THE Maharlika Investment Fund bill which the Senate is widely expected to pass before adjourning this week, is “unsalvageable” in its current version, according to Minority Leader Aquilino “Koko” Pimentel III, who mounted an apparent last-ditch effort to delay a vote before the break.
He and his colleague in the minority bloc, Sen. Risa Hontiveros, had earlier admitted they see themselves without the numbers needed to defeat the bill, but have nontheless stressed they will take every opportunity to expose the flaws of the measure that President Marcos Jr. certified last week—or at least delay a vote on the existing version.
Majority Leader Joel Villanueva said the senators held a caucus on Monday to strategize on the passage of priority bills, including the MIF. He said the Senate may hold sessions until Thursday, instead of just Wednesday.
On Monday, Hontiveros interpellated at length the bill’s sponsors, Banking committee chairman Mark A. Villar, after Pimentel tried but failed to use a question of quorum.
After Hontiveros completed her interpellation, Pimentel questioned the legal basis of the Executive in certifying the MIF bill to allow its speedy passage, when the law lists an “emergency” or “public calamity” to justify such.
“Truth is, this bill is unsalvageable and beyond repair,” Pimentel declared on Monday, a few days away from the final vote on the highly contentious measure.
“After thorough analysis and careful review of Senate Bill No. 2020, I have come to the conclusion that the overall risk is too great that it outweighs whatever the potential benefits of the measure are, if there is any at all,” Pimentel stressed.
He aired concerns that creating an investment fund with a price tag of P500 billion—would require the government to divert resources away from more immediate priorities such as addressing poverty, hunger, education gaps, joblessness, healthcare deficiencies, and the country’s ballooning debt.
Pimentel said similar fund mechanisms, such as sovereign wealth funds (SWFs), were established and funded through budget surplus, trade surplus, and income from in-demand commodities such as oil.
In the case of MIF, the country’s own version of a sovereign wealth fund, Pimentel III said there is no new source of fund as the Philippines has no surplus in trade nor budget.
The country’s trade in goods deficit is around $40 billion to $60 billion a year, he noted.
Per the Senate Economic Planning Office (SEPO), the government has been in a perennial budget deficit.
“With no surplus from oil discovery or from trade activities and no windfall profit of any kind, the Philippines has no justifiable reason to form and enter into the world of SWFs and investment funds,” Pimentel III insisted.
“Our national debt now stands at P13.75 trillion as of end-February 2023,” he added.
The Maharlika Investment Corporation (MIC), according to Pimentel, will be vested with the power to incur more debt.
“The implications of the proposed Maharlika Investment Fund Act are simply too grave for us not to do anything to stop it. These are difficult economic times,” the senator noted, pointing to the case of three US banks that failed recently: the First Republic Bank, Silicon Valley Bank and Signature Bank. And the contagion reached the banking safe-haven of Switzerland, leading to the collapse of Credit Suisse, he added.
Even the Norway Sovereign Wealth Fund, the “gold standard” of SFWs, suffered $164-billion losses in 2022, Pimentel pointed out.
BSP capitalization
Earlier, Senator Sherwin Gatchalian clarified he has yet to decide whether to vote for the MIF, owing mainly to his concern over the impact of having the Central Bank contribute to the MIF seed fund, at the expense of its capitalization buildup program.
In a radio interview at the weekend, Gatchalian recalled the point he raised at last week’s debate, about the New Central Bank Act’s mandating a capitalization program of the Bangko Sentral ng Pilipinas from P50 billion to P200 billion. “The argument of BSP officials at that time, this is 2016 to 2019, is that the economy has grown, and the banking sector as well. The BSP has not kept pace with such growth and there’s an urgent need to boost its capitalization so it can better respond to shocks that may imperil the banking and financial system,” said Gatchalian, partly in Filipino.
Given the MIF bill’s requirement for BSP to contribute to the MIF’s seed fund, it would take an unduly long 14 years before BSP reaches the P200-billion capitalization. In case anything happens in between, the BSP won’t have the meanss to respond, Gatchalian said.