THE Department of Finance (DOF) on Tuesday played down the concerns of some lawmakers on the potential risk to government financial institutions (GFI) and government-owned or -controlled corporations (GOCC) investing in the proposed Maharlika Investment Fund (MIF).
In an interview with reporters in Malacañang, Finance Secretary Benjamin E. Diokno said there are existing safeguards that prevent GFIs and GOCCs from being ruined by poor investments.
Among such measures, he said, is the restriction in the amount of their funds which they allocate for investments.
In the case of the Land Bank of the Philippines (LBP), he said, the GFI can only invest 3 percent of its total “investable funds.”
“Actually its [LBP] investable fund is more than 1 trillion [pesos]. But it can only contribute P50 billion of it [for investments],” Diokno said.
Similar investment limits, he said, also apply to the Social Security System (SSS) and the Government Service Insurance System (GSIS).
DOF made the pronouncements after Senate Minority Leader Aquilino Pimentel III warned in a television interview that the MIF can bankrupt financial institutions if it fails.
Diokno, however, insisted such concern is “baseless” since GFIs and GOCCs also have boards and “risk committees” to protect their interests.
“They are presidential appointees [but] they act in the best interest of the company,” Diokno said.
Senator Risa Hontiveros expressed concern on the alleged “backdoor provision” in Senate Bill (SB) No. 2020 allowing GFIs and GOCC to “gamble” their funds by investing in the MIF.
The lawmaker said the Senate should remove the said provision, similar to what the House of Representatives did in its own version of the MIF legislation, House Bill (HB) No. 6088.
In the Senate version, SSS and GSIS may “volunteer” to invest in MIF within the parameters set by their charters. She expressed concern they will invest a portion of the pension funds of their members in the MIF. She earlier noted that the heads of these GFIs are appointees of the Executive, which puts in question their independence in judging the soundness of investing their agency’s funds in MIF.
Diokno, however, said the GFIs and GOCCs should be given the opportunity to allocate more funds in the MIF, especially if it will allow them to increase their revenues.
“For example, SSS, [its investments] are very limited. They are mostly in treasury bills. Now, if you give them the opportunity to invest in infrastructure projects like tollways for example, and they will earn a 20-percent return, why will they be prohibited from doing that?” the DOF chief said.
President Ferdinand R. Marcos Jr. has included the MIF as part of his administration’s priority legislation to help the government increase its investments in strategic and commercial projects to promote fiscal stability and strengthen the top-performing GFIs.
The House of Representative passed the bill, HB 6088, on third and final reading last December, while the Senate is trying to finalize SB 2020 before Congress goes on a two-week break.
Image credits: Roy Domingo