CHAPTER-1-FINAL_Public-Enterprise-3.pdf

PAE 3: PUBLIC ENTERPRISE MS. IZELLE C. FRANCISCO - GABION Public Enterprise History, Growth, and Purposes 01 02 03 Public Enterprise Rationale and Introduction to Concept...

PAE 3: PUBLIC ENTERPRISE MS. IZELLE C. FRANCISCO - GABION Public Enterprise History, Growth, and Purposes 01 02 03 Public Enterprise Rationale and Introduction to Concepts and classification of public Public Enterprises enterprises Definition 04 05 06 Understanding the Difference between “Old History of Public challenges and changes Public Management” and Enterprises facing the Public Sector “New Public Management”  What are your insights on the Enhancing Performance in Philippine Public Enterprises: A Revisit of Recent Reforms and Transformations?  01 Introduction to Public Enterprises OBJECTIVES OF PUBLIC ENTERPRISE Social Welfare: Providing essential services and goods to citizens, often at affordable prices. Economic Growth: Contributing to the national economy through revenue generation, employment creation, and infrastructure development. Strategic Sector Control: Ensuring government influence in key sectors for national security and development. OBJECTIVES OF PUBLIC ENTERPRISE The International Centre of Public Enterprises (ICPE), defines PUBLIC ENTERPRISES as: “Any commercial, financial, industrial, agricultural or promotional undertaking –owned by public authority, either wholly or through majority share holding –which is engaged in the sale of goods and services and whose affairs are capable of being recorded in balance sheets and profit and loss accounts. Such undertakings may have diverse legal and corporate forms, such as departmental undertakings, public corporations, statutory agencies, established by Acts of Parliament or Joint Stock Companies registered under the Company Law (Basu, 2005, p. 3).”  02 Public Enterprise Concepts and Definition Public Enterprise Concepts and Definition Public enterprises are business entities owned or controlled by the government. Public Enterprise Concepts and Definition They operate in various sectors, including transportation, energy, healthcare, telecommunications, and more. Public Enterprise Concepts and Definition An organization owned, managed, and funded by the government, with the aim of delivering goods and services to the public.  PUBLIC ENTERPRISES are autonomous or semi- autonomous corporations and companies established, owned and controlled by the state and engaged in industrial and commercial activities  PUBLIC ECONOMIC ENTERPRISES – is a business- like entity, wholly or partially owned by local government that sells a product or service to meet a perceived specific public demand. Public enterprises are industries created officially for economic development, enhancement and protection of the national interest and institutional response to specific problems. - Briones 1 985b Article XIV, Section 6 of the 1973 constitution sets the general policy and framework. DID YOU KNOW! Public Undertaking Nationalized Industry in U.K. Parastatal Sector in Latin America and Africa State-owned-enterprise by World Bank & some authors Public sector undertaking. Government controlled enterprise State economic enterprise National company  PUBLIC ENTERPRISE IN THE PHILIPPINES In the PHILIPPINE SETTING, public corporations have been called many names: government corporation, public corporation, public enterprise, state-owned enterprise, parastatal corporation.  PUBLIC ENTERPRISE IN THE PHILIPPINES The official nomenclature is "Government Owned or Controlled Corporations" (GOCCs) as stated in the 1973 Constitution.  PUBLIC ENTERPRISE IN THE PHILIPPINES DID YOU KNOW! SOEs/PES/ GOCCs/ government corporation, public corporation, public enterprise, state-owned enterprise, parastatal corporation - potent tools of development  03 Rationale and Classification of Public Enterprises.  There are several rationales for the establishment of public enterprises: to introduce economic activities that the private sector is either unwilling or unable to undertake. in pursuit of national and social interests. need to provide of public goods and services that would be best undertaken by the government means of generating revenues through their commercial functions arise out of the governments efforts the save sick units CLASSIFICATIONS OF PUBLIC ENTERPRISES  Based on Ownership Wholly-Owned Public Enterprises: These enterprises are fully owned by the government and operated under its direct control. Partially-Owned Public Enterprises: In these cases, the government holds a significant portion of the equity  Based on Economic Activity Strategic Industries: Public enterprises in strategic sectors such as defense, energy, transportation, and telecommunications, where the government's involvement is deemed crucial for national security or public interest. Commercial Enterprises: Public enterprises engaged in commercial activities such as manufacturing, trading, and services  Based on Objectives Service-Oriented Public Enterprises: These enterprises are established to provide essential services to the public. Profit-Oriented Public Enterprises: These enterprises are intended to generate profits for the government and may operate in sectors like manufacturing, infrastructure, and finance.  Based on Degree of Autonomy Dependent Public Enterprises: These enterprises operate under strict government control and direction, with decisions often being made at the bureaucratic level. Autonomous Public Enterprises: These enterprises have a higher degree of managerial and operational independence, allowing them to function with some level of flexibility and efficiency.  Based on Legal Structure Corporations: Public enterprises can take the form of corporations or companies with their own legal identities, often following corporate governance principles. Authorities or Boards: Some public enterprises may be structured as authorities or boards, typically responsible for overseeing specific functions or sectors, such as transportation or utilities.  Based on Local vs. National Level National Public Enterprises: These enterprises are owned and operated by the central government. Local Public Enterprises: These enterprises are owned and operated by local governments or regional authorities.  Based on Regulation Regulated Public Enterprises: Enterprises operating in sectors with natural monopolies or significant market power may be subject to specific regulations to ensure fair competition and consumer protection.  Based on Financial Performance Profit-Making Public Enterprises: These enterprises are expected to generate profits, often contributing to government revenue. Non-Profit Public Enterprises: Enterprises focused on providing essential services to the public might not prioritize profits but rather service accessibility and quality.  04 HISTORY OF PUBLIC ENTERPRISES HISTORICAL DEVELOPMENT OF PUBLIC ENTERPRISES Early State Involvement/ Early Origins and Mercantilism (16th - 18th centuries) 1 2 Industrial Revolution and Early State-Owned Enterprises (19th century) 3 Post-World War II Period 4 Decolonization and Import Substitution 5 Socialist and Planned Economies 6 Privatization and Market Reforms 7 Public-Private Partnerships (PPPs) 8 Resurgence of State-Owned Enterprises  Early State Involvement/ Early Origins and Mercantilism (16th - 18th centuries): In ancient civilizations, rulers and governments often engaged in economic activities  Industrial Revolution and Early State-Owned Enterprises (19th century) The Industrial Revolution brought about significant changes in production and transportation  Post-World War II Period (Mid-20th century) The devastation of World War II led to increased government intervention  Decolonization and Import Substitution/ Mixed Economy and Diversification (Late 20th century) Many newly independent nations in Africa, Asia, and Latin America established state-owned enterprises as part of import substitution industrialization strategies  Socialist and Planned Economies During the Cold War, socialist countries pursued centrally planned economies with extensive state ownership of industries.  Privatization and Market Reforms Starting in the 1980s, many countries around the world embarked on privatization efforts  Public-Private Partnerships (PPPs) Shift toward public- private partnerships, where the government collaborates with private entities to manage and operate public infrastructure and services.  Resurgence of State-Owned Enterprises Some countries have reevaluated the role of state- owned enterprises in strategic sectors  PUBLIC ENTERPRISE IN THE PHILIPPINES "In the Philippines, the primacy of the private sector has been a long-held tradition. Although there was a spurt in the growth of the public enterprise sector during the post war years as the government took an active role in the rehabilitation of the economy. This was quickly followed by a divestment program during the mid 50's an early 60'S because of the poor financial performance of state enterprises." HISTORICAL DEVELOPMENT OF PUBLIC ENTERPRISES 1 Early State Involvement 2 Post-World War II Period 3 Import Substitution and State-Owned Enterprises 4 Martial Law Era and Expansion of Public Enterprises 5 Privatization and Market Reforms 6 Public-Private Partnerships (PPPs 7 Resurgence of State-Owned Enterprises HISTORICAL DEVELOPMENT OF PUBLIC ENTERPRISES 1 Colonial Period (Pre-20th Century) 2 American Period (Early 20th Century) 3 Post-World War II Era (1940s-1950s) 4 1960s-1970s 5 1980s-1990 6 2000s-Present Public Enterprise Reform: The Case of the Philippines, 1986-1987 (Philippine Institute for Development Studies) Timeline President No of PSE 1951 Elpidio Quirino 13 1966 Ferdinand Marcos 44 1975 Ferdinand Marcos 120 1985 Ferdinand Marcos 303 1987 Corazon Aquino 171  PUBLIC ENTERPRISE IN THE PHILIPPINES State-owned enterprises (SOEs), public enterprises (PEs) or government-owned and/or controlled corporations (GOCCs) in Philippine terminology, are defined in PD 2029 (1986) and restated in AO 59 (1988) as: …stock or non-stock corporations…performing governmental or proprietary functions…owned or controlled by government directly or indirectly through a parent or subsidiary corporation , to the extent of at least a majority of its outstanding capital stock or its outstanding voting capital stock.  PUBLIC ENTERPRISE IN THE PHILIPPINES GOCCs became “major arenas for the consolidation of economic and political power” (Dytianquin 1985). A Revisit to Recent Public Enterprise Reforms (pre-2001-present) Enactment of the Corporate Governance Act of 2011. A Revisit to Recent Public Enterprise Reforms (pre-2001-present) 1 Policy Guidelines for the Creation/Definition of GOCCs 2 Ensuring Financial Discipline 3 Compensation/Salary Reforms 4 Performance Evaluation and Audit 5 Privatization 6 Rationalization COMMON PUBLIC ENTERPRISES WATER DISTRICTS PUBLIC MARKETS SLAUGHTERHOUSES TRANSPORT TERMINALS SOLID WASTE MANAGEMENT FACILITIES LOCAL HOUSING AND DEVELOPMENT PROJECTS TOURISM AND RECREATION FACILITIES ELECTRIC COOPERATIVES LOCAL CREDIT AND FINANCING INSTITUTIONS LOCAL EDUCATIONAL INSTITUTIONS LOCAL HEALTH FACILITIES LOCAL TOURISM AND INVESTMENT PROMOTION AGENCIES  05 Understanding the challenges and changes facing the Public Sector UNDERSTANDING THE CHALLENGES AND CHANGES FACING THE PUBLIC SECTOR 1. Most operate at a loss and require heavy subsidies from LGUS 2. Most are operated according to traditional practices without regard for new technologies, local development priorities and changing consumer demand. 3. Many are inefficiently managed, wasting previous resources 4. Many offer substandard and poor-quality products and services 5. Some provide products and services below market rates in unfair competitor with the private sector. 6. Some are established opportunistically without regard for their financial feasibility and their impact on the local ecological, economic and social environment. Corruption and Governance Issues  Inefficient Bureaucracy Infrastructure and Service Delivery Gaps  Fiscal Constraints and Budget Deficits Workforce Skills Mismatch Technology and Digital Divide Climate Change and Disaster Resilience  Changing Demographics and Urbanization Healthcare and Education Disparities Public Sector Modernization and E- Governance  06 Difference between “Old Public Management” and “New Public Management”  PARADIGM OF PUBLIC ADMIISTRATION TO GOVERNANCE traditional/ modern phase 1950s through to classical phase the present late 1800s development administration (1950s to the through the 1950s 1960s) new public administration (1960s to the 1970s), new public management and reinventing governance (1980s into the 1990s) public administration as governance (1990s into the present) 76  TRADITIONAL/ CLASSICAL/ OLD PUBLIC ADMINISTRATION (1800’s to 1950’s) MODERN PUBLIC 3E's - "Efficiency, Effectiveness and Economy" ADMINISTRATION DEVELOPMENT NEW PUBLIC ADMINISTRATION ADMINISTRATION (1950s to (late 1960s to 1970s) 1960s) 3’Es + Equity (Social Equity) “Emerging Nations” PUBLIC ADMINISTRATION AS NEW PUBLIC MANAGEMENT AND REINVENTING PUBLIC ADMINISTRATION GOVERNANCE (the 1990s into the (1980s to 1990s) 2000s) 4’Es + Entrepreneurship (Privatization) 5’Es + E – Empower Old Public Management (OPM) Focus: OPM emphasized hierarchical, centralized control and bureaucracy in public administration. Goals: The primary goal of OPM was to ensure stability, equity, and predictability in public service delivery. Decision-Making: Decision-making was centralized, with a top-down approach and limited involvement of lower-level employees. Bureaucracy: Bureaucratic structures and rigid rules were characteristic of OPM, often leading to slow response times. Accountability: Accountability was primarily focused on compliance with rules and procedures. Public Services: Public services were often seen as entitlements and were not necessarily designed with customer satisfaction in mind. New Public Management (NPM): Focus: NPM aimed to introduce market-oriented practices and principles to the public sector. Goals: NPM focused on efficiency, effectiveness, and responsiveness to customer needs. Decision-Making: NPM introduced decentralization, delegation of decision-making, and empowerment of employees. Bureaucracy: NPM sought to streamline bureaucratic processes and introduce flexibility. Accountability: NPM emphasized performance-based accountability and results. Public Services: Public services were treated as products or services, with an emphasis on customer satisfaction and choice.  The private sector comprises of business which is owned, managed and controlled by individuals. The public sector comprises of various business enterprises owned and managed by Government.  BASIS FOR COMPARISON PUBLIC SECTOR PRIVATE SECTOR Meaning The section of a nation's economy, The section of a nation's economy, which is under the control of which owned and controlled by government, whether it is central, private individuals or companies is state or local, is known as the Public known as Private Sector Sector. Basic objective To serve the citizens of the Earning Profit country. Raises money from Public Revenue like tax, duty, Issuing shares and debentures or penalty etc. by taking loan Areas Police, Army, Mining, Health, Finance, Information Technology, Manufacturing, Electricity, Mining, Transport, Education, Education, Transport, Telecommunication, Telecommunication, Agriculture, Manufacturing, Banking, Banking, Insurance, etc. Construction, Pharmaceuticals etc. Benefits of working Job security, Retirement benefits, Good salary package, Competitive Allowances, Perquisites etc. environment, Incentives etc. Basis of Promotion Seniority Merit Job Stability Yes No Thank you and God bless! Do you have any questions? You can find/ contact me: @CREDITS: [email protected] This presentation template was created by Slidesgo, including icons by Flaticon and infographics & images by Freepik  ACTIVITY: Creative Presentation Instructions - Exploring Government-Owned and Controlled Corporations (GOCCs) The purpose of this creative presentation is to explore and showcase one of the five chosen Government-Owned and Controlled Corporations (GOCCs) in an engaging and innovative way. Participants will gain a better understanding of the selected GOCC's role, functions, and significance within the government's framework.