By Danilo P. Padua, PhD
For the past 3 weeks, the proposed Maharlika Wealth Fund, dominated discussions among economists, politicians, business groups and others on TV, radio and other news portals.
It means the idea is a big one and may have very great implications to our economy- negative or positive. Some consider it a rosy proposition, others call it a dark idea. A former high official of the Duterte administration even call it illegal!
Some of those who commented were obviously just don’t like the administration, while others were just talking for the sake of media mileage.
But it may appear that those comments are moot and academic already. No bearing anymore on the approval of the House Bill 6398 principally authored by House Speaker Martin Romualdez.
Last Dec 15, before Congress adjourned for the holidays, House Bill 6608 which supplanted the earlier bill, was passed by the Lower House on its second and third reading-on the same day. It was not a normal happenstance, of course. The approval was made possible when PBBM consider it as urgent before he left for the EU-ASEAN meeting in Brussels, Belgium.
The passed bill will then go to the Senate for further discussions, maybe refinement, for approval or disapproval. It may be tweaked by the Senate a little bit but definitely, it will be passed or rejected generally as is.
The very quick approval by the house of representatives is an indication that the President can do a lot – for good or for worse – due to the unreserved support of practically the whole house. The president is therefore in an enviable position to redeem the Marcos name during his term, at least for the first 3 years. For him to make unforgiveable mistakes will drag their name into the abyss of oblivion.
Lets have some brief backgrounder on the Maharlika Investment Fund.
It was originally called Maharlika Wealth Fund that seeks to draw investments from Landbank, Development Bank, GSIS and SSS pension funds for an initial total of PhP 275 billion. But due to the widespread negative reaction from various sectors, GSIS and SSS were then excluded as sources of initial investment although the heads of both agencies were already in the loop. The MWF was too risky a proposition was the rightful indignation. BSP income was then targeted as the alternative.
MWF then evolved into Maharlika Investment Fund was the final name of the fund as approved by the Lower House, taking into considerations the suggestions and criticisms. Some even rejected the name Maharlika as too identified to the Marcos name, as if they are oblivious of their Philippine History. The total amount of investment was reduced to PhP120billion, equivalent to about US$2.0B.
The idea of Sovereign Wealth Fund (this was the original idea) started in Texas USA, to fund a specific project, but the first state fund created for a sovereign nation is in Kuwait in 1953. According to reports, the that state fund is now a huge U.S.$600.0B today.
There are now at least 49 countries with the same sovereign fund, Wealth Fund, if you may. At least 22 are from Asia (6 from Southeast Asia: Singapore, Malaysia, Indonesia, Vietnam, Brunei and East Timor), 11 from Africa, 6 from Europe, 6 from South America, 2 from Oceana: 2 from Their inadequate transparency is a concern for investors and regulators: for example, size and source of funds, investment goals, internal checks and balances, disclosure of relationships, and holdings in private equity funds.
The Wealth fund is not confined to the wealthy nations. As a matter of fact, Kiribati, purportedly the third poorest country in they has its own Wealth Fund could be its key to a better economic status in the near future.
From the list we can see that the Philippines is already even left behind by our ASEAN neighbors. Singapore even has the third largest Fund now amounting to U.S.$ 1,642, next only to China (U.S.$ 1,744T) and France ( U.S.$ I,670T).
Then senator Bam Aquino actually filed the first Wealth Fund bill in the Philippines. It was filed as Senate Bill 1212 during the 17th Congress as:“An Act Establishing a Philippine Sovereign Fund, Providing for the Management, Investment, And Use of Proceeds of Its Assets, Appropriating Funds Therefor and For Other Purposes.” It did not prosper. Two years later, Sen. JV Ejercito filed his own version as SB 1964 having the same title. It was also ignored. It was not its time.
Actually, the Philippines has already parallel Wealth Fund called Malampaya Fund. It was established supposedly to fund improvement of oil-related projects. It is now worth U.S.$4.0B. Maybe this fund could be used instead for MIF but some relevant legislative act of Congress maybe needed.
I hope the Senate version will be well studied, amended accordingly if necessary, and it answers grey areas of the Bill. We do not want graft and corruption in the use of the MIF fund as had happened with that of Malaysia when its Fund grew huge.**
