A state-run corporate junk in a ruined place

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One of the most appreciated acts of good governance carried out by the first Aquino administration after taking power in 1986 was the dismantling of the state owned and controlled corporations of underwhelming performance. Dozens of state-owned and controlled corporations were archived during that inspired agency-cutting binge to put sanity into the chaotic bureaucracy that Mr. Marcos left behind.

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Bluntly put, it was a wholesale massacre of the useless entities done without bias. One of the first to be abolished was in Tarlac province—an entity called Sacobia Development Corporation.

Sacobia Development Corporation, a poster child for utter uselessness, more than deserved its abolition. Like the many unnecessary, superfluous, tangential corporate entities that Marcos created, it did nothing but waste government money and give sinecures to cronies.  Sacobia, when I last saw the place years ago, was a speck of hilly land in southern Tarlac, very near Clark. And its outstanding landmarks were its cogon patches.

When Marcos created the SDC, there were still wild boars that inhabited Sacobia.

That Mr. Marcos overdid the creation of corporate entities was a supreme understatement. During his time, just about every river basin in the country had its own governing corporation. So he created agencies such as the Bicol River Basin Development Corporation (BRBDC)-and only God knows what its mandates were.

Mr. Aquino, the incumbent president, recently abolished three corporations – the National Agri-business Corp., the Philippine Forest Corp., and the ZNAC Rubber Estate Corp., or ZREC. But the reason was the role of the three agencies in the Napoles pork barrel scam.

Cohorts of Napoles in the legislature allegedly funneled money to Napoles-controlled NGOs through these government entities.

The abolition orders were more a reaction to the scam than a honest-to-goodness rationalization of the bureaucracy.

Mr. Aquino definitely needs to do more and scuttle more agencies on the solid grounds of incompetence and waste of public money. Good government advocates from the Bicol Region have proposed that the agency-dismantling should start in their area, claiming that they have one government corporation right now that looks and operates like the abolished Sacobia and Bicol River Basin. The agency is called the Partido Development Authority or PDA.

The advocates say that the PDA, which is supposed to oversee the transformation of the poorest district of Camarines Sur from a poverty-stricken place into a thriving economy, has been a massive failure and a huge waste of public money. The PDA, they claim, is also under the tight grip of the Fuentebella political dynasty, the political overlords of the district for over a century. And their bill of particulars against the PDA, broken down below, has been both powerful and compelling.

The PDA is now saddled with over P1 billion in domestic and foreign debts that it cannot service. The burden of debt servicing has been passed on to the national government, which has been struggling with the woes of other hemorrhaging state corporations.

The P1 billion in mature loans, to make matters worse, had been contracted from foreign and domestic sources to fund projects for a congressional district that could have thrived on a fraction of that P1 billion loan. Projects for one district and over P1 billion in loans? In this poverty-riven section of Camarines Sur, the better choice would have been dropping by helicopters the P1 billion in cash to the general population.

As if the P1 billion in unserviceable debts were not enough, the PDA, according to an audit report from the Commission on Audit, incurred a loss of more than P100 million in 2008 and 2009. The water system that the PDA built through loans from the ABN AMRO and two other Europe-based institutions  charges the highest water supply rates in the entire province. PDA, this is the hard truth, has a trinity of bad debts, huge losses and the unfulfilled mandate of running efficient utilities.

Of what use, you might want to ask, is a government corporation beset with such trinity of corporate woes? A state corporation that is definitely beyond redemption. And overseen, from time immemorial, by members and factotums of a political dynasty.

House Bill No. 2867 offers the way out. It seeks the scrapping of 36 state corporations that have been deemed inefficient and underperforming and the PDA is on that list. The House Bill says that the public funds being wasted by these inefficient state corporations should be invested in worthwhile projects, not in corporate white elephants with public mandates.

Scrap. Abolish. Dismantle. Mothball. This is the cry of the House Bill, which aim is in perfect sync with the task being performed right now by a special review unit—the Governance Commission for Government Owned and Controlled Corporations (GCG)—that has been assessing the performances of state owned corporations.

The GCG has also been a strong advocate for ending state owned corporations that are inefficient and deficient on social impact.

The cruelest cut is this. Huge money goes down the drain for nothing. The unfortunate lives in the so-called Partido area remain deep in poverty and underdevelopment despite the huge but misused investments.

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3 Comments

  1. If incompetence and waste of public funds are grounds for abolition of GOCC’s and government offices/agencies, then let us put Malacanang number 1 on that list.

  2. Every government owned corporation has its own distinct objectives that benefits certain people in its covered area of operation and it is very disappointing that it is being stopped or sold to private companies because of mismanagement and cannot continue to run due to its mounting debts. Like the case of Napocor and to almost all GOCC’s being sold to private companies. But look at the benefits these GOCC’s should have given our people if only our government installed check and balance or audit systems that should have prevented these mismanagement problem. But why did the government did not conduct investigations to make those culprits accountable? Is it because even our officials in Malacanyang and the Department Heads are also involved in the looting of these GOCC’s?

  3. Claro Apolinar on

    Very good, Mr. Ronquillo.
    These government corporations and their projects that are almost non-existent like JLim Napoles’ fake NGOs cost money that should be used to raise up the economic standard of our poor population. Dropping the money from helicopters, as you say, would have been a better way of using these funds.