WE RECENTLY attended a meeting of the Legislative-Executive Development Advisory Council (LEDAC), during which the leaders and members of both the Senate and the House of Representatives brainstorm with representatives of the Executive branch on the prioritization of bills for approval. Through the LEDAC, the administration will be able to convey its list of priority bills that are in line with its agenda for the short term and for the succeeding years. It is good that this process is back and executed on a regular basis. This will help the legislature map out its work over the course of the year and ensure that the bills approved will be acted upon positively by the President once it reaches his desk.
A total of 10 bills were identified for approval by June 2 or before Congress adjourns its first regular session. One of these is the proposed Maharlika Investment Fund (MIF), the Philippines’ version of the sovereign wealth fund (SWF) that many industrialized and developing countries have utilized to promote economic development in their respective jurisdictions. At present, the House has approved House Bill 6608 with an overwhelming majority vote of 279-6. In the Senate, there are two counterpart bills being taken up by the Committee on Banks, Financial Institutions and Currencies: SBN 1670 filed by Senator Mark Villar and Senator Raffy Tulfo’s SBN 1814.
As proposed, initial funding for the MIF will be sourced from the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the declared dividends of the Bangko Sentral ng Pilipinas, and a portion of the gross gaming revenues of the Philippine Amusement and Gaming Corporation. Allowable investments include fixed income instruments, domestic and foreign corporate bonds, joint ventures, mutual and exchange-traded funds, NEDA-approved infrastructure projects, and loans and guarantees to investors for public interest. All income earned from the MIF will go to poverty and subsistence subsidies and to social welfare programs and projects, excluding infrastructure projects.
A Maharlika Investment Corporation will be created to manage the MIF, its investments and assets. The Board will be composed of the Secretary of Finance as the chairperson, a chief executive officer, the presidents of LBP and DBP, six regular members representing the contributors to the fund, five independent directors from the private sector, the academe, business sector and investment sector.
Prior to the conduct of hearings by the Committee on Banks, the economic managers briefed us on the MIF and tried to answer any questions we had about the fund. I have expressed my concerns in the past about the original plan to include the pension funds held by the Social Security System and the Government Service Insurance System insofar as I did not want to expose these funds to any investment that carries with it some degree of risk. I’m relieved that this was eventually omitted in HB 6608 and in the two Senate bills. In response to queries from the media, I suggested the use of idle assets of the government, either through their outright sale or via joint ventures so that these could be put to good use.
After hearing the presentation of the economic managers, I have to say that the bills, in their present form, need a lot of fine tuning. One thing that immediately crossed my mind was the matter of having a level playing field. The MIF will be allowed to invest in a number of financial instruments and sectors that will in effect compete with the private sector but with the advantage of being exempted from certain taxes. I anticipate that this would eventually lead to some concerns being raised with regard to the issue of fairness.
There is also the issue of safeguarding the fund, which is for most people, including the public, the most important aspect that must be addressed in the discussion of these bills. The proponents of the MIF have said that there will be tight safeguards incorporated into the bills and that transparency and accountability will be ensured in the management of the fund. There are many SWF success stories such as Norway, China and Singapore, but there are also cautionary tales, foremost of which is that of Malaysia and its 1Malaysia Development Berhad or 1MDB.
President Ferdinand Marcos Jr. has asked us to study the bills carefully and to come up with the best version possible. I expect that the Senate will go through the MIF bills with a fine-toothed comb, with a critical eye and then work on improving it with the goal of making it redound to the public interest in greater fashion. We have to be very careful that in pursuing these aspirations, we will not end up creating something that could work against us in many different ways.
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Sen. Sonny Angara has been in public service for 18 years—9 years as Representative of the Lone District of Aurora, and 9 as Senator. He has authored, co-authored, and sponsored more than 330 laws. He is currently serving his second term in the Senate.
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Email: sensonnyangara@yahoo.com| Facebook, Twitter & Instagram: @sonnyangara/PN
