UP economics faculty members say Maharlika fund intent unclear

Members of the faculty of the UP School of Economics said that the proposed Maharlika Investment Fund goes against the primary principle of economics.

According to Mariz Umali's report on "24 Oras", the faculty members said in a discussion paper that even the objective of the MIF remains unclear even after it has been passed in both houses of Congress.

"Hindi nakalagay sa bill na ano ba talaga siya sovereign wealth fund or strategic investment fund kasi marami iba't-ibang klase sa mundo," Prof. JC Punongbayan said.

They said the MIF should have something else to contribute apart from those already being done by existing government financial institutions.

"Kung tutuusin meron ng existing government agency na 'yun din layunin. So ano pa ang ambag o value added or 'yung maidadagdag pa ng Maharlika Investment Fund?" Punongbayan said.

The faculty members said there appears to be some confusion about the source of the funds.

While the proposed measure is clear that the funds will not be taken from the Government Service Insurance System and the Social Security System, it seems that the President is also saying that these could be sourced from these institutions.

They are also wary that presidential appointees will be on the MIF board.

The returns from the funds also could not be guaranteed because of the global economic climate, they added.

Punongbayan asked why there was a need for the MIF if the President was already touting the investment pledges from his foreign trips.

"Sinasabi ng gobyerno na lampas na raw ito sa P1 trillion pesos, higit na sa P1 trillion pesos pero... kung ganun pala kadali na mag-attract ng ganung klaseng investments eh bakit pa tayo magtatayo ng isang Maharlika Investment Fund?" Punongbayan said.

Sen. Mark Villar, the sponsor of the MIF bill in the Senate, has previously said that government borrowings can go down if MIF funds are invested in infrastructure.

State pension and insurance funds have been prohibited from investing in the MIF.

The government will not guarantee the bonds that will be issued by the Maharlika Investment Corp.

Albay Rep. Joey Salceda, the chairman of the House Committee on Ways and Means and one of the principal authors of the MIF bill in the House of Representatives, said there is no confusion as regards the intent of the measure.

"Section 13 of the bill clearly says that 'The objective of MIF is to promote socio-economic development.' There it is. It's a development fund," Salceda said.

"So, it's mainly a development fund and if it takes on the characteristics of an investment fund in some respects, it does so only because it necessarily has to be involved in the financial markets," he added.

"The bill makes clear that investments in financial instruments are means to an end, not an end on their own. The true goal is socio-economic development," Salceda said.

He said the Maharlika listing had been "praised by experts and opinion leaders as a good way to raise money, increase transparency, and encourage good corporate governance." —NB, GMA Integrated News