By Ding I. Generoso
LET’S start with what the word “maharlika” means. First of all, if my readings are accurate, the word has nothing to do with nobility–although most Filipinos think it so.
Maharlika, it appears, traces its roots to the Sanskrit maharddhika, a title that means “a man of wealth, knowledge, or ability.” In the old days, the maharddhika were freemen. In other words, they were the working class. If you ask me, the Tagalog word adhika may be a derivative from maharddhika, so probably in the old days, someone who worked hard to create wealth or who could create wealth was someone who was maadhika.
Now to the subject of this piece–the Maharlika Investment Fund, whose “noble” purpose, if I may venture an interpretation of the law that created it, is “the creation of more wealth” for the development of the Philippines and the uplift of the quality of life of Filipinos. That is perhaps why it is also referred to as “sovereign wealth fund.”
Well, it’s been more than a year since the Fund and the corporation tasked to manage it were created. And it has been a few days shy of one year since the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) remitted to the National Treasury P75 billion as seed capital of the Fund–as required by the Maharlika Law.
The P75 billion also represents the value of the shares of stocks held by the two government banks in the Maharlika Investment Corporation (MIC).
So perhaps, it is time to ask what wealth, if any, has been created from the Maharlika Fund?
About two weeks ago, Finance Secretary Ralph Recto, who is also the chairman of the board of the Maharlika Investment Corporation, said that “very minimal” funds have been spent out of the Maharlika Fund. The reason: the MIC has no single employee – yet – more than a year after it was established. The problem? They can’t seem to agree on the salaries.
Then a few days later, Recto announced that the Fund may start investing before the year is over – eyeing as first investment shares of stock of the National Grid Corporation of the Philippines (NGCP), the company that operates the country’s power grid.
NGCP, in case you are not familiar with it, is a private consortium that is 60 percent owned by the Sy and Coyuito families and 40 percent by the Chinese-government-owned State Grid Corporation of China. When the government decided to “privatize” the Luzon, Visayas and Mindanao power grids during the time of Gloria Arroyo, NGCP bought the grid from the National Transmission Corp., a subsidiary of the National Power Corporation. Both are owned by the Philippine government.
So now Recto wants the government (through the Maharlika Fund) to buy back a minority stake in the NGCP, just enough to have one board seat. Maybe Recto realized that sometime last year, the NGCP, during a Senate hearing, admitted that the bulk (74 to 90 percent) of its net income since 2015 went to its stockholders as dividends. And that is the most likely reason that until now all the grids under NGCP have barely seen improvement since it was granted the franchise by Congress more than 10 years ago.
Recto wants to cash in on the greed of the grid operators to show good earnings for the Fund from its initial investment. Not bad thinking at all.
But I have another beef with the Maharlika Fund–specifically the P75 billion that it has held for a year now.
Recto is to be commended for spending very little of it because, as he said, they don’t have any employees yet. But then, a few days ago, he also proudly announced that during the last 365 days or so, the P75 billion earned P1.5 billion in interest. Not bad.
P1.5 billion is two percent of P75 billion, most likely interest on a savings deposit, which any Tom, Dick and Harry with little knowledge of investment will tell is no way to invest and no way to earn.
But why is this so?
Because the P75 billion has laid idle in the vaults of Land Bank and DBP for a year under the account of the National Treasury (in the name of the Maharlika Investment Fund/Corp.). Neither Land Bank nor DBP can touch the Fund without the say-so of the National Treasury or the MIC.
So, the P1.5 billion that Recto refers to as “interest earning” is actually interest paid by Land Bank and DBP on the deposit account of the National Treasury.
But wait, isn’t the P75 billion money of the Land Bank and DBP to begin with? So, in reality, Land Bank and DBP paid interest on its own money that it cannot use–whether invest or lend to other borrowers–because it is tied up in the non-performing Maharlika Fund.
That’s what you call Maharlika double jeopardy.
Meantime, Recto insists on getting money from PhilHealth to finance “unfunded” programs in the General Appropriations. Mr. Secretary, how about using the P75 billion Maharlika Fund?
