THE House of Representatives will approve the proposed P270-billion Maharlika Wealth Fund on second reading before the Christmas break of the Congress on December 17.
This was announced by House Majority Leader Manuel Jose “Mannix” M. Dalipe, one of the authors of House Bill (HB) 6398 or the proposed Maharlika Wealth Fund Act (MWFA).
“As far as the Committee on Rules is concerned, we can approve the bill on second reading this December,” Dalipe said.
Earlier, Albay Rep. Edcel C. Lagman asked Congress not to fast-track the approval of HB 6398.
Lagman said the proposal must pass the “furnace of exhaustive legislative debates and searching scrutiny.”
The measure proposes to initially exact funding a total of P270 billion for future investments from top government financial institutions (GFIs), such as the Government Service Insurance System (GSIS) and the Social Security System (SSS) and national government.
Step back
HOUSE Deputy Minority Leader and Bagong Henerasyon Rep. Bernadette Herrera-Dy encouraged her fellow lawmakers to take a step back and examine its mechanics more cautiously.
“The theory behind a sovereign wealth fund is very sound and many developed countries have used it as an effective way to manage assets and pursue development projects,” Herrera said.
“With that being the case, the Philippines has the opportunity to model our own fund based on the successful best-practices of other nations. Unfortunately, even the source of funds of the MWF raises a number of serious questions,” she added.
The lawmaker provided “a simple analogy.”
“Imagine a cooperative fund that was put up by security guards, or delivery riders, for example. Would it make sense if these funds were used to benefit someone who was never a security guard or a delivery rider?,” she said. “Or how about the association dues of a private village or community? Can this be used to aid someone who never lived there and never contributed to the pooled fund?”
Similarly, since the SSS and GSIS are consolidated funds that are collected from registered members, Herrera feels that using these to benefit non-members and non-contributors may be a violation of their respective charters.
Intent, function
THE lawmaker, likewise, advised that the fundamental intent and function of the proposed MWF be clarified.
According to Herrera, “normally, there are two types of funds—one to manage surplus resources such as foreign exchange or natural resource revenues and the other to manage state assets or to implement development projects.”
“Singapore, for instance, has two SWFs: GIC, to manage and invest its foreign exchange and Temasek, to operate state assets,” she explained.
Building on this point, the lawmaker cited the emotional and financial gravity involved in the source of funds.
“We are talking about GSIS and SSS contributions here, which are quite literally something that countless Filipinos have worked all their lives to build. Retirees, the elderly, those who get sick, or injured on the job—they are counting on these funds to help them during difficult times,” Herrera added. “Wealth building and high returns should not be the investment strategy of the GSIS and SSS. Rather, it should be to ensure the safety of the principal as much as possible.”
Value-added benefits
HERRERA also wants to know the value-added benefits the MWF can bring to the country.
The bill said that the MWF adheres to the principles of good governance, transparency and accountability. The fund shall be sourced from the investible funds of the country’s top performing GFIs, the Treasury of the Philippines and Bangko Sentral ng Pilipinas.
The bill said the fund shall be used to invest on a strategic and commercial basis in a manner designed to promote fiscal stability for economic development and strengthen the top performing GFIs through additional investment platforms that will help attain the national government’s priority plan.
The establishment of the MWF was patterned after the sovereign wealth fund of other countries, to maximize the profitability of investible government assets.