GOOD GOVERNMENT

through
PRIVATIZATION

Presented by : Gina May T. Daul, RL, MLIS

 ROLE:
 The private sector is the engine of
growth. Successful businesses drive
growth, create jobs and pay the
taxes that finance services and
investment.
 The Philippine government THE
acknowledges the role of the private
sector as an important partner in PHILIPPINE
attaining the country’s development
objectives of inclusive growth.
Examples of Private Sector
PRIVATIZATION
“Privatization offers an alternative to the
perceived excesses of organized government:
uncontrolled growth, bloated expenditures,
inefficient and wasteful public enterprises,
incursion into private sector activities, and so
on.”
“Privatization occurs when a government
agency that provides public services is
converted into a privately-owned
organization.”
 MODES OF PRIVATIZATION
1. Asset divesture – Disposition or sale of asset or
stakes

2. Contracting – The government pays a private firm to

render public services

3. Franchise – The government gives a private firm the

privilege to act as a 'local monopoly' in their area

4. Public-Private Partnership – Shared responsibility in

delivering public services
 THRUST OF PRIVATIZATION

1. Debt crisis

2. Multilateral stabilization loan

3. Incursion in private sector

MANDATE OF PRIVATIZATION
 a) Reduce the financial burden to the
government due to “losing and inefficient
GOCCs”
 b) Reduce the government's intervention in
economic activity
 c) Raise funds from the sale of GOCCs and
assets to finance government programs
 d) Promote greater efficiency in the operation
of the government
 “A stock or a non-stock corporation whether performing
governmental or proprietary functions, which is directly chartered
by a special law or, if organized under the general corporation law, is
owned or controlled by the government directly or indirectly
through a parent corporation or a subsidiary corporation.”
(Presidential Decree No. 2029)
“A corporation created by special law or incorporated and organized
under the Corporation Code and in which government, directly or
indirectly, has ownership of the majority of the capital stock.”
(Executive Order No. 64 of 1993)

GOVERNMENT-OWNED AND
CONTROLLED CORPORATIONS
• From the 1950s to 1960s, GOCCs had “disastrous
financial performances.” In 1965, there were 37 GOCCs.
• By 1975, or ten years later, the 37 GOCCs became 120 in
number. In 1984, the 120 GOCCs had swelled to 303.
• Fast forward to 2010, the country had 604 GOCCs, in
which 446 are water districts.
• The privatization of GOCCs through President Cory
Aquino’s proclamation brought down the number of
GOCCs to 158 (today).

HISTORY OF GOCC’s
 ISSUES IN PHILIPPINE
PRIVATIZATION
 The labor sector was not consulted in
formulating the privatization policy.
 Section 27 of the Proclamation for privatization signed by then
President Corazon Aquino raised ‘much concern.’
 “None of such officers or employees shall retain any vested right to
future employment in the privatized or disposed corporation, and the
owners or controlling interest thereof shall have full and absolute
discretion to retain or dismiss said officers and employees and to hire
the replacement or replacements of anyone or all of them as the
pleasure and confidence of such owners may dictate.”

 SOURCES: Briones, L. (January 1989). Issues on The Privatization Policy in

the Philippines PROCLAMATION NO. 50. Privatization and Management
Office
 ISSUES IN PHILIPPINE
PRIVATIZATION
Liabilities surpassed the value of
transferred assets
 ISSUES IN PHILIPPINE
PRIVATIZATION

 Constitutional rights and public

accountability
 The Philippine Constitution
guarantees specific social services
to the people. Concern has been
expressed that contracting out
these services might dilute public
accountability.
 EXAMPLES OF PRIVATIZATION
 Philippine Long Distance Telephone Company
 Was established on November 28, 1928
 In December 1967, Ramon Cojuangco Sr. took over the
company after buying its shares. This made PLDT a
“Filipino-controlled corporation.”
 In the 1970s, the Marcos administration nationalized the
company. By 1981, PLDT had monopolized the Philippines’
telecommunications industry.
 In 1986, the company had been ‘reprivatized’ as President
Corazon Aquino took over the country.
EXAMPLES OF PRIVATIZATION

 Petron Corporation
 Two oil companies from the United States merged in 1933 to
form Stanvac. When this merger ended, Stanvac became Esso
Philippines.
 By 1973, President Ferdinand Marcos Sr. established the
GOCC Philippine National Oil Company (PNOC). Consequently,
the PNOC acquired Esso Philippines and renamed it Petron
Corporation.
 In 1993, the PNOC sold 40 percent of Petron to the Arabian
American Oil Company (Saudi Aramco). Another 20 percent
was sold to British company Ashmore Group.
 In 2010, Philippine conglomerate San Miguel Corporation
acquired the majority of Petron from the Ashmore Group.
PRIVATIZATION AS
ENGINE OF
GROWTH IN THE
PHILIPPINES
 Privatization act as an engine of
growth in the Philippines

 Efficiency and Productivity: Privatization often leads

to increased efficiency and productivity in formerly
state-owned enterprises. Private companies typically
have stronger incentives to innovate, streamline
operations, and cut costs to remain competitive.
 Investment and Infrastructure Development:
Privatization can attract domestic and foreign
investment into sectors previously dominated by the
state.
 Privatization act as an engine of
growth in the Philippines

 Fiscal Benefits: Privatization can generate revenue

for the government through the sale of state-owned
assets.

 Competition and Innovation: Privatization introduces

competition into formerly monopolistic industries,
driving innovation and improving the quality and
affordability of goods and services.
 Privatization act as an engine of
growth in the Philippines
 Job Creation and Human Capital Development:
Privatization can create employment opportunities as
private companies expand their operations and invest
in workforce development.

 Improved Governance and Accountability:

Privatization can promote good governance and
accountability by subjecting formerly state-owned
enterprises to market discipline and transparent
regulatory frameworks.
 Overall, privatization has the potential to play a
crucial role in driving economic growth and
development in the Philippines by:
 improving efficiency,
 attracting investment,
 fostering competition and innovation,
 creating jobs, and promoting good governance.
• REFERENCES:

• Briones, L. M. (January 1989). Issues on The Privatization Policy in the

Philippines
• Vilches, R. J. (2018, May 29). Privatization of Public Services in the
Philippines. SlideShare.
https://www.slideshare.net/DomingoBrotamante/privatization-of-
pubilc-services-in-the-philippines
• Lumanog, H. (2014, January 11). Government Owned and Controlled
Corporation (GOCC) – Report. SlideShare.
https://www.slideshare.net/HermanLumanog/goverment-owned-
and-contolled- corporation-gocc-report
• What is PPP?. Public-Private Partnership (PPP) Center.
https://ppp.gov.ph/ppp-program/what-is-ppp
• Cecilia, E. & DPM. (2020, September 17). The role of the private sector. The
Manila Times. https://www.manilatimes.net/2020/09/17/campus-
press/the-role-of-the-private-sector/76883
Thank You!