PUBLIC ENTERPRISE - Self financing ( it can sustain its financial

needs even without funds from the

- International meaning (owned and
government)
controlled by gov’t)
- Example: PNOC
- Fully owned (100%)
- Partially owned (shares and stocks) PUBLUIC ENTERPRISE CAN BE SEMI –
- They operate like regular businesses AUTONOMOUS

International centre of public enterprise - Government oversight more direct control &
oversight
- To make or set up money by creating or
- It needs constant monitoring
making taxes, programs or services.
- Needs funding and support
Presidential decree 2029 (1986) 8AO59 (1988) - Rely more on gov’t funding management
structure
1. Nature – either stock or non-stock
- It requires approval
Where stocks have other owners. Example
- Example: Landbank of the Philippines
DBP is under so many branches in finance.
Non-stock – solo or it is 100% owned by the PUBLIC ECONOMIC ENTERPRISES
gov’t. example Nawasa or Water districts.
- Business org ownership, public market,
2. Functions – perform governmental and
water district controlled by government.
proprietary functions
- Providing services & goods business PUBLIC ENTERPRISES
function to make money.
- Government Owned Controlled
3. Ownership – owned by the gov’t
Corporations
How many percent should the government own
to hold the majority.
RATIONALE
- 50% +99 majority owned
1. To introduce economic activities that the
OBJECTIVES OF P.E
private sector is either willing or unable to
Social Welfare – it’s the way of the government to undertake.
make sure that everyone gets the basic necessities in - Private sector focuses on profit and they are
everyday life. Ex. Public Clinic or Local Water unable to take it because is too risky and non
utilities. profit or it has only small profit.
2. Need to provide of public goods and
Economic Growth – help the economy by
services that would be best undertaken by
generating revenue.
the government.
- Opening opportunities and works. - Example. National defense will always be at
- Example: public markets the gov’t side.
3. Means by generating revenues through their
PUBLIC ENTERPRISE CAN BE
commercial functions.
AUTONOMOUS
- They can operate without government it is
independent. CLASSIC OF P.E
- As more freedom
BASED ON OWNERSHIP
 Wholly Owned P.E 100% para dina sila mag export para di lumlabas
and pera ng isang bansa)
Partially 50 – 99% (shares and stocks)
1600 hundreds
Service Oriented Public Enterprise – need to
provide services even if no or a little profit. BRITISH EAST INDIA COMPANY
Profited Oriented Public Enterprise – “focuses - Granted exclusive rights by the british
on profit” to make profit and service. crown as their state back up enterprise
- Quasi public enterprises
HISTORICAL REVOLUTION OF PUBLIC
- Perks of british India manage private army,
ENTERPRISES
manage vast territory, collect tax.
EARLY STATE INVOLVEMENT / EARLY - They targeted the China to take over Asia in
ORIGINS AND MERCANTILISM terms of spices.
- They use opium at pinalaganap nila to sa
Starts of Public Enterprise (early state mercantilism)
China na ultimo ang emperor ng China s
1. ANCIENT CIIVILIZATIONS gumagamit narin (opium) a drugs that is
- Gov’t rule always involve in economic act, addictive.
trades import to control resources
a. ROMAN EMPIRE – (annona system
) it monopolize the industry “they are 1602 (nainggit sa british india)
the only one who produce it”
DUTCH EAST INDIA COMPANY
(grain dole) – a system of grain they produce
and sell it in a cheaper price. - Dutch gov’t (Netherlands)
Reason: generate money and sympathy of - It has 21 years contract under the gov’t and
people or favor f people. has public function
- They generate money
2. CHINESE EMPIRE - Negotiate foreign affairs
- HAN DYNASTY – they invested on - It has a public function
infrastructure
- They monopolize salt and iron (the daily 19th Century
needs or basic nee of people) RISE OF INDUSTRIALIZATION
- Sila lang din ang nag poproduce but they ae
selling it much higher price to invest and Turning point of public enterprise – Industrial
build in their infrastructure one of those is Revolution (mass production, machinery, factory)
the ( Great Wall of China ) EARLY SOE’S (State Owned Enterprise) it support
- Agrarian and grain (un minopolize nila) the private sector
- Response to the needs of the people ex:
3. EGYPTIAN EMPIRE
- They also monopolize the agrarian, or grains railways
to make infrastructure. (Pyramids)
MERCANTILISM – it maximize import & HISTORY OF PUBLIC ENTERPRISE
minimizes export
WORLD WAR II ( Sept. 1 1939 – Sept. 2 1945 )
- State control over the economic activities
- During the war the government take over
(kung kaya nila na sila lang mag produce
almost all of the public enterprise but due to
 mismanagement it all fall down turning expense but low income. Gov’t cant do
government to bankrupt and it starts to have anything but to help them.
loans from the WB.
MID 1950 – 1960
2. MOST ARE OPERATED ACCORDING
- The government decide to give the TO TRADITIONAL PRACTICES
businesses back to the [private sector WITHOUT REGARD FOR NEW
because they are more efficient in that field. TECHNOLOGY.
- Many P.e are still using traditional ways
Summary of history of public enterprise
kung saan madami pang lalakarin na mga
From private sector (before WWII) papeles or madami pang mga proseso sa
para lang makuha or mavail ung services na
To public enterprise ( during the WWII) because
yun.
private sector cannot produce because lahat is nasira
- Example: PHILPOST is one of the Public
nawasak that’s why gov’t turn over all business to
Enterprise that dealt the damages of
public enterprise
modernization where every services that
To private sector ( due to mismanagement it all they are offering can be done through online
bankrupt and ov’t has so many loans in the different mostly because of the internet.
ban or countries internationally. - They tried to keep up sa mga online
services ngayon like package delivery like
COMMON PUBLIC ENTERPRISES
the business sector but still failed because
1. PUBLIIC MARKET private sector know their business so well.
2. WATER DISTRICT
3. SLAUGHTERHOUSE
4. TRANSPORT TERMINAL 3. MANY ARE INEFFICIENTLY
5. TOURISM AND RECREATION MANAGED WASTING PRECIOUS
FACILITIES RESOURCES
6. LOCAL HEALTHCARE FACILITIES - It leads to wastages of resources where
government should focus more on th needs
of its people.
CHALLENGES AND CHANGES - Mismanagement of man power of the
qualification is not exactly what the public
1. MOST OPERATE AT A LOSS AND
enterprise is about.
REQUIRE HEAVY SUBSIDIES FROM
LGU’S
- Public enterprise are most likely struggling
4. MANY OFFER SUBSTANDARD AND
in expenses and there is no profit that’s why
POOR QUALITY PRODUCTS AND
they are relying on the government or
SERVICES
LGU’s fund and most of the budget na dapat
- Poor services and poor quality that why
na nakalaan sa ibang problems or program
“peoples trust” is nasisira na kahit mas
napupunta nalang sya sa mga public
mahal ang services ng private sector is
enterprise.
tatangkilikin pa din nila or ever worse hindi
- Example: public hospitals build for
nalang sila magpapagamot.
marginalized sector where they have high
 5. SOME PROVIDE PRODUCTS AND 3 Roles and Function of Public Enterprise
SERVICES BEOW MARKET RATES IN
6 KEY ROLES IN THE PUBLIC ENTERPRISE
UNFAIR COMPETITION WITH THE
PRIVATE SECTOR. 1. PUBLIC ADMINISTRATORS AND
- Service = money but public enterprise is CIVIL SERVANTS
more affordable that’s why private sector - Crucial factor in public enterprise
cannot compete with their price or low - They are involve in day-to-day operation of
revenue. public enter.
- Public administrator – they are connected to
6. SOME ARE ESTABLISHED planning and making decision “managerial”
OPPORTUNISTICALLY WITHOUT - Civil servants – clerikal work mostly paper
REGARD FOR THEIR FINANCIAL works, they monitor equipment.
FEASIBILITY AND THEIR IMPACT
ON THE LOCAL ECOLOGICAL, 2. PUBLIC SERVICE PROVIDERS
ECONOMIC, AND SOCIAL - Hand in hand delivering the service to
ENVIRONMENT. people
- Public enterprise na hindi pinagiisipan ng
mabuti 3. GOVERNMENT LEADERSHIP AND
- Example: bataan power plan it failed POLICY MAKERS
because the lack of feasibility on what are - They are not involve in day to day operation
the possible problem in thee future. - They set strategic direction and priorities
- Government leadership are the high ranking
OLD PUBLIC MANAGEMENT
officials (President, Governor, Mayor) they
- It is traditional and hierarchal structures provide direction and what ought to do.
“top-bottom approach” “centralization” - Policy makers are on the legislative crafting
- Poor services and poor quality that why and developing operation.
“peoples trust” is nasisira na kahit mas
mahal ang services ng private sector is 4. RESEARCH AND COMMUNITY
tatangkilikin pa din nila or ever worse hindi ENGAGEMENT SPECIALISTS
nalang sila magpapagamot. - Public enterprises remain responsive and
effective
NEW PUBLIC MANAGEMENT
- They finding areas of improvement
- Focusing on what works the best - corrective measures
- Flexible, efficient, and customer-oriented - they help p.e by doing interview to know the
practices current needs of the people.
- “benchmarking” the private sector so that - Researchers ( student, professor, ;)
they can adopt it in public enterprises
- Customer service and feedback 5. LEGAL EXPERTS
- Where the premises of public enterprise is
Public Sector – business under the government
not breaking any laws and it should be
“serving the people by providing service in of
bounded by the laws.
affordable price.
Private Sector – owned and controlled by private 6. CITIZENS OR CUSTOMERS
individual or company they provide services and - They are the beneficiary and there feedback
goods to make money and profit are important to know
KEY CONTRIBUTORS OF THE - It fulfill social responsibility
PHIILIPPINES - Example: public enterprise are funding
schools and scholarships where they build
1. Developing Infrastructures
and renovate facilities.
- Build and maintain essential infrastructure
- (public facilities) economic growth
- Infrastructure are for rural and urban CHARACTERISTICS AND PURPOSE OF
development PUBLIC ENTERPRISE
(sctex) connect and boost the economic
1. With Clear Vision, Mission, Goals and
activities
Objectives

2. Strong Industrial Foundation - A successful organization or a public enterprise

- Establishing and supporting key industries must have a clear Vision,
- Development of economy
Mission, Goals and Objectives.

3. Opportunity and employment

- Provide stable job, employment and
WHAT IS VISSION?
opportunities
- NPC = thousands of workers PNR = - Long term aspiration of Public Enterprise
employment on transportation sector
- Future, aspirations of an organization and
stakeholders
4. Formation of Capital
- Financial asset of one country
- Reinvesting profits (programs, activities,
WHAT IS MISSION?
allocate towards expanding infrastructure.
- Example: DBP – functioning to reinvest of - Ways on how a public enterprise set its vision
profits to infrastructure like bridge, roads,
- Specific ways on how to execute the vision
and further investments.
- PAGCOR – they fund in social welfare, - Outlines the action turning vision into reality
education, healthcare, where they produce
new assets.
WHAT IS GOALS?
5. Export Promotion and Import
- Broad outcomes
substitution
- Can produce but not import - What enterprises ants to achieve
- Producing goods for international markets or
substitute imports
- Example: NPC can produce oil but cannot WHAT IS OBJECTIVES
import
- Specific, measurable action and has allotted time
limit
6. Contributes to Community Development
- Enhancing the quality of life for local
populations 2. Has a form that supports the long term LGU
- Initiative to improve education sustainable development plans
- Focuses on the well being of the people
- Structured and operate in LGU 6. Direct Channels for Using Foreign Money –
receive and utilize foreign aids and loans.
- Ensures that the Enterprise are contributes to
National goals 7. Helpful in implementing Government Plans –
assist in executing policies and
- Flexible and adaptable to the local needs.
development plans
8. Autonomous or Semi-Autonomous – a degree
3. Supported by National and Local Policy
of independence a freedom to make
- National Policy laws and guidelines made by
decision.
national government
National policy has two features Authority and
Funding PURPOSE OF PUBLIC ENTERPRISE
- Local policy rules set by LGU adopt the needs of 1. Help in rapid Economic Growth and
community Industrialization of the Country – focuses on
- helps public enterprise that fit in the current building up industry for country to develop.
situation or needs of LGU
2. To earn Return on Investment and thus generate
- these are the Local Ordinances set by LGU resources for development
3. To promote redistribution of Income and Wealth
4. Managed according to well Researched 4. Create Employment Opportunities
business
5. To Promote Balance Regional Development –
a. Using data for decision helps rural development
b. Cost-effective solution 6. To Promote Import Substitution, Save and Earn
Foreign Exchange for the Economy
c. Balancing efficiency and service
7. Acts as a Countervailing Force and Put up an
Effective Competition to Undertaking
CHARACTERISTICS OF PUBLIC
in Private Sector
ENTERPRISE
8.To Gain Control over the Commanding Heights of
1. Finance by Government – funds directly from
the Economy
the government (taxes, investments)
2. Government Management – overseen and
managed by appointed officials or agencies. GOCC Government Owned or Controlled
Corporation
3. Financial independence – self sufficient
- commercial activity - Selling goods and services
4. Public Services – services that benefits the
public - non-commercial activity – providing services not
profit driven
5. Useful for Various Sector – supporting different
sectors
Presidential Decree No. 2029
- GOCC as non stock or stock corporation 7. Utilities and Communications Sector
- Governmental – means f giving goods and 8. Healthcare Services Sector
services ‘
9. GOCC Supervised by PCGG
- Normal Business – providing products but still it
10. Under Privatization
has profit
11. Non-Operational/ Inactive/ Deactivated
- What does a GOCC does
12. Under Abolition
13. Dissolved/ Abolished
Executive Order No. 64 1993
14. Privatized
- Government directly or indirect
15. Merged GOCCS
- 50% up majority share holder of a GOCC
16. GOCCS Disposed by PMO
- How a public enterprise own/ ownership
17. GOCCS Excluded from the Coverage of RA No.
- How they are owned
10149
Many GOCC’s have Multiple or Conflicting
Market Failures Do Exist Objectives
- Situation where private sector cannot provide - May kumikita at may nalulugi
other fields of service because its
- Operate like businesses
risky or more likely business to easily bankrupt like
- Low cost of services
utility or public health.
Public-Private Partnership (PPP)
- Then GOCC need to fulfil the gap.
- Public is the government
- Private business that is owned by private
How Do GOCC’s Contribute on Government
individual or corp.
Finances?
- Partnership agreement between 2 people
- Revenue Generation
Public-Private Partnership
RA 7656 Sec. 3 – mandates GOCC remits a
percentage to treasury (50%) - A contractual agreement between the government
and a private firm.
Classification of GOCC’s by Sectors
- Common target of public and private is to serve
1. Government Financial Institutions Section
people
2. Trade Area Development and Tourism Sector
- Allow government to get project and manage.
3. Educational and Cultural Sector
4. Gaming Sector
PPP offers Monetary and Non-Monetary
5. Energy Materials Sector Advantages for the Public Sector
6. Agriculture, Fisheries and Food sector Monetary – money funds of the government
Non-Monetary – generate profit of the gocc Develop Operate and Transfer – near that facility
develop
Eligible – complete an PPP arrangement.
Rehabilitate Operate and Transfer – an existing
facility will hand over to a private sector then
PPP Modes of Procurement
they will rehabilitate and develop it and operate it in
1. Solicited PPP – government initiate the project a span of time then it will be back to the
and offer it to investors then private
government.
company bids to get that project.
Rehabilitate Own and Operate – private company
2. Unsolicited PPP – private initiate thee project refurbish the facility and owns it until they
then present it to the government.
wants to the where there are no agreement between
gov’t and private company.

PPP Contractual Arrangement

Build and Transfer (BOT) – private company fund
and build infrastructure, hand it to the
government, the government will pay the private
sector.
Build Least and Transfer (BLT) – private
company build infrastructure then private company
least or loan it to the government in specific time
span.
Build Operate and Transfer (BOT) – private
company operate it and transfer it to the
government for 25-50 yrs.
Build Own and Operate (BOO) – private
company will build then owns it and operate it by
specific time 25-50yrs.
Build Transfer and Operate (BTO) – private
company build the infrastructure then they
transfer the ownership to the government, private
sector will continue the run of facility but it is
owned by the government.
Contract Add and Operate – private company
expands to an existing GOCC or facility then
they can only run the expansion only.