Foreign Chambers weigh in on proposed sovereign wealth fund

Warren De Guzman, ABS-CBN News

Posted at Dec 01 2022 03:33 PM

The Joint Foreign Chambers members in a press briefing in Manila on Dec. 1, 2022. Warren De Guzman, ABS-CBN News
The Joint Foreign Chambers members in a press briefing in Manila on Dec. 1, 2022. Warren De Guzman, ABS-CBN News

MANILA –– Several foreign chambers in the country said on Thursday they were "monitoring" the progress on the proposed Maharlika Sovereign Wealth Fund. 

Some members of the Joint Foreign Chambers, which is composed of business groups from the United States, Canada, Australia, New Zealand, Europe, Japan, and Korea, said it could work but it might not be necessary to bring foreign direct investments (FDI) in at this time.

Putting up a sovereign wealth fund was proven successful in other countries, members have said. 

“We are following it with great interest. It might be something that would happen if not sooner than later, but there is very few details on the table right now, so for now we are monitoring the situation,” said Lars Wittig of the European Chamber of Commerce of the Philippines.

Scandinavia, particularly Norway, has been very successful with sovereign wealth funds and has often been used as a model for such investment endeavors. 

Wittig said it isn’t a one size fits all type of deal, and the Philippines would have to find its own formula for success.

“It has taken years to implement that kind of system. These nations are very very small, and it is much easier to create control, and there is a very high degree of trust in government. When the maturity of this country is ready, then it will also be an area to pursue further here," he added.

Ebb Hinchliffe of the American Chamber said they were quite confident that the Philippines would continue to attract foreign direct investment even without a sovereign wealth fund. 

According to the group, the country's FDI inflows could hit $128 billion by 2023 from its 2020 projection of just $50 billion.

The drivers of this optimism include multiple liberalization reforms opening up the Philippines to more foreign investment such as the amendments to Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act.

“Other countries are doing this, it seems to have been successful. I just don’t know how necessary it is in the Philippines," Hinchliffe said.

Meanwhile, Bradley Norman of the Australian-New Zealand Chamber of Commerce Philippines said they were eager to see what investment opportunities the fund would offer.

“From our point of view we are very supportive of mining and if the sovereign wealth fund being set up would assist to create further mining opportunities then it is something we would look at and certainly that would augur well for foreign direct investment,” Norman said.

House Speaker Martin Romualdez earlier led the filing of the bill seeking the establishment of a sovereign wealth fund. 

Finance Secretary Benjamin Diokno said he supports the proposed measure. Diokno added the country has the money to back the fund. 

However, an analyst said the success of a sovereign wealth fund largely depends on the check and balances as well as safeguards in place to eliminate corruption and prevent a financial crisis similar to the 1Malaysia Development Bhd.

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