THE highly contentious Maharlika Investment Fund (MIF) currently under legislative discussion will be advantageous to the Filipino people and will help the country attract more investors, President Marcos Jr. said yesterday, the first time that he aired his sentiments on the proposal amid public criticisms against its necessity.
The President, in an interview Sunday night on board Flight PR 001 on his way to Brussels in Belgium, said he would not have supported the MIF himself if it was not beneficial to the country.
“For sure (it is advantageous). I wouldn’t have brought it up otherwise… It’s very clear that we need added investment. This is another way to get that,” he said.
Marcos urged the public to allow lawmakers to finish their debates first and come up with a final and clearer version of the measure.
“Let’s not debate until we see the final form because we could be debating about provisions that will no longer exist. So hintayin natin kung anong gawin ng legislature (Let’s not debate until we see the final form because we could be debating on provisions that will no longer exist. So, let’s wait and see what the legislature will do),” Marcos said.
He said lawmakers should be allowed to do their jobs and deliberate thoroughly until they come up with the perfect version of the bill.
The proposed MIF is embodied under House Bill 6398, which is co-authored by Speaker Ferdinand Martin Romualdez, Senior Deputy Majority Leader and Ilocos Norte 1st District Rep. Ferdinand Alexander “Sandro” Marcos III, House Majority Leader Manuel Jose Dalipe, Tingog party-list Reps. Yedda Marie Romualdez and Jude Acidre, and Marikina City Rep. Stella Luz Quimbo.
The bill seeks to establish the MIF that will allow the government to invest surplus reserves in real estate and financial assets.
Several members of Marcos’ economic team had supported the proposed bill, namely Finance Secretary Benjamin Diokno, Budget Secretary Amenah Pangandaman, and Socioeconomic Planning Secretary Arsenio Balisacan.
PENAL PROVISION
To make the proposed measure more acceptable to critics, lawmakers have included a provision that proposes to put behind bars government officials who will cause investment losses in the proposed sovereign wealth fund.
The committee report on the bill, as separately approved by the House committees on banks and financial intermediaries, appropriations and ways and means, adopted the amendment of Albay Rep. Joey Salceda, who proposed a penal provision under Section 44, Article XI of the bill.
Salceda, chair of the ways and means panel, introduced a penal clause which seeks an imprisonment of not less than a year but not more than five years or a fine of P50,000 to P2 million or both pursuant to the discretion of the court against violators who are members of the Board of Directors of the proposed Maharlika Investment Corp. (MIC).
Under the bill, the Board of Directors will serve as the governing body of the MIC, which is the state investment body responsible for the overall governance and management of the MIF.
Section 44 provides that: “Any director, trustee, or officer who willfully and maliciously violates investment policies and guidelines set by the Board of Directors as defined pursuant to Section 19 of this Act, or whose acts of gross negligence, willful misconduct, fraud, or actions in breach of any investment agreement result in a loss suffered by the Fund shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons, and shall be punished by imprisonment of not less than one (1) year, but not more than five (5) years, or by a fine of not less than Fifty thousand pesos (P50,000.00) but not more than Two million pesos (P2,000,000.00), or both, at the discretion of the court.”
The authors of the measure earlier adopted the official name “Maharlika Investments Fund” in place of the Maharlika Wealth Fund.
“The bill continues to evolve. Let’s not say it’s beyond repair,” Manila Rep. Irwin Tieng, chair of the banks panel, told reporters, adding that the measure is still evolving and being improved by lawmakers amid the initial flak that it has been drawing.
Romualdez’s HB 6393 originally sought P275 billion seed funding for the Maharlika Fund patterned after the sovereign wealth fund of other countries, “to maximize the profitability of investible government funds for the benefit of the Filipino people.”
To meet the P275 billion target, the initial proposal was to source at least P125 billion of the Maharlika Wealth Fund Act P50 billion each from the Government Service Insurance System (GSIS) and the Social Security System (SSS), and P25 billion each from the Development Bank of the Philippines and Treasury of the Philippines.
Bill proponents, however, have agreed to remove the GSIS and the SSS as fund contributors in favor of dividends from the Bangko Sentral ng Pilipinas (BSP) and other fund sources, such as state-run banks LandBank of the Philippines (P50 billion), and the DBP (P25 billion).
Quimbo, a senior vice chair of the committee on appropriations, has said the seed funding for the Maharlika Fund will go down to around P150 billion without the contributions from GSIS, SSS.
‘SLOW DOWN’
In a letter to Romualdez, Albay Rep. Edcel Lagman urged the House leadership not to “fast track” the bill’s approval, saying the Christmas break “will afford members of the House sufficient time to consult with their constituents on the pros and cons of the proposed measure.”
While he welcomed the removal of the President as chairman of the MIC, he said his “replacement by his alter-ego, the Finance Secretary must be subject to further consideration.”
Among the other amendments to the bill are the provisions prohibiting the board from managing an investment in a company it invested in, removing the seven-year fixed term for the chairman of the board, placing the Maharlika Fund under the Philippine Competition Commission regulation, and setting aside 20 percent of the fund proceeds to social welfare projects.
CROSSING PARTY LINES
Lawmakers from various political parties expressed support for the creation of the MIF, saying it would help expedite economic development and provide better public services for Filipino people.
Deputy speaker Aurelio Gonzales Jr. of the PDP-Laban said the proposal would “tap investible government resources to maximize their profitability for the benefit of future generations of Filipinos.”
“We are all for the MIF proposal of the Speaker. The objective of maximizing or optimizing gains from the investment of excess state funds or assets is laudable. That is what every nation on this planet would want to do,” he said.
Quezon Rep. Mark Enverga, one of the leaders in the House of the Nationalist People’s Coalition (NPC), said that while the proposal has become contentious, “it is important to recognize that the country needs the MIF to fund its needs.”
Romblon Rep. Eleandro Jesus Madrona of the Nacionalista Party said investing government assets for optimum profit for the citizens is what 49 countries with sovereign wealth funds are doing and what the House leadership is trying to emulate.
Quezon City Rep. Marvin Rillo, a member of Lakas-Christian Muslim Democrats (CMD), said “the Philippines, in creating a sovereign wealth fund, should learn from the best practices of countries with successful investments and avoid the mistakes of others.”
Rep. Margarita Ignacia Nograles of party-list group PBA said the House leadership has listened to the suggestions of the public on the proposed MIF by adding safeguards against corruption, fraud and other potential acts of wrongdoing, while Northern Samar Rep. Paul Daza, who belongs to the minority group, said he was inclined to support the MIF bill after the House leadership introduced improvements.
UNTIMELY?
Senate minority leader Aquilino Pimentel III said proponents of the MIF should consider its timeliness and relevance to the present time before pressing for the approval of the measure.
In a chance interview, Pimentel said as lawmakers, it is their “duty to our work and part of our work is the question whether we need this at this time.”
“So, hindi ‘yung ina-assume natin na we need it. Ayusin ang detalye. Sagutin muna — Do we need this? Tayo ba ay makikinabang sa pagtayo ng sovereign wealth fund? Yan ang tanong muna bago ang detalye (So, we do not need to assume that we need it. Let us fix the details. Let us answer first the questions — ‘Do we need this? Shall we benefit from this if we put up a sovereign wealth fund?’ Those are some of the questions that need to be answered before we go into details),” Pimentel said.
Pimentel said the President’s statement that the MIF would be advantageous to the country indicates that he “is backing up the concept of the sovereign wealth fund but not the details.”
“Ibig sabihin nananawagan na siya sa mga supporters niya to study, to support the concept but study very well. Meron siyang sinabi doon na magsumikap kayo, kayong mga mambabatas. Tama naman iyon. Sige pagdating dito sa Senado I will have to require participation of all senators. Kailangan may quorum if we discuss the sovereign wealth fund (That means he [Marcos] is calling in his supporters to study, to support the concept, but study very well. He is also said that lawmakers should work harder. I agree, that’s why when that measure reaches the Senate, I will have to require the participation of all senators. There should be a quorum if we discuss the sovereign wealth fund),” he added.
Senate President Juan Miguel Zubiri said President Marcos “is seriously taking (into) consideration” the creation of the sovereign wealth fund, but said that the general sentiment of the Senate is to not rush its approval.
“Ang general sentiment namin dito sa Senado is to wait for the final version ng House.
Hindi namin minamadali ito, matagal na usapin ito. Pag-aaralan naming mabuti (Our general sentiment here in the Senate is to wait for the final version of the House. We are not going to rush it. This will take a lot of time. We should study it well),” Zubiri said.
Zubiri said there are certain projects that the President wants to invest in using the Maharlika fund, and one of them is the National Grid Corporation of the Philippines, which is now 40 percent owned by China.
“There are certain assets that the President wants to invest in. For example the National Grid (Corporation of the Philippines), if it is run by Chinese na hindi tayo makapasok [that we cannot enter], it makes sense if it will be nationalized,” he added.
He said there are enough funds for the MIF to be operational which will come from the Development Bank of the Philippines and LandBank of the Philippines.
He said funds from the DBP and LBP are just “sitting there” and the government can tap portions of these as seed money for the sovereign wealth fund.
“Yung pera naman ng DBP and Land Bank nakatengga lang yun. Those are in the banks’ accounts (and are) not being utilized. They don’t have the power to reinvest it elsewhere.
You can get a portion of Land Banks’ stored wealth together with DBP and utilize it for investment
(The money of DBP and Land Bank are just stored up. Those are in the banks’ accounts [and are] not being utilized… They don’t have the power to reinvest it elsewhere. You can get a portion of Land Banks’ stored wealth together with DBP and utilize it for investment),” he said.
He also downplayed suggestions to borrow money so that the sovereign wealth fund can be operational.
“There’s no sense in borrowing money. The concept of wealth fund is surplus,” Zubiri said.
Once the measure reaches the Senate, Zubiri assured that it will not be railroaded as they will be “transparent” in all the hearings. — With Wendell Vigilia and Raymond Africa
