Good Governance in GOCCs; (Excerpts from the Speech Delivered during the Financial Executives Institute of the Philippines National Conference Held October 8, 2004, at the Hotel Intercontinental Manila.)

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Byline: GARY B. TEVES President and CEO, Land Bank of the Philippines

OVER the past few years, the spectacular failures of international enterprises such as Enron and Tyco have highlighted the need for systems of good governance. In addition, weve seen how poor governance can adversely and significantly affect a countrys economic performance.

According to an International Monetary Fund report, these effects include greater losses in government revenues, lower quality of public investment and public services, reduced private investment and the loss of public confidence in government. When governance is poor, domestic investment and growth suffer.

With the fiscal crisis our country is currently experiencing, both the national government and the Filipino people are closely scrutinizing the performance and governance practices of government agencies, particularly government-owned and-controlled corporations (GOCCs) and government financial institutions (GFIs). Now more than ever, we are challenged to deliver.

Importance of Government in GOCCs

When their governance structures are anchored on accountability and transparency, government organizations gain the publics trust and confidence. On a larger scope, good governance makes it easier to achieve sustainable economic growth. This is why GOCCs and GFIs need to continuously improve the level of governance in their respective organizations.

To this end, the national government has instituted some recent initiatives to uphold good governance among government offices, including GOCCs.

First, the Bangko Sentral ng Pilipinas (BSP) created the Internal Audit System to ensure effective management and discharge of responsibilities, as well as to minimize illegal and immoral activities in government.

Second, Congress passed RA 9184 (or the Government Procurement Reform Act), which resulted in strict implementation of the e-Procurement System. This electronic bidding system aims to make the government procurement process more transparent, thus drastically reducing potential opportunities for graft.

And lastly, Congress enacted the Anti-Money Laundering Act to enhance the countrys system of detecting dirty money and corruption in the Philippine banking system.

LANDBANK Initiatives Towards Good Governance

In addition to complying with these rules and regulations, however, government agencies, GOCCs and GFIs need to set up internal governance mechanisms of their own. After all, real governance is founded on self-governance.

Recognizing our role as the governments partner in countryside development, LandBank has established a history of prudent management, transparency and accountability, the result of which is a government financial institution that is self-reliant and profitable even as it continues to address the needs of its priority sectors: The farmers and fisherfolk, the SMEs and the agri-agra sector, among others.

In its 41 years of existence, LandBank has never had to ask the government for financial assistance. In fact, from 1994 to 2003, we remitted R3.1 billion in cash dividends to the national government, R600 million for 2003 alone. Also in 2003, we posted a record high net income of R2 billion. We managed to accomplish this while remaining faithful to our mandate, with loans to our priority sectors making up nearly 60 percent of our total loan portfolio as of August 2004.

Still, we continue to undertake various initiatives in order to uphold and even improve the standards of good governance in all aspects of our operations. …