The Organization for Economic Cooperation and Development (OECD) calls for a review of the operations of state-owned companies in a context of overlapping regulatory and commercial functions.
The OECD “supports the Philippines’ state-owned enterprise reform” in its policy document, pointing to the importance of clear separation between these functions to mitigate potential conflicts of interest.
“This overlapping mandate emphasizes the ongoing need for careful functional reviews of every government-owned and controlled company (GOCC) operation to ensure competitive neutrality and avoid market distortions,” it said.
Among the GOCCs with dual roles are the Philippines Entertainment and Gaming Corporation (Pagcor), the Philippine Port Authority (PPA), the Civil Aviation Agency of the Philippines and the Lake Laguna Development Agency. These entities can operate as both commercial entities and regulatory agencies.
“The Philippine Competition Commission (PCC) has the power to investigate anti-competitive behavior, although no enforcement action has been taken against the GOCC,” the OECD said.
The OECD also urges the government to improve cooperation among agencies, especially between the GOCCS (GCG) and PCC, to enhance detection and prevention of anti-competitive practices.
It added: “The review of the public procurement process that favors SOEs, including direct government contracts, can help address competition neutrality.”
Under the law, GOCC is subject to the Philippines Competition Act (PCA) of 2015 and the GOCC Governance Act of 2011. The latter law provides for a “clear separation” between its functions to enable the private sector to conduct similar business activities to the private sector.
Despite the laws, these overlapping functions continue. In a 2021 report, the OECD said the Philippines Development Plan marks long-standing government-owned monopoly, government-mandated monopoly, and government control over entry and expansion of market participants.
The OECD said that these can be seen in areas such as power transmission, water distribution systems and building arrangements for transportation facilities, including road services, rail and air and sea transportation.
However, some GOCCs have already stated that the dual function needs to be ended.
Pagcor Chairman and CEO Alejandro H. Tengco earlier said GOCC is determined to separate its dual role for regulators and operators by 2026.
“By decoupling, we will be able to show the world that we are fair and there is no conflict of interest,” he said in a February press conference.
Last year, members of the Business Group and United Rooms of Foreign Countries (JFC) called for the passage of a Senate bill that would separate the business and regulatory functions of the PPA.
Housing bills 1400 and 8055 that attempt to split the regulatory and commercial functions of the PPA are still pending in Congress.
PPA said it implemented the separation of its regulatory and operational functions by privatizing port operations through the port terminal management regulatory framework.
At the same time, the OECD stated that the number of GOCCs is only 119, with total assets of P11.6 trillion, P11.6 trillion, compared with 158 GOCCs in 2011.
It added that the size of the portfolio will drop to 117 after expectations of privatization by the Davao International Airport Authority and Maharika Investment Company.
The OECD also reiterated that state-owned banks such as Landbank and Development Bank of the Philippines (DBP) are potential candidates for listing on the Philippine Stock Exchange.
“As of March 2025, there are no GOCCs listed in the Philippines, although some GOCCs are indeed likely to be listed.” – Aubrey Rose A. Inosante
