Maharlika Investment Fund bill passed by Congress amid controversy

RG Cruz, ABS-CBN News

Posted at May 31 2023 09:11 PM

President Ferdinand Marcos Jr. delivers his first State of the Nation Address at the Batasan Complex as Senate President Migz Zubiri (L) and House Speaker Martin Romualdez look on in July 2022. File/Jonathan Cellona, ABS-CBN News
President Ferdinand Marcos Jr. delivers his first State of the Nation Address at the Batasan Complex as Senate President Migz Zubiri (L) and House Speaker Martin Romualdez look on in July 2022. File/Jonathan Cellona, ABS-CBN News

MANILA — The Maharlika Investment Fund (MIF) bill now only needs President Ferdinand Marcos Jr's signature for the controversial measure to become law.

The House of Representatives on Wednesday adopted Senate Bill 2020 or the Senate's version of the bill creating the sovereign wealth fund, paving the way for the bill to be sent to Marcos for signature.

The 19th Congress passed the measure before adjourning its First Regular Session.

Lawmakers from both chambers met earlier Wednesday which led to the House panel deciding to adopt the Senate's version.

Albay 2nd District Rep. Joey Salceda, one of the advocates of the MIF in the chamber, said the MIF could be the first sovereign wealth fund created by the government as he explained why the House went with the Senate version instead of insisting on their own.

"The Maharlika Investment Fund is the first but it does not have to be the last sovereign wealth fund that the government can create. The House has decided to adopt the Senate version, so that the Executive can begin crafting the rules and regulations – which no doubt will be as significant as the law itself. We expect the President to announce that he has signed it by SONA," Salceda said in a statement.

Salceda said the bill kept state pension funds out of the MIF.

"As promised, the MIF will not touch the funds of the SSS, GSIS, Philhealth, or HDMF. We are thankful for the Senate for retaining most of the accountability and transparency safeguards established by the House," Salceda said.

Salceda also said he suggested involving multilateral institutions and the stock market.

"To refine the implementation, I raised some points during our pre-bicameral conference meeting that I hope can be addressed by the Executive. First, I suggested that we allow multilateral financing institutions like the World Bank and the Asian Development Bank to be strategic partners with a stake in the founding of the MIF.

"These banks bring in not only capital, but also experience, institutional expertise, and international credibility to the Fund. I also suggested that we make [a] provision for listing in the stock market. The Senate version, which we adopted, can allow for that in the implementing rules and regulations. Listing, of course, subjects the MIF to more transparency and public accountability standards," Salceda explained.

The lawmaker pointed out that the implementing rules also need to clarify the extent of coverage by the Civil Service Commission. 

"While the Senate version provides for compensation rules, we can clarify in the IRR how the CSC will regulate MIF employees," he said.

Salceda, however, has some reservations.

"I appreciate the Senate’s effort to remove special exemptions, including tax exemptions. I agree with the point that government neutrality is a desirable element in an investment corporation. But I expressed my reservations on requiring regular dividends out of the MIF.

"The point of an investment company is to compound its funds, and dividend remittances even when the Fund can achieve a bigger return, can reduce the power of compounding. While the Treasurer has assured me that the President can exempt the MIF from dividends, I hope they give the MIF sufficient time to compound its funds," he said.

Salceda requested that members of the Board, during meetings, attend themselves and are not represented by proxies.

Members of the Makabayan bloc meanwhile manifested their objections to the creation of the MIF after the approval.

"Marcosian na pagsusugal ito ng pondo ng bayan para sa pribadong ganansya, sa panahong lubog pa rin ang milyung-milyong Pilipino sa mababang pasahod, gutom at kahirapan. Kalahating trilyon ang isusugal at isesentralisa sa Maharlika Investment Corp., pero kapag nalugi, walang mananagot sa pamahalaan. Taumbayan ang papasan ng lugi at nawaldas na pondo ng mamamayan," Gabriela Party List Rep. Arlene Brosas said in her manifestation.

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The solon added that while state-managed pension agencies had been removed as sources of funding for the MIF, it will still tap the state-owned Landbank, Development Bank of the Philippines, and even dividends from the Bangko Sentral ng Pilipinas. 

"Kapag pumalpak ang investment ng gobyerno sa ilalim ng Maharlika, malalagay sa panganib ang Philippine banking institution. Wala tayong napala, nasira lang lalo ang ating ekonomiya.

She reiterated that the Philippines does not have the surplus funds normally used for investment in a sovereign wealth fund.

"We are trying to pass a sovereign wealth fund as if we have a surplus, as if we have a strong economy. And we all know that is not the reality. We could've used our time and energy in passing meaningful legislation, but here we are railroading Maharlika Investment Fund despite strong opposition from the public."

House Deputy Minority leader and ACT Teachers party-list Rep. France Castro, on the other hand, described the measure as a "massive pork fund" of the President that may worsen the country's debt, while affecting funds intended for social services.

"Sa kalagayang lumobo na nga ang pambansang utang sa P13 trillion, sa kalagayan ng perpetual deficit ng bansa sa pondo, at sa kalagayang palaging inuuhaw ang public schools, hospitals, at iba pang institusyong nagbibigay ng batayang social services, magtatayo pa ng diumano’y “investment vehicle” na sa katotohanan ay magpapalala pa ng fiscal deficit, lalo pang magpapalobo ng utang na babayaran ng bawat Pilipino hanggang sa mga susunod na henerasyon, at lalong sisipsip sa pondong dapat ilaan sa basic social services na inaasahan ng mga mamamayan, lalo na ang mga mahihirap," Castro said.

Economic managers meanwhile downplayed these concerns and said the MIF will be good for the country.


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