April 12, 2018

The National Economic and Development Authority (NEDA) is pushing for major reforms concerning state-owned enterprises to enhance market competition in the country and promote consumer welfare and public interest.

NEDA Officer in Charge (OIC) Rosemarie G. Edillon said these reforms intend to boost market performance as well as correct the dual regulatory and proprietary functions of some state entities.

“If a state entity is an enterprise or operates as a business, then it must compete on equal terms with the private sector and must not have undue advantage. State support in the form of subsidies, tax incentives, and immunity from certain regulations must be reserved only for government-owned and–controlled corporations that operate in non-profitable or non-commercially viable markets avoided by private firms,” Edillon said.

Edillon also said that regulatory functions and commercial operations should not mix because of inherent conflict of interest. This principle is clearly stated in Section 2 (g) of Republic Act No. 10149, otherwise known as the GOCC Governance Act of 2011.

“A business aims to earn profit while a regulator sets rules to protect the consumer and the public interest in general, which may negatively affect profits. So if a state entity is a regulator, then it must not be involved in business operations in the sector or market it regulates. If it is a business, then it must not have regulatory powers or influence,” Edillon explained.

“Ultimately, we would like to see more and more high-quality goods and services being made available and affordable to as many consumers as possible. Market competition and effective regulation can make this happen,” Edillon said.

The Philippine Development Plan 2017-2022 calls for a review of the mandate, quality of services, and specific markets of GOCCs to ensure that their proprietary activities do not conflict with their regulatory functions and that procedures are streamlined.

Meanwhile, the Governance Commission for GOCCs, the oversight body for GOCCs, has already conducted initial steps in reviewing profiles of GOCCs.

 To integrate these reforms, NEDA, with assistance from the Philippine Competition Commission (PCC), will formulate a National Competition Policy this year.

Guided by key pillars of competition, the Policy will flesh out competition strategies in the country’s economic blueprint. These pillars are 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.

“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.