Environment And Nature Of Public Enterprise In Philippines

• Public enterprises in the Philippines

  • Subject to various issues due to their unique hybrid nature
  • Often have conflicting objectives, sometimes as a result of ambiguously set mandates
  • Involve a mix of both proprietary and social/political objectives which may contradict one another
  • Unable to maximize their effectiveness in attaining their multiple objectives due to having to balance them
  • Often unable to ensure their financial viability or exercise fiscal restraint
• Private firms


  Have a clear proprietary objective: to earn profit
• Bureaucracies


  Entirely different animals with different objectives from private firms, aimed at social or political objectives handed down from above by their political masters
• The Philippine public enterprise sector has historically been hounded by numerous problems such as rampant corruption, mismanagement and inefficiency, nepotism, being vehicles for crony capitalism, lack of clear policy on government intervention, inadequate monitoring and control, and poor corporate performance
• Roberto Benedicto, the "Sugar King" of Marcos Sr. era


  Established a monopoly in the Philippines' sugar industry beginning in 1974, aided by Marcos's presidential decrees under martial law
• Coco Levy Fund Scam


  Controversy in the 1970s and 1980s involving former President Ferdinand Marcos and his cronies, who conspired to tax coconut farmers and use the collection fund for personal profit
• The Coco Levy Fund is estimated to have ballooned anywhere in the range of ₱100 billion to 150 billion in assets
• In 2012, a Supreme Court decision awarding ₱71 billion in coconut levy funds to coconut farmers was only part of the goals of a 50-year struggle to bring to the poor farmers the benefits of the Marcos-era levies gouged from them
• Attitudes towards government corporations in the Philippines

  • Many people have been biased against government engaging in business
  • Government corporations have often been described as "convenient political tools" which are overstaffed, inefficient, and graft-ridden
  • A former president was reported to have said that expanding government ownership of business meant socialism "the twilight that falls into the darkness that is communism"
• Evolution of public enterprises in the Philippines

  1. Established and increasingly utilized before World War II to cope with efforts at nation building

  2. Utilized in the post-war period to help solve difficult problems of the socio-economic development

  3. Number of government corporations increased from 13 state firms in 1951 to 37 public enterprises in 1964
• Ideas of public enterprise development

  Evolved from the original focus on economic development to a "multidimensional process involving major changes in social structures, general practices, national institutions, as well as the acceleration of economic growth and reduction of inequality and of absolute poverty"
• Three objectives of development (Todaro)


  • To increase the availability and widen the distribution of basic life-sustaining goods
  • To raise levels of living including higher incomes, more jobs, better education and greater attention to cultural and humanistic values
  • To expand the range of economic and social choice to individuals