House to ensure prudence, transparency in Maharlika fund bill

By Filane Mikee Cervantes

December 12, 2022, 8:07 pm

<p>House Committee on Banks and Financial Intermediaries chair and Manila Rep. Irwin Tieng <em>(Photo courtesy of House Press and Public Affairs Bureau)</em></p>

House Committee on Banks and Financial Intermediaries chair and Manila Rep. Irwin Tieng (Photo courtesy of House Press and Public Affairs Bureau)

MANILA – A House leader on Monday assured that the proposed multi-billion peso Maharlika Investment Fund (MIF) would contribute to a prudent and transparent management of government resources.

In sponsoring House Bill 6608 to the plenary, House Committee on Banks and Financial Intermediaries chairperson Irwin Tieng said the establishment of an independent MIF shall adhere to principles of good governance, transparency and accountability.

"There are several safeguards embodied in the MIF to ensure its transparency and accountability," Tieng said. "The MIF provides that it will comply with the guidelines that assign best practices for the operation of the sovereign wealth fund as provided in the Santiago Principles."

He said several amendments were introduced to the bill, including the change in the capitalization and funding, which will be sourced from the Land Bank of the Philippines and the Development Bank of the Philippines.

The initial version of the bill proposed that government financial institutions, such as the Government Service Insurance System (GSIS) and Social Security System (SSS), would be the funding sources for the controversial MIF.

Marikina Rep. Stella Quimbo, a vice chairperson of the appropriations committee, said the MIF would rely on national government dividends from the Bangko Sentral ng Pilipinas.

Tieng said another proposed amendment is a change in the board composition wherein the Secretary of Finance shall sit as the chairperson and more independent directors from the private sector shall be added.

Tieng also noted that it shall be governed by a 15-member board selected according to strict criteria of knowledge and professional experience in investment management and financial matters.

It shall be required to publish its annual report and its financial and investment performance will be audited by an independent external audit firm, internal auditor and the Commission on Audit

MIF is also mandated to provide regular and timely information on its website and other platforms for the public to be well informed, he noted.

"As the Philippines secures its place, not only as the rising star of Asia but as a real economic leader in the Asia-Pacific, the creation of the MIF becomes imperative," he said.

Meanwhile, Deputy Speaker Aurelio Gonzales Jr. said he supports the planned creation of the sovereign wealth fund initiated by Speaker Martin Romualdez, arguing that it would tap investible government resources to maximize their profitability for the benefit of future generations of Filipinos.

“We are all for the MIF proposal of the Speaker. The objective of maximizing or optimizing gains from the investment of excess state funds or assets is laudable. That is what every nation on this planet would want to do,” Gonzales said.

San Jose del Monte City Rep. Florida Robes said the House intends to put enough safeguards in the MIF bill to prevent possible abuse, corruption and dissipation of the funds.

“The proposal of Speaker Martin will be a big help to our country and to every Filipino,” Robes said.

PBA Party-list Rep. Margarita Ignacia Nograles said the House listened to the suggestions of the public on the proposed MIF by adding safeguards against corruption, fraud and other potential acts of wrongdoing.

“The most important of these are the penalty clauses or provisions. We want to avoid possible graft and corruption and scandals, which the public is afraid of. So we want the penalties to be at par with those contained in the Corporation Code,” Nograles said.

She said another feature added to the bill is the earmarking of 20 percent of MIF profits for social projects.

Economic managers of President R. Ferdinand Marcos Jr. have also expressed their support for the proposal, saying it would serve as an investment vehicle to move forward the administration's Agenda for Prosperity and achieve the country's economic goals.

In a signed joint statement on Friday, Finance Secretary Benjamin Diokno, Budget Secretary Amenah Pangandaman, Socioeconomic Planning Secretary Arsenio Balisacan and Bangko Sentral ng Pilipinas Governor Felipe Medalla highlighted the "direct and intergenerational benefits" of the sovereign fund.

They said direct benefits include increased investments in and funding of big ticket infrastructure projects, high-return green and blue projects and countryside development while intergenerational benefits include increased access of future generations to income from investments, such as potential earnings from extracted natural resources such as in mining.

"Without a doubt, the creation of the MWF will help us achieve our Agenda for Prosperity and the objectives for inclusive and sustainable economic growth we have outlined in our Medium Term Fiscal Framework, 8-Point Socioeconomic Agenda and in the Philippine Development Plan 2023-2028," they said.

For the near and medium term, they said a sovereign wealth fund will enhance fiscal space and reduce fiscal pressures as the fund pursues public infrastructure projects, as well as reduce uncertainties in cases when fund resources are channelled to high-yielding financial undertakings and assets that are underinvested amid high inflation and the lingering pandemic effects.

They expressed confidence that with professionals managing the funds, there will be efficient use and management of these investible public funds.

"They will be able to ensure the availability of an alternative high return investment platform, obtain the best absolute return for the funds, find additional sources of liquidity as the need arises, and perform better risk management, given additional layers of checks and balances in the use of investible funds," they said.

The economic team called for the immediate enactment of the bill creating the MWF as this will redound to growth and help the country achieve "economic transformation towards inclusivity and sustainability".

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

They thanked the lawmakers for their "openness" in continuously improving the bill, as well as President Marcos for recognizing the benefits of a sovereign wealth fund. (PNA)