Salceda welcomes further discussion on proposed Maharlika Fund

Albay Representative Joey Salceda on Saturday said he would welcome further discussion on the proposed law establishing the Maharlika Investment Fund (MIF) to be made up of pooled investible state assets.

Salceda issued the remark after Senator Imee Marcos raised a concern 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.

“As Chair of the House TWG (technical working group) on the bill, I welcome continued discussion on the matter. I am sure Senator Marcos will also be very active in discussions once the Senate begins hearings on the bill,” Salceda said.

The Albay representative said that House Bill 6398 would still go through deliberations in both the House and the Senate, adding that a study group had been constituted on the matter.

“We can discuss the mix of assets that the fund will invest in, but some allocation for foreign securities is necessary. It diversifies the portfolio and allows the fund to take positions in potentially higher-return investments,” Salceda said.

“A fund that grows faster due to some exposure to high-return foreign investments is better than a smaller and severely constrained fund exclusively investing in domestic investments,” he said.

On specifying which investments are allowed per government financial institutions (GFI), Salceda said “this might not be possible under the current configuration.”

“Pooling of funds is a key feature and advantage of the current proposal since it maximizes the impact that GFIs can make compared to what they can achieve on their own,” he said.

He said that it can prioritize certain investments in agriculture, infrastructure, and healthcare.

“On the demand for pension fund investments to be zero-risk, the government guarantee to GFI infusions in the form of preferred shares and convertible debts would make these investments zero-risk,” Salceda said.

“Finally, on the concern about BSP investments in the form of foreign reserves, we have already amended the provision so that the BSP's required investments come from declared dividends, not foreign currency reserves from OFW and BPO remittances and income,” he added.

Under the measure, the MIF will have an initial fund of P250 billion sourced primarily from the Government Service Insurance System (P125 billion), Social Security System (P50 billion), Land Bank of the Philippines (P50 billion), and Development Bank of the Philippines (P25 billion).

The bill also mandates Bangko Sentral ng Pilipinas and Philippine Amusement and Gaming Corporation, among other government instrumentalities, to pitch to the MIF.

It also provides that “sums thereafter necessary for additional contributions of the national government will be included in the General Appropriations Act (GAA) or supplemental appropriations, as the case may be, subject to budget preparation process and authorization by Congress.”

Under the proposal, the President is authorized to appoint two independent directors to the board of the Maharika Investments Corporation, which will operationalize the disbursement and management of the MIF.

Other authors of the measure are House Majority Leader Manuel Jose “Mannix” M. Dalipe, senior Deputy Majority Leader Ferdinand Alexander A. Marcos, Tingog party-list Reps. Yedda Marie K. Romualdez and Jude A. Acidre, and Marikina City Rep. Stella Luz A. Quimbo.

So far, there is no counterpart measure filed in the Senate for the creation of a sovereign wealth fund.

Last Wednesday, Finance Secretary Benjamin Diokno said the establishment of the MIF “has been the imprimatur” of President Ferdinand "Bongbong" Marcos Jr.--the brother of Sen. Imee Marcos. — DVM, GMA Integrated News