The Organisation for Economic Co-operation and Development (OECD) called for a review of state-run firms’ operations amid an overlap of their regulatory and commercial functions.
In a policy paper, “Supporting State-Owned Enterprises Reform in the Philippines,” the OECD noted the importance of a clear separation between these functions to mitigate potential conflicts of interest.
“Such overlapping mandates underscore the continued need for careful functional reviews of each government-owned and -controlled corporations (GOCCs) operations to ensure competitive neutrality and avoid market distortions,” it said.
Among the GOCCs with dual roles are the Philippine Amusement and Gaming Corporation (PAGCOR), the Philippine Ports Authority (PPA), the Civil Aviation Authority of the Philippines, and the Laguna Lake Development Authority. These entities operate both as commercial entities and regulators.
“The Philippine Competition Commission (PCC) has authority to investigate anti-competitive behavior, although it has not yet taken enforcement actions towards GOCCs,” the OECD said.
The OECD also urged the government to improve inter-agency collaboration, particularly between the Governance Commission for GOCCs (GCG) and the PCC to boost the detection and prevention of anti-competitive practices.
“Reviewing public procurement processes which tend to favor state-owned enterprises, including through direct government contracts, could help address competitive neutrality,” it added.
Under the law, the GOCCs are subject to the Philippine Competition Act (PCA) of 2015 and the GOCC Governance Act of 2011. The latter law mandates a “clear separation” between its functions to enable a level playing field with the private sector performing similar commercial activities.
Despite the law, these overlapping functions continue. OECD said in a report in 2021 that the Philippine Development Plan flagged long-standing government-owned monopolies, government-authorized monopolies, and government control over the entry and expansion of market players.
The OECD said these can be seen in sectors like electricity transmission, water distribution systems, and build-and-operate arrangements for transport facilities, including road services, railways, and air and sea transport.
However, some GOCCs have already expressed the need to end its dual functions.
PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco earlier said the GOCC is determined to split its dual role of regulator and operator by 2026.
“By decoupling, we will be able to show the world that we are fair, that there is no conflict of interest,” he said in a press briefing in February.
Last year, business groups and members of the Joint Foreign Chambers (JFC) has called for the passage of a Senate bill that will separate the commercial and regulatory functions of the PPA.
House Bills 1400 and 8055, which seek to split the regulatory and commercial functions of the PPA, is still pending in Congress.
The PPA said it has implemented the separation of its regulatory and operational functions by privatizing port operations through the Port Terminal Management Regulatory Framework.
Meanwhile, the OECD said that the number of GOCCs has started to decline with only 119 with total assets of P11.6 trillion, from 158 GOCCs in 2011.
It added that the size of the portfolio will go down to 117 after the expected privatization of Davao International Airport Authority and Maharlika Investment Corporation.
The OECD also reiterated that the state-run banks such as the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) are potential candidates for listing at the Philippine stock exchange.
“As of March 2025, there were no listed GOCCs in the Philippines, although some GOCCs do have the potential to become listed,” the OECD said. — Aubrey Rose A. Inosante