Government-owned and -controlled corporations (GOCCs) need reforms that will clearly establish their commercial and regulatory functions, the National Economic and Development Authority (NEDA).
“They have to be defined,” Socioeconomic Planning Secretary Ernesto Pernia said in an interview over the weekend.
“If the key purpose of the GOCC is to earn income, then it should be just [that,] not regulation,” he added.
Citing the National Food Authority (NFA) as an example, he said the state-run agency was not only a regulator, but also a merchandiser, because it sells rice.
Drawing “the line between commercial activity or proprietorship and regulation is needed,” Pernia said.
His statement came days after NEDA Undersecretary Rosemarie Edillon said mixing state firms’ regulatory functions and commercial operations presented conflict of interest, as stated in Republic Act 10149, or the GOCC Governance Act of 2011.
A business aims to earn profits, while a regulator sets rules to protect consumers’ interest and welfare, according to her.
“So if a state entity is a regulator, then it must not be involved in [the]business operations [of]the sector or market it regulates. If it is a business, then it must not have regulatory powers or influence,” Edillon said.
NEDA will integrate the reforms into the National Competition Policy that it will formulate with the Philippine Competition Commission’s (PCC) assistance, she said.
The policy will enhance market competition and promote consumer welfare and public interest, she added.
Pro-competitive laws and regulations and government interventions, competitive neutrality, and enforcement of the Philippine Competition Act (PCA) and other competition-related laws and issuances would guide the policy’s creation.
“While the enactment of the PCA and the good work done by the PCC on implementing the law are steps in the right direction, we believe there is still a lot that needs to be done to deliver a level playing field for businesses and higher bargaining powers for consumers,” Edillon said.