MANILA – Finance Secretary Benjamin Diokno is looking at the approval of the proposed sovereign wealth fund (SWF) by mid-2023, and cited long term gains that will benefit the economy.
In an interview by journalists after the economic managers’ meeting on Monday, Diokno discounted the approval of the proposed legislation by the end of 2022.
“Not (by the) end of the year kasi tight na ang schedule. Maybe (by the) middle of next year, before the budget is submitted. (It) will take a while kasi o-organize pa yan (Not by the end of the year because the schedule is already tight. Maybe by the middle of next year, before the budget is submitted. It will take a while because it needs to be organized),” he said.
Last week, the House Committee on Banks and Financial Intermediaries approved and adopted the amendments of the technical working group for the proposed Maharlika Investment Fund, authored by House Speaker Martin Romualdez.
Under the proposed measure, the SWF will be financed through pooled funds from state-owned financial institutions and state pension funds.
Specifically, the Government Service Insurance System will contribute the highest share at PHP125 billion, followed by the Social Security System and the Land Bank of the Philippines at PHP50 billion each, and the Development Bank of the Philippines and the Bureau of the Treasury at PHP25 billion each.
Safety of the SWF’s capital is set to be ensured through a three-tiered auditing to be done by an internal auditor, an external auditor and the Commission on Audit.
A four-layer good corporate governance also will be in place through the Board of Directors, the advisory body, the risk management units and the congressional oversight committee.
Diokno said a SWF has long been needed in the Philippines given the large number of proposed infrastructure projects and the availability of funds such as the government’s share in the Malampaya Fund.
He said royalties to be gained by the government from mining projects can also be used for the SWF.
He said the share of each proponent is subject to change, depending on the decision of their respective Boards, but cited that the national government can increase its share to PH50 billion or even PHP100 billion as state revenues continue to improve.
He said they may also eventually allow foreign investors to contribute to the SWF.
He also discounted the need to provide sovereign guarantee to funds placed in the SWF, noting that the money placed in the welfare fund are investments which will have gains in the long term.
The proposed welfare fund has received criticisms, with some questioning why it has to be chaired by the President of the Republic.
Diokno, however, said there will be no politics involved in running the welfare fund and that best practices will be implemented. (PNA)