THE House of Representatives has increased the amount earmarked from the profits of the Maharlika Investment Fund (MIF) for social welfare purposes or subsidies (ayuda)—from 20 percent to 25 percent—as proposed by an opposition lawmaker, Speaker Martin G. Romualdez revealed on Friday.
Voting 279 in favor, six against, with no abstentions, the House approved Thursday night House Bill (HB) No. 6608 creating the MIF, which was earlier certified as urgent by President Ferdinand “Bongbong” R. Marcos Jr.
The MIF was principally envisioned as an effective vehicle to execute and sustain high-impact infrastructure projects, urban and rural development, agricultural support, and other programs that would generate more income and economic activity in the country.
“We have increased the contributions of the profits of the Maharlika Investment Fund to social welfare fund that the government can utilize to provide assistance to those who need it the most,” Romualdez said.
Romualdez noted that such an increase came from a proposal of the opposition bloc in the House, although they later voted against the passage of HB 6608.
“This amendment was proposed by the Makabayan bloc, which we accepted,” Romualdez added.
In his message to peers before the House adjourned for the Christmas break, Romualdez noted that the approval of HB 6608 followed public consultations and exhaustive deliberations with agencies and stakeholders.
“At the Plenary, several interpellators, and numerous hours of session were devoted to informative debates and manifestations discussing lengthily the nature, scope, and benefits of the proposed measure,” he added.
HB 6608 originally allocated 20 percent of the profits from MIF for social welfare purposes.
Opposition lawmaker ACT Party-list Rep. France Castro proposed an amendment to increase the amount to 30 percent until compromise was eventually reached to peg the increase at 25 percent.
Under HB 6608 at least 25 percent of the net profits of the Maharlika Investment Corporation—the independent body that will manage the MIF—shall be directly distributed in the form of poverty and subsistence subsidies to families falling below the poverty threshold as determined by the Philippine Statistics Authority, in lieu of taxes and dividend remittance to the National Government.
The remainder of MIC’s net profits shall be remitted to the National Government, to be earmarked for social welfare programs and projects, excluding infrastructure projects.
Aside from increasing social welfare’s share in the profits of MIC, Castro also proposed other amendments that were accepted by the majority.
One such proposal is a provision to ensure government-owned and -controlled corporations like the Government Service Insurance System (GSIS), the Social Security System, and the Home Development Mutual Fund would not be required to contribute their respective funds to the MIF.
The sponsors also agreed to accept Castro’s proposed amendments to prohibit the MIC from investing in activities or entities with a record of commission of human rights violations, or relating to the production of weapons of war, as well as in corporations involved in activities that seriously degraded the environment.
Amendments
Albay Rep. Joey Sarte Salceda said the amendments adopted on the floor are designed to make the MIF’s safeguards even tighter.
“The third-reading version now creates an MIF that is significantly more transparent and accountable than the committee report. I am proud of the work of the Technical Working Group, which included recommendations from the minority,” said Salceda.
The amendments, summarized, follow:
1. On the declaration of policy, the House included to “foster technological transformation”
2. On funding sources, the House clarified that what will come from the BSP is “declared dividends” to prevent the use of funds needed for operations
3. On the objectives, lawmakers emphasized that the main object of the fund is “to promote economic development by making strategic and profitable investments in key sectors”
4. On the general framework of the Fund, the chamber required that the board formulate ethical standards, and that the MIF will be covered by “ethical standards under the Securities Regulation Code, and ethical standards set by the International Organization of Securities Commissions (IOSCO) and other significant international organizations of investment entities”
5. The House also clarified that “the provisions of Republic Act No. 8799 or Securities Regulation Code, Republic Act No. 8791 or the general banking law, Republic Act No. 2629 or the investment company act, their respective implementing rules and regulations, and other relevant laws, rules, regulations, and issuances by regulating authorities governing transactions with and among directors, officers, stockholders and related interests shall apply to the MIC.”
6. It also removed the power of the MIC to condone debts owed it
7. To ensure that usual fiscal rules apply, the chamber inserted the proviso that “all other instruments of mic shall be subject to laws, rules, and regulations on the contracting of debt and issuance of guarantees by GFIs”
8. It also deleted the provision allowing the BSP to invest part of its surplus
9. On the mandatory review by the SOF, it included a review of “the financial condition of investing GFIs”
10. Pension funds are also explicitly excluded from GFIs that may invest in the Fund
11. Lawmakers inserted a provision that the board will set targets to reduce expenses below the 2-percent cap:
a. They included a new Section on prohibited investments. These are
b. activities and investments related to, and entities with a record of commission of human rights violations, including but not limited to indigenous peoples, farmers, fisherfolk, and labor;
c. activities and investments related to, and corporations involved in the production of cluster munitions, nuclear arms, intercontinental ballistic missiles, and similar technologies and equipment;
d. activities and investments resulting in, corporations with a record of serious degredation of the environment; and
e. similar activities, investments and corporations.
12. The chamber inserted a paragraph that the investment policy will prioritize government infrastructure and development projects
13. It increased the number of independent directors to five out of 15 (one-third, consistent with corporate good governance principles)
14. Consistent with good corporate governance, the Board will constitute an audit committee which will recommend the external auditor to be confirmed in the annual general shareholders’ meeting
15. While professional and technical services are exempt from the Procurement Law, lawmakers inserted a qualifier that the procurement of such shall still undergo competitive selection
16. Secondment of GFI employees to the MIF is limited to five years, to maintain the independence of the MIF from their owners, consistent with the Santiago Principles
17. Adopting the recommendation of the Minority, lawmakers increased the remittance to the NG for social projects from 20 percent to 25 percent. But the remittance shall not exceed the share of total contributions of the NG to the fund
18. The external auditor will be engaged annually instead of for a three-year term, consistent with good corporate governance rules
19. It also adopted the recommendation of the Makabayan bloc for a right to freedom of information for all relevant financial information on the MIF
20. Lawmakers inserted a new section requiring an annual audit for compliance with the Santiago Principles. This is also a requirement under the Principles.
21. The House also expanded penal provisions for a broader set of offenses, including collusion, intermediation for and tolerance of graft and corrupt practices, and retaliation against whistleblowers.