SENATORS prodded economic managers on Monday to move fast on the privatization of assets that they described as “less controversial” sources of seed funding for the proposed Maharlika Investment Fund (MIF), encouraged by an initial priority list that was provided them, which could raise a total of P130 billion in three years.
At the third joint hearing led by the Senate Banks committee chaired by Sen. Mark Villar, officials of the Department of Finance were asked to list down the big-ticket assets that are deemed convertible into cash for funding MIF in the next three years.
This, as Sen. Sherwin Gatchalian noted that with P130 billion, there should no longer be a need to require government financial institutions to put up the initial fund for Maharlika.
More especially, added Gatchalian, there should be no need to bother the Bangko Sentral ng Pilipinas (BSP) to pour in its dividends into the fund, given projections that this would delay the mandated capitalization buildup of the BSP by nine years.
Asked for the initial priority list of doable privatization initiatives, officials cited mining rights, seen to bring in P100 billion; followed by the Food Terminal Inc. (FTI) site in Taguig City, seen to fetch an estimated P22 billion; and other sources, P8 billion.
Also at the hearing, BSP officials were asked how they arrived at the conclusion that they can live with a nine-year delay in their capitalization buildup timeline, given the real risk that shocks could emerge that would require a central bank with enough financial muscle to respond quickly and adequately.
“What calculations did you make that made you willing to delay your capitalization buildup by nine years” if the BSP is mandated by the proposed Maharlika law to pour in its dividends into the Fund? asked Gatchalian.
He was reacting to information provided by BSP that, if it were not required to contribute to the MIF’s seed fund, it could complete its capitalization buildup in eight years. But if it does provide initial contribution to the MIF, that timeline stretches to 17 years.
“So many things can happen in 17 years,” stressed Gatchalian, adding that it is “too long” a period to risk having the central bank exposed with inadequate capital given what is happening in the world.
He noted that the size of the Philippine banking industry “was the main reason” for ramping up the BSP capitalization buildup program several years ago, and stretching this process over a long period would further put the central bank in an awkward situation of being dwarfed by the assets of the entities it regulates.
The NDC template
Also at the hearing, senators Nancy Binay and Risa Hontiveros inquired at length into the mandate and operations of the National Development Corp. (NDC), which Minority Leader Koko Pimentel sought to be invited at the last hearing, saying it might be better to boost the NDC resources instead of building from scratch a new entity like the Maharlika Investment Corp.
NDC general manager Antonio Mauricio described NDC as a non-bank government financial institution that, however, is provided with relatively meager resources.
“If we give you P75 billion from Land Bank [of the Philippines], can you level up your operations?” Binay asked of NDC officials, as a theoretical question.
As the government’s main investment arm, the NDC is under the Department of Trade and Industry (DTI) and is chaired by the DTI secretary.
Created in 1919 as a semiprivate corporation, it became a state corporation in 1936, mandated to pursue commercial, agricultural, industrial and national economic development under Presidential Decree 1648.
Image credits: Bibo Nueva España/Senate PRIB