AT the behest of Finance Secretary Benjamin E. Diokno, President Ferdinand R. Marcos Jr. has certified as urgent a bill creating the country’s Maharlika Investment Fund (MIF).
Diokno wrote Marcos on December 13 requesting the certification as urgent of House Bill (HB) 6608, which seeks to establish the MIF, the country’s first sovereign wealth fund that has been mired in controversy since it was first floated.
The current administration’s economic managers, which include Diokno, had earlier publicly endorsed passage of HB 6608 on the grounds that the measure would provide the country with much-needed funds.
They later pointed out that most of the grounds objectors had cited—initially, the tapping of the two main pension funds, for both private and government sector workers—have already been addressed in various amendments introduced by proponents.
“This is to respectfully request His Excellency to certify as urgent House Bill No. 6608, establishing the Maharlika Investment Fund, filed as Committee Report No. 237 by the Committees on Banks and Financial Intermediaries, Appropriations, and Ways and Means,” Diokno said in his letter, which was also coursed through Executive Secretary Lucas P. Bersamin.
Labor slams move
Labor groups on Thursday slammed the ongoing attempts in Congress to rush the passage of HB 6608 creating the MIF for being “ill-timed, poorly-conceived.”
Sentro ng Nagkakaisa at Progresibong Manggagawa (SENTRO) Secretary General Josua Mata questioned the decision of lawmakers to prioritize the MIF over other pressing national issues.
“There are so many things that need the immediate attention of our government—from providing public employment, increasing wages of workers in the private and public sectors, lowering the cost of food, transportation, electricity and other commodities and services, ensuring that our seafarers are not blacklisted, ending the continuing killings and labor and human rights violations, etc.—and yet this (MIF) is what Mr. Marcos, Jr. wants to prioritize,” Mata said in a statement.
Federation of Free Workers (FFW) Sonny Matula expressed concern over possible lapses in the safeguard measures of the HB 6608 as lawmakers fast-track its passage.
“Rushing the MIF can lead to disaster or costly mistakes. FFW and Nagkaisa [labor coalition] urge Congress to always be careful with their work. As their haste may result in waste of people’s money,” Matula said.
He noted how other sovereign wealth funds similar to the MIF such as the 1Malaysia Development Berhad (1MDB) in Malaysia became the source of corruption and led to the misuse of government funds.
“1MDB is like that of MIF. Without enough ‘check and balance’ measures, workers already know where we are heading to,” Matula said.
Marcos said on Sunday he was the one who proposed to lawmakers to create the MIF.
Following its announcement, the bill creating the MIF immediately drew criticisms from different sectors, including labor groups, since it required the Social Security System (SSS) and the Government Service Insurance System (GSIS) to contribute to the fund.
Congress later excluded SSS and GSIS list of fund sources for the MIF.
With the amendment of the bill creating the MIF, it drew support from most members of the House of Representatives and is now co-authored by over 200 lawmakers.
Diokno’s pitch
In his letter, Diokno emphasized that the creation of the country’s sovereign wealth fund bodes well for the Marcos administration’s economic and fiscal goals.
“The creation of the MIF manifests the Administration’s recognition of: (i) the role of various investments in financial assets in promoting economic growth, accelerating job creation, and improving the overall welfare of Filipinos; and (ii) the need to preserve and optimize the use of government financial assets, as well the intergenerational management thereof for macroeconomic stability,” he said.
Diokno assured Marcos that the current version of the proposed MIF has the necessary safeguard mechanisms to ensure prudent use and investment of the funds.
“The bill provides for a set of investment policies, guidelines, and risk management limits and procedures. Such safeguards are approved by the Board of DIrectors of the [Maharlika Investment Corp.], taking into consideration the recommendations of the advisory body,” he said.
“To ensure transparency, accountability, and protection to the Fund, the bill further provides for the engagement of three auditors, namely: an Internal Auditor, External Auditor, which is required to be an internationally recognized auditing firm, and the Commision on Audit,” he added.
Diokno explained to Marcos that a sovereign wealth fund is a “tried” and “tested” investment vehicle that has been used by governments in both developed and developing countries “to achieve economic objectives.”
Multilaterals in support
Earlier this week, Budget Secretary Amenah F. Pangandaman disclosed that Multilateral lending institutions and a United States-based think tank have thrown their support behind the establishment of the country’s own SWF. (Related story: https://businessmirror.com.ph/2022/12/14/pangandaman-imf-backed-creation-of-swf/)
Pangandaman said during the previous administration, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) backed the idea of creating a Philippine SWF.
Pangandaman said she supports the creation of the country’s wealth fund since it would generate additional budget for the government amid “limited” fiscal space.
The budget chief said the national government has tapped the Milken Institute of Singapore to determine the feasibility of creating a Philippine SWF, particularly the specific type of such fund suitable for the country.
Based on the findings of the forthcoming report of the think tank, Pangandaman said the right time to create the country’s SWF is “now.”
Recently, the supermajority or 216 members of the House of Representatives have co-authored the proposed MIF Act which, they said, would help fast-track economic development and provide better public services for Filipino people. (Related story: https://businessmirror.com.ph/2022/12/14/216-house-members-coauthor-maharlika/)