MANILA -- The Senate finally tackled Wednesday the proposed Maharlika Investment Fund following its passage last year in the House of Representatives.
The Senate Committee on Banks, Financial Institutions and Currencies led by Sen. Mark Villar opened the public hearing on the bill seeking to establish a sovereign wealth fund.
"The bill seeks to create the Maharlika Investment Fund which will be used to invest in programs and projects which may help generate income and in attaining the government's economic plans," Villar said.
During the hearing, senators took turns scrutinizing the proposed MIF.
Sen. Risa Hontiveros warned that the MIF may instead become a “liability fund” that will balloon the nation’s "already enormous" foreign debt since no new source of funds for the project have been identified.
“We should perhaps instead call the MIF the 'Sovereign Liability Fund' as it will be effectively funded by liabilities. There is also no assurance that the cost of borrowing will be lower than the yield to be generated by the SWF,” Hontiveros said.
In response. National Treasurer Rosalia De Leon said that the government intends to attract more equities so offshore and domestic investors, including those from the private sector, will have long-term placements in the MIF and share in the risks of the fund.
De Leon said that the additional funding in the form of equities can later reduce the fiscal pressure on government and eventually lower the country’s debt matrix.
Hontiveros also said the penalty provisions for appointees to the Maharlika Investment Corporation who will engage in graft and corruption seem to be "ridiculous and inappropriate."
“No forfeiture of ill-gotten wealth in favor of the government, no perpetual disqualification from public office for offenses committed by government officials who are members of the Maharlika Investment Corporation board, no provisions in the event fund invested is used in money laundering,” Hontiveros pointed out.
Sen. Win Gatchalian meanwhile noted that investors who would put their money in the SWF seem to enjoy "too many tax exemptions" compared to those who avail other mutual funds.
Sen. Chiz Escudero also grilled the Marcos administration's economic managers regarding the composition of the MIF's 15-member board of directors.
"Unang beses ko ata nakarinig ng korporasyon na ganyan... Bakit may academe? Nagbigay ba si academe? There must be some rhyme and reason behind it why we are choosing people to sit there," Escudero said.
Villar meanwhile welcomed the comments from his colleagues.
“We are here to open up a dialogue so that the Senate and the public can scrutinize this significant measure that may affect the future of our country. We are open to studying suggestions and other proposals or alternatives on the proposed measure.” Villar said.
Villar also encouraged public participation through social media so they may be aware of the said bill.
“The public may post their comments in the comment box. We have staff who are monitoring your questions and reactions. Please feel free to raise your concerns and questions. We will ask the resource persons some questions originating from the public to encourage the public’s participation.” Villar said
Several groups earlier warned that the proposed sovereign wealth fund poses several risks to the Bangko Sentral ng Pilipinas, calling it "fundamentally flawed and does not achieve the stated economic activities cited in its formation.”