THE chairman of the House Ways and Means committee on Wednesday defended the Maharlika Investment Fund (MIF) bill, which Congress approved before adjourning sine die, from criticism by 21 faculty members of the UP School of Economics (UPSE) who described it as “beyond repair.”
Albay 2nd District Rep. Joey Sarte Salceda cited the bill’s solid policy directions, goals and mechanisms.
He pointed out that there was “no implication” in the MIF bill that the intended developmental outcomes would replace the financial returns. Furthermore, the MIF having a “dual bottomeline” goal is not something to be avoided, Salceda added.
“I also specifically explained during House discussions that at certain points, you will need a portfolio mix of long-gestating development projects and short-to-medium-term financial investments, so you can make immediate absolute returns while the longer-term investments mature,” he said.
“It would be bad if social and economic returns were presented as a substitute for absolute financial returns. That is clearly not the case here—and it’s never a bad idea to hit two birds with one stone,” he added.
Salceda claimed that “clearly” stating in the bill the policy objective of the MIF, whether it is a developmental fund or an investment fund, is a “false dichotomy.”
Citing Section 13 of the MIF bill, Salceda said the fund at its “core” is for development. He added that even President Marcos Jr. emphasized that it was the main direction of the MIF.“In unequivocal terms, it states that ‘The objective of MIF is to promote socio-economic development.’ End of story there. What follows that provision are ways to do it, not objectives,” he said.
“So, it’s mainly a development fund, and if it takes on the characteristics of an investment fund in some respects, it does so only because it necessarily has to be involved in the financial markets,” he added.
Furthermore, Salceda argued that there is no need to explicitly state that the MIF is aligned with the Philippine Development Plan since a provision of the bill already implies so.
He stressed that the MIF has “very different” objectives compared to government financial institutions despite them possibly achieving the same “socioeconomic” outcomes.
“But this is no argument against pursuing the MIF,” he said.
Salceda, who chaired the House Technical Working Group on MIF, said the proposed measure “does not encroach upon” the budget process and Congress’s power of the purse since budgetary aspects of the MIF will still require congressional approval.
“The MIF is a creation of Congress, so we do not perceive this to be an attempt to supplant the congressional power of the purse. The payment for subscription of shares by the National Government will be appropriated by Congress,” he said.
“The increase in capitalization has to be approved by Congress. There is a Joint Congressional Oversight Committee on the MIF. Even the corporate life can be sooner revoked by Congress. So, as far as the powers and existence of the MIF is concerned, Congress giveth, and Congress taketh away,” he added.
Salceda said putting a private sector-lead board to oversee the MIF is no different from a board composed of government officials in terms of accountability.
“I do not see how installing a private sector-led board will make the MIF more accountable than installing a board of government officials who are liable to more laws, rules, and regulations than private sector individuals—who may have vested interests—are,” he said.
“I also do not see why a focus on domestic investments [a tendency, the UPSE paper suggests, when political leaders are on the Board] constitutes a problem. As earlier discussed, the MIF is above all else a development fund,” he added.
In terms of the issue of “crowding in,” Salceda suggested that the MIF be listed in local and global stock changes, the easiest way, he said, for the fund to crowd in.
“That will also give additionality to the fund, instead of depending on government funds, as the discussion paper appears to warn against. That will also reduce the cost of capital for development projects pursued by the MIF, and catalyze FDIs,” he said.
“Countless experts, institutions, and opinion leaders have already argued for this approach. I reiterate my point that the language of the bill we ratified allows for this approach,” he added.