Admits starting on wrong foot on wealth fund, eyes smaller seed money
Congressmen on Thursday admitted taking the heat and getting off the wrong foot on the country’s proposed sovereign wealth fund, even as they broached a smaller starting amount for the fund with seed money coming from government banks and other sources.
Marikina Rep. Stella Quimbo, a co-author of the Maharlika Investment Fund (MIF) bill being deliberated on in the House of Representatives, said initial funding for it should be about P150 billion, down from the P275 billion first proposed last week.
Lawmakers on Wednesday decided to drop the planned contributions from the Government Service Insurance System (GSIS) and Social Security System (SSS), the state-run repository of pension of employees in the country, as mandatory contributors to the MIF in the face of strong opposition to their inclusion and to allay the people’s concerns.
“The concept is good, but admittedly, we started on the wrong foot. And that’s fine. We took the heat. There is no perfect bill. This (MIF bill) was prepared by the economic managers, and of course, we assumed that there were sufficient consultations. But lo and behold, when we started hearing the bill, we realized that the consultations were not enough, and obviously, at this time, it is not right to include GSIS and SSS as mandatory fund contributors,” Quimbo said.
From A1″We have a Speaker (Martin Romualdez) who listens, and we are proactive. We had a meeting with economic managers yesterday and we decided that it is not right to include GSIS and SSS right now. In the future, they can do that if their board sees that they can grow their funds by pitching in MIF because it is clear in their charters that investing is within their mandate. Their earnings from investments are part of what is financing the pension,” she added.
Quimbo then said that aside from GSIS and SSS, the General Appropriations Act and the National Treasury have been removed from the list of mandatory contributors.
Originally, the bill envisioned contributions of P125 billion from the GSIS and P50 billion from the SSS.
“I don’t want to preempt how much it is going to be [without GSIS and SSS as mandatory contributors], but for me, P150 billion is enough to jumpstart this,” Quimbo said in a mix of English and Filipino on the ANC news channel.
“Again, let us start small. Let us grow the initial amount first, let us see how much we can contribute [from that initial fund] to support the national budget, and we’ll see how it goes,” she added.
With the two pension agencies out of the picture, the MIF will be funded by state-owned banks Land Bank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and dividends or profits of the Bangko Sentral ng Pilipinas.
Quimbo did not say where the government would get the balance of her proposed P150 billion seed fund for the MIF.
GSIS and SSS members, economists, and business groups had opposed the inclusion of the two state-run pension funds.
Quimbo said the change of heart shows Congress is committed to addressing the public’s concerns.
The lawmaker said the MIF authors also increased the number of independent MIF Board Members from two to four.
The MWF Board will still be composed of 15 individuals and chaired by the President.
“The four independent members will come from the academe and the private sector,” she said.
Quimbo appealed to the public to give MIF a chance, given that the earnings from its investments would provide the necessary boost to the annual national budget which is currently insufficient to fund social services, including salary and pension hikes.
“We cannot just remain dejected every time we don’t have enough funds for teachers, for schools, hospitals, so this is where the MIF initiative is coming from,” she said.
“It is the first time that we are seriously considering this, so there are trust issues. Birthing pains. But that is a part of our job, it is not for the fainthearted. But we should [also] keep an open mind because we deserve more. We deserve better,” Quimbo added.
Rep. Paul Daza of Northern Samar on Thursday commended Romualdez and the House leadership on its decision to amend the controversial Maharlika Investment Fund bill and remove the GSIS and SSS as sources for its funding.
“This is indeed a step in the right direction,” Daza said. “As I’ve previously mentioned, I’m not entirely against having a State Wealth Fund like the [MIF].
Daza also suggested and appealed to his fellow legislators to also exclude the annual national budget as a source of funding.
“It is clear that the process of dialogue, stakeholder discussions, and expert consultations are leading to improvements to the bill, Daza said.
But the leftist Makabayan bloc continued to oppose the legislation, saying the MIF will gamble public funds just the same.
“No matter how they try to deodorize it, the fact remains that this bill is rotten and should be junked. We don’t have surplus, we don’t have wealth. We are even running on a deficit budget and the Treasury said our current debt is P13.52 trillion,” House Deputy Minority Leader France Castro said in a news conference.
She added that the removal of the GSIS and SSS as sources of the MIF “is an initial and partial victory of the people against endangering their pensions.”
Albay Rep. Joey Salceda, vice chair of the House committee on banks and financial intermediaries, said state pension companies would have limited gains from investing in the MIF.
Salceda, who led the technical working group that drafted the latest versions of the bill creating the MIF, said “the (Social Security System) and (Government Service Insurance System) have more limited gains from being invested in the fund compared to the potential gains for state banks with funds they could leverage to maximum advantage.”
He made the statement shortly after Quimbo announced the House leadership’s decision to drop the GSIS and SSS and the annual national budget as funding sources for the controversial sovereign wealth fund proposal.
In other developments:
• Senate Minority Leader Aquilino Pimentel III on Thursday said the proposed MIF being pushed by several ranking House leaders will have a difficult time in the Senate. In a text message, Pimentel said the MIF bill was not “thought out well” and “rushed” after proponents made changes in the proposed capital sources amid public outcry. “An idea which keeps on changing because it hasn’t been thought out well and was rushed, will always have a more difficult time in the Senate,” Pimentel said when asked if the proposal will have better chances in the Senate.
• Senator JV Ejercito said the decision of the House members to drop GSIS and SSS as fund sources is a “very welcome development” as its provisions would now be similar to a sovereign wealth fund bill that he filed in the 17th Congress. Ejercito said his proposal had pushed for a creation of a welfare fund that would derive its capital fromreserves and surplus. “I will not support any measure that will gamble on SSS and GSIS pensions,” he said.
• The labor group Partido Manggagawa welcomed the government’s decision to exclude the SSS and GSIS from Maharlika’s sources of funds. However, PM Secretary general Judy Miranda said that the decision does not absolve Congress as well as the executives of the two pension funds from accountability. The PM said strong opposition was key for this reversal, and should be sustained to prevent future attempts at misappropriating workers’ funds. “The mere fact that Congress toyed with the idea of creating a wealth fund out of our pension funds is already a red flag. But more reprehensible was the reckless approval of the SSS and GSIS executives to divert funds into the MIF without consulting the fund owners – the Filipino working class,” Miranda said.