THE proposed Maharlika Investment Fund (MIF), which President Marcos Jr. wants the Senate to hurriedly approve before it adjourns on Friday, will put the economy at risk and lead to additional debts for the government, Senate minority leader Aquilino Pimentel III yesterday said in his two-hour turno-en-contra speech on the passage of Senate Bill No. 2020.
Pimentel reiterated his position that the measure is “unjustifiable” since the government has no fund surplus and insisted that the establishment of the MIF should be based on excess government funds, trade surplus, or other sources of revenue, like a high price of commodity or a natural resource.
On the contrary, he said the proposed Philippine sovereign wealth fund (SWF) will tap government financial institutions for its seed money.
“I am of (the) strong belief that the establishment of the Maharlika Investment Fun is totally unjustifiable. Forcing it therefore presents significant risks and concerns that cannot be ignored. The MIF bill have far-reaching effects on our economy and the future of our country,” Pimentel said.
He said “forcing ourselves” to believe that the MIF is a cushion against economic instability is questionable.
“It is said that the expected return of the Maharlika Investment Fund is estimated to be at 8.6 percent on average. I do not know the formula used in arriving at such a positively brave estimate, but what if the investments made by the Maharlika Investment Fund do not perform as expected?” he said.
He added that the MIF is very risky since the country has a history of corruption.
Likewise, Pimentel rejected the proponents’ argument that the concept of a SWF has “evolved” and that countries without budget surplus have also put up their own SWFs. He said that such countries “most likely got their funding from debts.”
The Philippine government has more than P13.7 trillion debt as of end February 2023 and that the country has no budget surplus, Pimentel said.
Pimentel raised anew the plan to tap the Land Bank of the Philippines and the Development Bank of the Philippines as sources of seed money for the MIF, arguing that the combined P75 billion to be taken from the two banks are supposed to be investible funds and cannot be considered as surplus, windfall, or new money since they are “already in the possession, balance sheets, and financial statements of these banks.”
“Another point needs to be clarified: Are these amounts taken from the deposits in he banks or from their capital? Will the deductions of these amounts affect the Capital Adequacy Ratio of these banks? How about the other important ratios like the Liquidity Ratio and the Leverage Ratio? Were studies called sensitivity analysis made on these matters? I submit that this is another prejudicial question,” he asked.
After presenting the questionable provisions of the bill, Pimentel urged his colleagues to carefully study the passage of the measure and set aside the urgent certification of the President, repeating that there is no existing public calamity or national emergency that merits the passage of the bill.
He said the effects of the MIF can be felt in 10 to 20 years so it cannot “answer to an existing public calamity or emergency” if ever there are such incidents.
“It is important to consider the potential risks associated with the measure. We should not rush our consideration of this bill,” he said as he called on the Senate leadership to recomit the measure and refer it to the Committee on Government Corporations for proper discussions.
Pimentel said that from the period that the proposed measure was referred for committee discussion, it already had a “procedural error” as it should have been referred to the Committee on Government Corporations, not to the Committee on Banks, since the government is creating a government-owned and controlled corporation, not a new bank.
“There is hardly any banking concept that is mentioned in the bill… Corporate matters and principles are well scattered in the bill and yet the banking concepts are nowhere to be found. This clearly is not a banking measure but a bill creating a government-owned and controlled corporation,” he stressed.
He said the Senate can still “correct” the mistake by re-committing the committee report to the Committee on Government Corporations.
His proposal, however, was immediately rejected by Senate majority leader Joel Villanueva who said the issue has been threshed after the bill was filed.
To settle the issue, Senate President Juan Miguel Zubiri asked the senators to vote on Pimentel’s motion.
Sixteen voted against, while only Pimentel and Senate deputy minority leader Risa Hontiveros voted in favor.
PRESSING MATTERS
Pimentel said the creation of the proposed MIF “diverts attention and resources” that the government can use to address more pressing socio-economic issues that the country face at present.
He said proponents of the MIF are making it appear that the solution to the country’s long-term goals of reducing poverty and raising the quality of life for Filipinos rest in the creation of the SWF.
“It is presented as if it is a necessity,” he said, adding that the money to be poured in the MIF is already at-hand to address pressing problems of the country but government still wants to gamble with it.
Also, Pimentel said the origin of the MIF remains a “mystery” since it was not mentioned by the President during his presidential campaign or in his first State of the Nation Address.
It is also not included in the original list of priority measures of the Legislative-Executive Development Advisory Council (LEDAC).
“Is it possible that we are doing this as a favor to a businessman who has access to the ears of the powers that be, whose business or bottom line has been hit by the downturn in the world economy and thus would need a new client? We will hopefully know the identity of this big-time influencer in due time,” Pimentel said.
As of printing time, senators are still in session discussing the Maharlika bill and was already at the period of amendments. The measure was expected to be approved on second and third reading late Tuesday night.
