Groups say Maharlika Fund has ‘insufficient safeguards,’ ask what about health worker benefits?

The proposed sovereign wealth fund or the Maharlika Investment Fund (MIF) does not have enough safeguards to protect public funds from losses or being looted, Bayan Muna chairperson Neri Colmenares said Monday.

Colmenares expressed his sentiments during the public consultation on House Bill 6398, which allocates as capital for the proposed fund P250 billion from state financial institutions—including pension funds SSS and GSIS—and P25 billion from the National Treasury. Other contributions will come from BSP and Philippine Amusement and Gaming Corporation, and even the General Appropriations Act if need be. 

“Somebody asked, sino ang sasagot kapag nalugi ‘yan? It is not President Bongbong Marcos but the members [of GSIS and SSS] and the taxpayers who are partly funding this under the GAA [national budget],” Colmenares said.

“Safeguards? The bill states the fund will be exempted from regulatory restrictions. It is exempted from the Procurement law which was crafted to prevent lack of public bidding. It will be exempted from tax laws, not only the Maharlika fund transaction but all those connected and related transactions. Given that, what will be left for the COA [Commission on Audit] to audit?” he added.

In addition, Colmenares said that Section 11 of the bill also provides that the Maharlika fund can invest in joint venture agreements, including with foreign citizens, which would be in violation of the Constitutional provision that limits foreign ownership to 40%.

Colmenares then argued that the government should instead use the P7 trillion borrowed by the former administration of Rodrigo Duterte to fund the MIF instead of dipping its hands into the state pension funds and taxpayers’ money.

“[I]t is not right to say this initiative does not have any risk. In fact, there are insufficient safeguards,” Colmenares added.

Alliance of Health Workers (AHW) and House Deputy Minority Leader France Castro, for her part, said the government should instead fund health workers’ benefits, which are provided by law but are unfunded to this day, as well as the increase in pension of GSIS and SSS retirees.

“Majority of GSIS members are from the education sector, and the GSIS dividends given to them are so paltry at P100 to P1,000. The GSIS is also against lowering the retirement age to 56 from 60, saying it will decrease GSIS’ fund life. There are also proposals to increase the pension of those GSIS pensioners who only receive P5,000 a month. These are the things which we must pursue if we want to help our people,” Castro said.

“When it comes to these things, you say you don’t have funds, but for the Maharlika fund, you have P125 billion,” Castro added.

AHW’s Robert Mendoza also pushed for the funding of health workers' benefits.

“The health emergency allowance for health workers has long been signed into law by former President Rodrigo Duterte but until now, it remains unfunded. The health workers are demoralized already,” Mendoza said.

GMA Integrated News has reached out to Malacañang and to bill author Speaker Martin Romualdez for comment.

In a statement, House Ways and Means chairperson Joey Salceda, a proponent of the wealth fund, said that "all concerns raised" will be addressed, and that the technical working group's version of the bill is "still evolving."

Salceda's statement also said that tax provisions of the MIF Act that have been approved "ensure that the benefits of the tax savings go purely towards the investment fund, increasing potential returns for the SSS and the GSIS."

"Some P680 million in tax savings will inure to the fund every year as a result of this exemption. That goes towards making the SSS and GSIS funds more robust. That means more funds for pensions," he said.

Salceda also said that other safeguards have been proposed, including an amendment that the fund's transactions shall abide by the "arm’s length principle," and a proviso that at least one independent director shall be an SSS or GSIS member or pensioner.

In a separate statement, former senator Paolo Benigno Aquino IV said that his proposal creating a sovereign wealth fund back in 2016 was made under different circumstances.

“Ibang iba ang ekonomiya noong 2016 at ngayon—maganda ang takbo ng ekonomiya, mataas ang economic growth, mababa ang utang ng gobyerno, at mababa rin ang inflation. Ngayon, bumagal ang ekonomiya dahil sa pandemya, at mataas ang presyo ng bilihin,” Aquino said.

(The economy in 2016 was very different from what it is now. Back then, the economy was running well, economic growth was high, government debt was low, and inflation was also low. Now, we are experiencing a slowdown due to the pandemic, and the prices of basic commodities are high.)

The inflation—the rate of increase in the prices of consumer goods and services—jumped to 7.7% in October from 6.9% in September according to the Philippine Statistics Authority (PSA) last October 3. The 7.7% inflation rate is the highest in 14 years, also according to PSA.

“Marami sa mga kababayan natin ang nangangailangan ng tulong sa pang-araw-araw na gastusin ng kanilang pamilya. Palagay ko, mas kailangang mabigyang prayoridad ito dahil ito talaga ang hinahanap at kailangan ng ating mga kababayan,” he added.

(A lot of Filipinos need help with their everyday expenses. This should be prioritized since this is what the people need.) — BM, GMA Integrated News