Senate to look into proposed Maharlika fund's necessity —Zubiri
The Senate will look into the necessity of the proposed Maharlika Investment Fund, Senate President Juan Miguel Zubiri said Friday, as he emphasized the need for full transparency and efficient utilization of taxpayers' money should the government push for its creation.
In a statement, Zubiri said he will ask a Senators Sonny Angara, Sherwin Gatchalian, Grace Poe, Mark Villar and Alan Cayetano, who chair the committees on Finance, Ways and Means, Economic Affairs, Banks and Financial Institutions and Government-Owned and -Controlled Corporations, respectively, to look into the proposal and give the Senate a feedback on the essence of the fund.
"We must first ensure [that] the Sovereign Wealth Fund is necessary... If so, we need to ensure that it is managed properly and the safeguards are in place so that it would not be misused or prone to corruption," he said.
"We must make sure the there is full transparency and efficient utilization of this fund," he added
Gatchalian made a similar statement, saying full transparency and checks and balances must be in place if the Philippine government will push for the creation of a sovereign wealth fund.
In an interview with reporters, Gatchalian said the Philippines is "ready" for the creation of the sovereign wealth fund and that there are measures that can be established in the law to address possible corruption.
"Ready naman tayo sa ganito. Para sa akin importante d'yan 'yung safeguards at importante 'yung investment. Nakikita ko sayang ang pera kung hindi malalagay sa magandang investment," said Gatchalian, vice chairman of the Senate Committee on Banks, Financial Institutions, and Currencies.
(We are ready for something like this. For me it's important to have safeguards and also investments. The fund will be wasted if it will not be properly invested.)
"'Yung corruption maa-address 'yan through safeguards. Importante may safeguards tayo. Kaya doon sa batas, titignan natin ang safeguards, 'yung professional management and of course, 'yung transparency," he added.
(The corruption can be addressed by safeguards, that's why it's important to have safeguards. So we'll ensure that there will be safeguards in the law, as well as professional management and of course transparency.)
For Gatchalian, the fund manager will play an important role to protect the investments from corruption. In other countries, he said, there is a professional board and a professional manager that handles the investments.
Another way of ensuring full transparency in the handling of funds is through periodic reports to Congress, Gatchalian said.
An oversight committee in the Senate can also be created to ensure that the funds invested are properly monitored, he added.
Although the funds that will be used to invest are not as huge as those from other countries with sovereign wealth funds, Gatchalian believes that there are excess funds that the government can use for its investments.
"'Yun (excess funds) ang puwede nating i-maximize para ang returns niya mas malaki [We can maximize those excess funds so they will have bigger returns]," he said.
On the other hand, Senator Imee Marcos expressed fears that the proposed Philippine sovereign wealth fund might suffer the same fate as Malaysia's 1Malaysia Development Berhad (1MDB), which was hounded by graft issues.
Marcos, sister of President Ferdinand "Bongbong" Marcos Jr., also questioned the timing of the creation of the sovereign wealth fund given the current economic crisis and the government's unpaid foreign debts and unfunded social services.
For Deputy Minority Leader Risa Hontiveros, the creation of a sovereign wealth fund with a word "Maharlika" in it reminds her of the legacies of the martial law.
"Makarinig lang ako ng salitang Maharlika, medyo nagkaka-heebie-jeebies din ako diyan eh. It's part of the legacy of the martial law dictatorship, yung myth-making na talagang sinusubukang pigain, to really milk it, nire-rehabilitate yung ala-alang iyon, to the detriment of accountability for human rights violations and plunder of the past," Hontiveros said in a television interview.
(I get heebie-jeebies whenever I hear the word Maharlika. It's part of the legacy of the martial law dictatorship, the myth-making, to really milk it. They try to revive it to the detriment of accountability for human rights violations and plunder of the past.)
"And speaking of plunder...Ngayon ina-articulate pa na baka i-mobilize dito sa sovereign wealth fund na ito 'yung mga pera ng mga miyembro ng SSS, GSIS, Pag-ibig," she mentioned.
(And speaking of plunder...They are saying that the money of the members of SSS, GSIS, Pag-ibig will be mobilized for this sovereign wealth fund.)
The opposition lawmaker said the government must deliberate carefully on these proposals as pension funds are still owned by the members of the said institutions.
"Given very strict rules, [implementing rules and regulations] laid out in the charter, hindi basta-basta pwedeng angkinin lamang ng estado (the state cannot just take over), because in those pension institutions, they are state funds, yes, but held in trust by government for the members, ang mga mamamayan (the people)," she said.
Albay Representative Joey Salceda, who chairs the House ways and means committee, defended the measure establishing Maharlika Investment Fund (MIF) that was filed in the chamber, saying it has enough safeguards.
“There is a provision for a risk management unit, Board of Directors chaired by the President, and Investment Committee,” Salceda said in an interview on Dobol B TV.
Salceda also stressed that the MIF measure will allow government financial institutions (GFIs) to diversify their investment portfolio and fund crucial government projects under off-budget or unfunded items in the national budget.
“As it is, SSS and GSIS have a lot of restrictions on investment portfolios. This (MIF) will diversify their fund and give them leeway to invest to earn more for their members and the national government, too. It can fund crucial government projects such as creeks, dams, which we hugely lack and need,” Salceda said.
“The possibility of returns, yields, earnings is high and these investments will be guaranteed by the national government. This will be the single biggest economic move of the Marcos administration.”
Salceda cited the case of Norway, which came up with a sovereign oil fund in 1996 that continues to grow to this date.
“The important feature of this (Norway model) is that the government allowed to spend income from the fund only in real returns, that is income over and above the inflation rate. If the fund return was 5% and Norwegian inflation rate was 2%, they could withdraw only 3%,” Salceda told GMA News Online.
“The fund grew every year, and the first withdrawal only happened in 2016.”
Salceda also said that since then, the Norwegian fund invests in thousands of companies around the world, their holdings estimated to account for 1% of global market capitalization.
On Thursday, Senate Minority Leader Aquilino "Koko" Pimentel said the proposed Maharlika Investment Fund (MIF), which has already hurdled a House panel, will undergo a rigorous scrutiny in the Senate, as there are a lot of questions that need to be answered, including the government’s capability to fund it.
“What will fund this? Where are the 'excess revenues'?" Pimentel said when asked if the minority will support the measure filed in the House of Representatives
"Will ask extensively searching questions about this. How will it be funded in the first place? How will it work in the long run? Will ask by analogy questions concerning SSS, GSIS, etc. Other matters: appointing power, transparency, [Commission on Audit], paper income, etc. MADAMING KAILANGAN SILANG IPALIWANAG," he added.
So far, there is no counterpart measure filed in the Senate for the creation of a sovereign wealth fund.
During the 17th Congress, Senator JV Ejercito and former Senator Bam Aquino filed two separate bills calling for the establishment of a wealth fund. Gatchalian said these were not tackled because they were not considered priority at that time. —with Llanesca T. Panti/KBK/AOL, GMA Integrated News