOCCs as fiduciaries of the State 2.Standard of Extraordinary Diligence 3.One (1) Year Term; with Holdover 4.Clear accountability of the CEO/Management to the Governing Board 5.Uniform Compensation System for all GOCCs 6.Power to Restructure the GOCC Sector

9 9 Slide Title MANDATES & PROGRAMS A.Rationalization of the Government Corporate Sector B.Compensation and Position Classification System (CPCS) C.Performance Evaluation Systems (Performance Scorecards) D.Shortlisting of Prospective Appointive Directors in GOCCs

10 10 Slide Title RATIONALIZING THE GOCC SECTOR The GCG has the power and function to ascertain whether a GOCC should be: (a)Reorganized; (b)Merged; (c)Streamlined; (d)Abolished; or (e)Privatized

11 11 Slide Title RATIONALIZING THE GOCC SECTOR (i)Implement the reorganization, merger or streamlining of the GOCC, unless otherwise directed by the President; (ii)Recommend to the President the abolition or privatization of the GOCC, and upon approval of the President, implement such abolition or privatization.

12 12 Slide Title On GOCC Sector Rationalization Formally dissolved/liquidated 20 GOCCs in 2012 Recommended for privatization 2 GOCCs Recommended for dissolution 15 GOCCs 25 GOCCs for dissolution by the end of 2013 Number of GOCCs reduced from 145 in 2011 to 125 by the end of 2012 and will further be reduced to 100 by the end of RATIONALIZING THE GOCC SECTOR

13 13 Slide Title COMPENSATION AND POSITION CLASSIFICATION SYSTEM (CPCS) Shall apply to all officers and employees of GOCCs whether under the Salary Standardization Law or exempt therefrom. Any law to the contrary notwithstanding, no GOCC shall be exempt from the coverage of the CPCS.

14 14 Slide Title COMPENSATION AND POSITION CLASSIFICATION SYSTEM (CPCS) The Charters of each GOCC to the contrary notwithstanding, the compensation, per diems, allowances and incentives of the members of the Board of Directors/Trustees of GOCCs shall be determined by the GCG.

15 15 Slide Title On the Development of a Compensation and Position Classification System (CPCS) Development underway with Towers Watson as the consultant; Objective is to provide a compensation system that is comparable to private sector that will allow GOCCs to attract the right talent; COMPENSATION AND POSITION CLASSIFICATION SYSTEM (CPCS)

16 16 Slide Title PERFORMANCE EVALUATION SYSTEM Establish the performance evaluation systems which shall apply to all GOCCs. Performance Scorecards containing the following perspectives: (a) Social Impact (b) Stakeholders (c) Finance (d) Internal Process (e) Learning & Growth

17 17 Slide Title PERFORMANCE EVALUATION SYSTEM The GCG may recommend to the President, incentives for certain position titles in consideration of the good performance of the GOCC. GCG Memo. Circ “Performance Evaluation System for the GOCC Sector”

18 18 Slide Title On Performance Evaluation Entails the preparation by each GOCC of a Performance Scorecard; Ensures adherence to mandate, and alignment to the Philippine Development Plan and the President’s Social Contract; Development of Integrated Corporate Reporting System (ICRS) for the GOCC Sector underway. PERFORMANCE EVALUATION SYSTEM

19 19 Slide Title SHORTLISTING An Appointive Director shall be appointed by the President of the Philippines from a shortlist prepared by the GCG. GCG Memo. Circ “Fit and Proper Rule for Appointive Directors and CEOs of GOCCs”

20 20 Slide Title O RGANIC D OCUMENTS 1.Ownership and Operations Manual for GOCCs 2.Code of Corporate Governance for GOCCs 3.The Fit and Proper Rule

21 21 Slide Title ORGANIC DOCUMENTS 1.Ownership and Operations Manual for GOCCs a.Provides for the Governing Principles and Objectives of the State as an “Active Owner” of the GOCCs; b.Defines the Role and Relationship of the State, its agencies and instrumentalities, vis-à-vis the GOCCs as “significant tools for national development”; c.Provides for the roles and responsibilities of GOCCs and the Primacy of the Boards of Directors/Trustees in the governance of the GOCCs; d.Provides Guidelines the in the Monitoring and Evaluation of the GOCCs and their Governing Boards; e.Provides for the Policy Framework for Tasking GOCCs to Undertake Non- Commercial Activities.

22 22 Slide Title ORGANIC DOCUMENTS 2.Code of Corporate Governance for GOCCs a.The Role and Responsibilities of the Governing Boards, and the Individual Directors; b.Disclosure and transparency requirements; c.Code of Ethics of Directors and Officers; d.Creation of Board committees and similar oversight bodies; e.Providing for an Integrated Corporate Reporting System; and f.CSR Statement and the Role of Stakeholders.

23 23 Slide Title ORGANIC DOCUMENTS 3.Fit and Proper Rule a.Primary mechanism through which the Commission ensures the integrity and competence of Directors/Trustees of GOCC Boards b.Codification of tried and tested standards already implemented by other agencies, with the qualification that the highest standard shall apply in the event more than one apply in a given situation

24 24 Slide Title COORDINATION WITH AGENCIES Office of the Ombudsman All members of the Board, CEO, and officers of GOCCs shall be qualified by the Fit & Proper Rule Persons with derogatory records as certified by the Ombudsman shall be temporarily disqualified from appointment in a GOCC. (GCG Memo. Circ. No )

25 25 Slide Title COORDINATION WITH AGENCIES Commission on Audit (COA) Restitution by a member of the Board or Officer of a GOCC shall be made upon determination and report of the COA. The Chairman of the GCG may direct at any time a special COA audit of any GOCC. Permanent disqualification from appointment in a GOCC by virtue of a final and executory Notice of Disallowance. Directors and Officers Liability Insurance (DOLI) (GCG Memo. Circ. No )

26 26 Slide Title COORDINATION WITH AGENCIES Civil Service Commission (CSC) The CPCS shall consist of classes of positions grouped into such categories as the GCG may determine. Involves the allocation of proper position titles and salary grades.

27 27 Slide Title COORDINATION WITH AGENCIES Securities and Exchange Commission (SEC) The SEC shall not register the articles of incorporation and by-laws of a proposed GOCC or Related Corporation, unless the application for registration is accompanied by an endorsement from the GCG stating that the President has approved the same.

28 28 Slide Title 1.Dividends remitted significantly higher; Number of GOCCs remitting also increased GOCCs GOOD GOVERNANCE GAINS

29 29 Slide Title 2.Better delivery of social services a.Civil Aviation Authority of the Philippines (CAAP) – effectively addressed aviation industry safety concerns resulting in the lifting of the EU ban on Philippine carriers on July 2013 (initially for PAL). b.National Electrification Administration (NEA) – successfully implemented the Sitio Electrification Program (at present, already 77% energized). c.National Housing Authority (NHA) – delivered the AFP/PNP Housing on time and within budget. d.Philippine Health Insurance Corp. (PHIC) – increased enrollment rate to 81% of the population from only 62% in 2010; also introduced more health packages. GOOD GOVERNANCE GAINS

30 30 Slide Title 3. Improved financials a.Metropolitan Waterworks and Sewerage System (MWSS) b.GOCC Sector Net Income (In P Millions) Net Income (Loss)(34)3331,980 Dividends / Other Remittances GOCC Sector Government Financial Institutions125, ,834161,991 Trade, Area Development and Tourism (1,981) 1,250 7,546 Educational and Cultural (329) (341) (186) Gaming 2,753 4,706 4,718 Energy and Materials 8,929 7,892 35,444 Agriculture, Fisheries and Food(22,789) (18,597) 1,917 Utilities, Information, Communications (1,960) (1,462) 12,714 TOTAL (P Billions)109, ,282224,144 GOOD GOVERNANCE GAINS

31 31 Slide Title 3/F Citibank Center Paseo de Roxas, Makati City, Philippines 1226 Tel No. (632) to 33 Fax No. (632) loc 204


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