Diokno doubts lawmakers are distancing from proposed Maharlika fund

Warren de Guzman, ABS-CBN News

Posted at Dec 09 2022 06:34 PM

Sec. Benjamin Diokno attends deliberations on the Department of Finance (DOF) and its attached agencies' P30.6-billion proposed budget for 2023 on Monday, October 3, 2022. Joseph Vidal, Senate PRIB/File
Sec. Benjamin Diokno attends deliberations on the Department of Finance (DOF) and its attached agencies' P30.6-billion proposed budget for 2023 on Monday, October 3, 2022. Joseph Vidal, Senate PRIB/File

MANILA — Finance Secretary Benjamin Diokno does not believe lawmakers are distancing themselves from the controversial Maharlika Wealth Fund (MWF) proposal, which has drawn criticism from some economists, members of the academe, and civil society groups. 

Responding to a question on how lawmakers, such as economist turned legislator Stella Quimbo, often stress that the economic team prepared the proposal, Diokno said, "I don’t think they are distancing. So just watch out."

"If they are distancing, hindi ma-approve ang bill, but let’s see if whether this [will] be approved or not. The new version is acceptable kasi 'yun lang, 'yung pension fund, parang pinapalaki nila na 'oy, member ako no'n, baka mawala lang 'yung pera.' So hindi na namin gagawin 'yon," he said on Friday. 

(If they are distancing, the bill will not be approved... The new version is acceptable because some people are just making a huge issue out of the pension funds. They say, 'I am a member, the money might just disappear.' So we will no longer do that.)

Quimbo, one of the bill's co-authors, said congressional leaders decided Wednesday to exclude pension funds as contributors. The Maharlika initiative will be seeded instead with Philippine central bank profits. 

The proposal "started on the wrong foot," she acknowledged. 

"We expected of course that there was due diligence, that there was sufficient consultation, but apparently not... But that's the beauty of legislation. Walang perfect na bill, kaya kailangan mag-participate ang tao," she told ANC. 

(There is no perfect bill, that's why the people need to participate.)
 
Diokno said Landbank and the Development Bank of the Philippines will contribute P50 billion each for the seed money of Maharlika. 

The central bank will remit 100 percent of its declared dividends for the first 2 years of the fund’s life, after which its contribution would go down to 50 percent per year. 

"In 2020, the net income of BSP was P31.79 billion. They declared a dividend to the national government of around P15.89 billion. Last year, the income of BSP was P34.81 billion. They declared a dividend P17.41 billion," he said.

Diokno however noted that Government Service Insurance System (GSIS) and Social Security System (SSS) will still be allowed to contribute to Maharlika in the future if their respective boards approve it. 

He said that the managers of Maharlika will have to generate higher returns for Landbank, DBP, BSP, and any other interested parties in order for it to make sense.

The final version of the bill will determine exactly what Maharlika will be allowed to invest in. 

But Diokno has already expressed eagerness to direct the cash toward specific projects. 

"Direct benefits of the MWF include increased investments in and funding of big ticket infrastructure projects, high-return green and blue projects, and countryside development, including agriculture," he said.

In a statement co-signed by the economic team of President Ferdinand Marcos Jr., Diokno implored lawmakers to pass the measure as soon as possible. 

"Let us not delay economic progress. Let us not deprive our people of this opportunity for prosperity," the economic managers said. 

Signatories include Diokno, Budget Secretary Amenah Pangandaman, Socioeconomic Planning Secretary Arsenio Balisacan, and Philippine Central Bank Governor Felipe Medalla. 

Medalla earlier voiced concerns regarding the fund alongside other members of the BSP Monetary Board, specifically regarding the impact such an investment might have on the central bank's ability to keep Gross International Reserves high.

Meanwhile, in a separate briefing, the Philippine central bank said it was projecting a higher Balance of Payments deficit driven by weak external factors, specifically a projected recession in developed nations next year.

Central Bank Department for Economic Research officer-in-charge Dennis Lapid discussed expectations of lower foreign direct investment inflows this year and the next. 

“The main driver is really the weaker global economic growth. It is much weaker going forward and this is because of aggressive monetary policy tightening. This tends to dampen demand for investors making investments overseas, particularly in emerging economies," he said.

One of the purposes of MWF is to generate more investor interest in the Philippines. 

Diokno brushed off concerns the timing of the MWF is flawed. 

“There is no such perfect timing for this. Market is bad, market is good, if you are an investor if the market is bad that is the time for market to invest."

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