Finance Secretary Benjamin Diokno, the administration's chief economic manager, is asking President Ferdinand Marcos Jr. to certify as urgent the bill creating the country’s own sovereign wealth fund called Maharlika Investment Fund (MIF).
JUST IN: Finance Secretary Benjamin Diokno is asking President Ferdinand Marcos Jr. to certify as urgent the bill creating the Maharlika Wealth Fund. pic.twitter.com/oA7zpXRbHt— Ted Cordero (@Ted_Cordero) December 15, 2022
“This is to respectfully request His Excellency to certify as urgent House Bill (HB) No. 6608, establishing the Maharlika Investment Fund (MIF or ‘Fund’), filed as Committee Report No. 237 by the Committees on Bank and Financial Intermediaries, Appropriations, and Way and Means,” Diokno said in a letter to the President dated December 13, 2022.
Once the bill is certified as urgent by the President, Congress can approve the measure on second and third reading within the same day, dispensing the three-day rule in between the readings.
Under the proposed Maharlika Investment Fund (MIF), previously called the Maharlika Wealth Fund, the seed funding will come from Land Bank of the Philippines with P50 billion, the Development Bank of the Philippines (DBP) with P25 billion, and dividends and profits of the Bangko Sentral ng Pilipinas (BSP).
The proposed sovereign wealth fund was originally aimed to have an initial capitalization of P275 billion with P175 billion coming from the Government Service Insurance System (GSIS) and the Social Security System (SSS), but lawmakers removed the pension funds as funding sources to ease public opposition.
With the seed funding, the proposed measure seeks to allow the government to invest surplus reserves in real estate and financial assets for more gains.
The measure is backed by the government’s economic managers led by Diokno, who said that criticisms of the measure come from those who have yet to read it in full, as safeguards will be put in place to ensure transparency.
The proposed Maharlika Investment Fund (MIF) bill has at least 275 authors so far at the House of Representatives.
Based on the list released by the Office of the Speaker Martin Romualdez of Leyte, his co-authors of the measure include the following:
- Manuel Jose Dalipe of Zamboanga City
- Stella Quimbo of Marikina
- Ferdinand Alexander Marcos
- Yedda Romualdez of Tingog party-list
- Jude Acidre of Tingog party-list
- Irwin Tieng of Manila
- Joey Salceda of Albay
- Camille Villar of Las Piñas
- Roberto Puno of Antipolo
- Inno Dy of Isabela
- Dong Gonzales of Pampanga
- Neptali Gonzales II of Mandaluyong
- Rex Gatchalian of Valenzuela city
- former President Gloria Macapagal-Arroyo, among others.
In his letter, the Finance chief told Marcos that the measure is seen to shore up the government's effort to create jobs, promote trade and investments, strengthen connectivity, expand infrastructure, and achieve energy and food security.
As among the safeguards, Diokno said the MIF should be professionally managed and administered by an independent entity called Maharlika Investment Corp. (MIC).
“The MIF and the MIC comply with the ‘Santiago’ Principles, which pertain to the set of Generally Accepted Principles and Practices voluntarily endorsed by the International Forum of SWF members,” he said.
“This represents best practices for operations of SWFs,” he added.
Diokno also said the fund “will be subject to strict investment and risk management guidelines, and is authorized to invest only in financial instruments and development projects approved by its board of directors.”
“Investments in real estate, infrastructure, and other development projects, however, shall be limited to National Economic and Development Authority (NEDA) Board — approved major capital projects to ensure that these are in line with the socio-economic development program of the government,” the Finance chief said.
Diokno also stressed that the MIC is barred to hold a controlling stake in its investee companies, and shall not be directly involved in their day-to-day management and operations.
The 15-member MIC Board of Directors, chaired by the Finance secretary, shall ensure that the investment policies formulated are consistent with the objectives of the MIF, and subject to periodic review, he said.
The MIC will also have an advisory board composed of the secretaries of the DOF, Department of Budget and Management, director general of NEDA, and the national treasurer.
“The Advisory Body shall provide assistance, guidance, and advise to the Board of Directors regarding formulation of general policies or plans and projects of the MIF. However, the Advisory Board will not take part in the management or control of the MIF,” Diokno said.
The MIC will tap an internal auditor, as well as an internationally recognized auditing company and the Commission on Audit to ensure transparency, accountability and protection to the fund.
“There shall also be an Oversight Committee to oversee, monitor and evaluate the implementation of the proposed,” Diokno said.
MIC is also tasked to contribute to government’s social welfare projects, as the company requires by law to remit 20 percent of its net profits to fill state coffers, the Finance chief said.
“Finally, the proposed bill provides penalties for erring directors, trustees, or officers who willfully and maliciously violates investment policies and guidelines set by the Board of Directors,” Diokno said.
The Finance secretary told the President that a sovereign wealth fund is a tried and tested investment vehicle used by developed and developing economies, such as the Indonesia Investment Authority (INA).
According to Diokno, Indonesia’s SWF may be used by the Philippines as a model, whose funds were tapped to finance in big ticket infrastructure projects even amid the COVID-19 pandemic.
“In the near and medium term, the MIF is expected to enhance the country’s fiscal space and reduce fiscal pressures as the fund pursues public infrastructure projects, as well as reduce uncertainties,” he said.
“We underscore that the establishment of the MIF will generate intergenerational benefits, which increases the future generations’ access to income from investments (e.g., potential earnings from extracted natural resources such as in mining),” he added.
“Ultimately, the immediate enactment of HB No. 6608 will redound to our country’s growth and help us achieve economic transformation towards inclusivity and sustainability,” Diokno said.
Albay Representative Joey Salceda welcomed Diokno's call.
"If so we can approve in House on 3rd reading and signify our collective will, 99% co-authors behind the idea. But Christmas will take over till Jan. 23. And the Senate is another thing," he said in a message to GMA News Online.
Senate Minority Leader Aquilino "Koko" Pimentel III, on the other hand, expressed hope the President will not certify the bill as urgent, saying there is not need for it.
"The presidential certification is for legislative measures which are urgently needed in order to meet a public emergency or calamity. Sige nga, please ask Sec. Diokno, what emergency or calamity is there now present which the Maharlika Fund is intended to be able to immediately address, help, or alleviate?" he said in a message to GMA News Online.
"If the President issues the certification then this is clearly an abuse already of presidential prerogatives and powers. Hence I sincerely hope, for the sake of the Rule of Law, that President Marcos will NOT certify the Maharlika Fund bill as 'urgent'," he added.— with Llanesca T. Panti/AOL/RSJ, GMA Integrated News