SOVEREIGN WEALTH FUND. President Ferdinand R. Marcos Jr. makes a soft launching of the Philippines’ sovereign wealth fund (SWF) at the Country Strategy Dialogue during the World Economic Forum in Davos, Switzerland on Tuesday (Jan. 17, 2023). Marcos said the SWF, known as Maharlika Investment Fund, is already in the pipeline. (Photo courtesy of Office of the President)
MANILA – Both the National Development Company (NDC) and the Philippine Stocks Exchange on Monday assured senators of investments that would come in once the country establishes the proposed Maharlika Investment Fund (MIF).
During the Senate's third public hearing on the proposed Maharlika Investment Fund, Chief Operating Officer lawyer Roel Refran told senators PSE shares fully adheres to the economic managers’ strategic vision of having a sovereign fund that will optimize the use of government resources by channeling government funds into high return-generating investments which can, in turn, provide additional funding source for the pursuit of the country’s socio-economic policy priorities.
"As a market institution whose performance and activity are largely influenced by economic conditions, it is incumbent upon the Exchange to join the country’s economic managers in pushing for key economic and fiscal reforms aimed at increasing national wealth and accelerating the country’s economic development," Refran said.
"While the Philippines currently does not have surplus revenues, the establishment of the Maharlika Investment Fund is envisioned precisely to create additional funds and, over time, accumulate surplus wealth that can be recycled and reinvested in high-yielding undertakings," he added.
Contrary to theories that sovereign funds will only work if the country has surplus wealth, Refran said empirical data show otherwise.
"There are 148 sovereign wealth funds all over the world, some of which were established by countries ranked by the United Nations as among the least developed economies such as Angola, Djibouti, Ethiopia, and Mauritania. Not all of these sovereign funds obtained funding from surplus wealth," he said.
Like the sovereign funds of developed countries, Refran said the MIF has the potential to address major infrastructure gaps in the country and provide the government much-needed funds to deliver basic services without incurring additional leverage.
"We believe that now is an opportune time to establish the fund if we want to see and reap the exponential benefits of major infrastructure improvements and jumpstart the country’s economic transformation," he noted
Meanwhile, NDC General Manager Antonilo Mauricio admitted that MIF can be considered as a competitor to NDC in terms of charter. However, he cited scale and time as exemptions.
"Maharlika, if you compare with how other funds were put up, would take at least two years to set up. So we don't see it as a competition because we are already here and we are already working on the smaller deals," Mauricio said.
"I am on the ground. I talk to the business people. Their sentiments on the Philippines is very positive. They want to really invest. They want to know how. So, while Maharlika is taking such a long time, the investments are ready," he added.
Unlike the NDC, Maurcio said they see the MIF as an instrument to eliminate budget limitations of the national government in supporting the projects of different government agencies.
"We do not have that scale. We are looking at gaps that the agencies may perhaps not be doing. We can focus on those gaps. So, we really see a synergy when Maharlika is established," he explained.
Some senators, who are having reservations on establishing the MIF, are looking into the possibility of empowering the NDC instead.
Established on 1919 as the government's investment arm, NDC is being considered as the oldest government investment company.
It is mandated to pursue commercial, industrial, agricultural, or mining ventures to give necessary impetus to national economic development which is also stated in the Presidential Decree 1648.
NDC's total asset value in 2022 was at PHP33.2 billion, managing PHP17.5 billion worth of assets, PHP303.43 million business income, and have acquired PHP3.09 billion available funds as of February 2023.
NDC and Department of Trade and Industry (DTI) Secretary Alfredo Pascual, through DTI Undersecretary Ireneo Vizmonte, said during the hearing that the state-owned company envisions MIF as a vehicle for mobilizing investments resources to propel economic growth and help achieve the country's economic goals.
"While its declared objective is to help fund big ticket infrastructure projects, its creation also has the potential to bring in new investments in the three key export sector of manufacturing, transport technology and communications, and health and life sciences," Vizmonte said reading Pascual's statement.
"Investment in the sectors will promote industriazation, improved productivity, and create more stable and higher-paying jobs," he added.
Senator Sherwin Gatchalian, on the other hand, proposed privatization of government assets to raise PHP130 billion for the MIF.
He cited a land parcel at the Food Terminal Inc. in Taguig City that is worth around PHP22 billion and the commercial Mile Long property in Makati City, estimated at PHP8 billion.
“Privatization seems to be less controversial and more logical because the assets being sold now can be enjoyed by future generations by investing in infrastructure and other things. We must put that on the table for the body to study,” Gatchalian said.
The Senate Committee on Banks, Financial Institutions and Currencies chaired by Senator Mark Villar was tasked to discuss House Bill 6608 filed by House Speaker Martin Romualdez, Reps. Mannix Dalipe, Stella Quimbo, et al, as well as Senate Bill Nos. 1670 and 1814 by Senator Mark Villar and Senator Raffy Tulfo, respectively.
Villar's commitee is set to convene a technical working group on Wednesday to consolidate the various concerns during the discussions about the proposed measures. (PNA)
