THE proposed Maharlika Investment Fund (MIF) will not suffer the same fate as the infamous 1MDB fund of Malaysia because it will have enough accounting and transparency safeguards, economic managers and lawmakers claimed.
Finance Secretary Benjamin E. Diokno said the Philippines may miss a lot of opportunity cost if the MIF will not be enacted since there are a lot of projects that could provide higher yield for the national government.
Some of the areas the MIF could invest in are infrastructure projects like tollways, which generates a steady flow of revenue, Diokno explained.
The Finance chief said the MIF will allow the government to invest in full or partial in investment portfolios that it would deem be beneficial to the country.
Diokno disclosed that he expects the legislative measure to be enacted into law as early as middle of next year.
Safeguard mechanisms
Diokno emphasized that the MIF will have the necessary safeguard mechanisms, such as internal
auditors, Commission on Audit and Congress oversight, to ensure its prudent use.
“There are 98 [sovereign wealth funds] in 70 countries. Bakit naman pinagpipilitan iyong isang failure, di ba?” he told reporters in a press briefing on Monday, referring to Malaysia’s 1MDB scandal.
“That is not going to happen here,” he added, referring to the 1MDB graft and corruption, that led to the jailing of its former prime minister.
The proposed MIF would source its initial total budget of P275 billion from state-run pensions and financial institutions.
Under House Bill 6398, P125 billion would come from GSIS, P50 billion from SSS, another P50 billion from Land Bank of the Philippines and P25 billion from the Development Bank of the Philippines. The national government will also contribute at least P25 billion to the MIF.
Salceda’s proposal
Albay 2nd District Rep. Joey S. Salceda, who chairs the House Committee on Ways and Means, proposed on Tuesday additional safeguard mechanisms to the MIF to make the proposed legislation “more airtight.”
Salceda proposed adding a provision making at least one of the independent directors an SSS or GSIS member or pensioner, to address concerns on representation in the fund’s governance.
Salceda also introduced an amendment to the bill that “all transactions of the MWFC shall abide by the arm’s length principle and the prudent person rule.”
He also recommended limiting the exemption of the MIF from the procurement law to “pertaining to minimum prescribed periods for stages of procurement and to restrictions on foreign or foreign-owned contractors.”
“Of course, we are always open for discussions and for enhancements to the bill. This is legislation. As TWG Chair, my job is to refine the proposal. Any reasonable input helps,” he said in a statement on Monday.
The House Committee on Ways and Means approved on Monday the tax provisions of the MIF.
Salceda said the tax provisions ensure that the benefits of the tax savings go purely towards the investment fund, increasing potential returns for the SSS and the GSIS.
“Some P680 million in tax savings will inure to the fund every year as a result of this exemption. That goes towards making the SSS and GSIS funds more robust. That means more funds for pensions,” he added.
Presidential accountability
Former president and Pampanga 2nd District Rep. Gloria Macapagal-Arroyo pointed out that the President will be “ultimately accountable” for the MIF since he will chair its governing board.
“The success of any fund, sovereign or private, lies in the quality of its management. In the current version of the Maharlika Wealth Fund, the President of the Philippines chairs its governing Board,” she said.
“This is a powerful statement that the highest official of the land will hold himself as ultimately accountable to the Filipino people for the performance of the Fund,” she added.