Dominguez to GCG: Improve the method for assessing GOCCs
Finance Secretary Carlos Dominguez III has urged the Governance Commission for Government-Owned and -Controlled Corporations (GCG) to include regulatory agency assessments in evaluating the performance of state-run firms in order to improve its oversight functions and avoid mistakes in the government’s policy-making process.
Dominguez took the decision after seeing multiple instances of “inconsistency” between the GCG’s assessment of government-owned and controlled businesses (GOCCs) and assessments made by regulatory bodies.
He noted that although “significant progress” has been made in improving the performance of GOCCs, which currently pay an average of PHP57 billion in dividends to the Bureau of the Treasury (BTr), the GCG’s review of these state-run enterprises still has to be improved.
President Rodrigo Duterte’s approach of fostering fiscal discipline among GOCCs has resulted in these significantly enhanced dividend collections, which are more than twice the previous administration’s average yearly collection, he noted.
As an ex-officio member of the GCG, Dominguez urged the Commission to follow his advice in fine-tuning its assessment methodology and taking regulators’ findings into account when analyzing and grading GOCCs.
“Our GOCCs are examined by their regulatory authorities as well. I am the ex-officio Chairman of eight GOCCs and a director of 20 state companies as Secretary of Finance. Some of these GOCCs are governed by departments within the Department of Finance (DOF). As a result, I’ve found a discrepancy between the GCG’s assessment and the assessments of regulatory bodies. This should not be the case,” he remarked at the GCG’s 10th anniversary virtual celebration last week.
Dominguez referenced the Insurance Commission (IC), whose appraisal of the performance of several government insurance businesses differed significantly from the GCG’s.
“The inconsistencies may generate confusion among the state firms that are controlled and evaluated. More significantly, they might expose policy flaws in the government,” he warned. “As a result, I urge my Commission colleagues to act to remedy this inconsistency.”
According to Dominguez, the GCG has given several government insurance businesses “very high” ratings despite the fact that they did not follow international accounting and reporting requirements.
“This, in my opinion, is a failure not just of the COA but also of the GCG. As a result, I strongly advise you to improve your capacity to assess the financial accounts of each GOCC “Added he.
According to Dominguez, the GCG should tailor its evaluation techniques to the various sectors in order to find elements unique to each GOCC and, eventually, create a scorecard that appropriately reflects GOCCs’ vision, goal, and mandates.
He praised the GCG for enacting “valuable governance reforms” in the public business sector, which have resulted in the OP abolishing 29 GOCCs since 2011.
The GCG’s reforms included the Corporate Governance Scorecard, which evaluates state firms, as well as the effort to institutionalize the Performance Evaluation System, which allows GOCCs to become performance-driven firms with sound corporate governance, he noted.