Assures wealth fund being crafted carefully to keep dirty money out
President Ferdinand Marcos Jr. assured the country on Monday that public funds to be invested in the proposed Maharlika Investment Fund will be protected and will only be used on very specific and accountable projects.
He also invited the Senate, which began deliberating its versions of the sovereign wealth fund bill on Monday, to carefully study the proposal already passed by the House of Representatives, stressing he preferred that the law emerging from it is well thought out rather than hastily passed.
In a televised one-hour interview with broadcast journalists, the President allayed fears of possible money laundering being caused by the proposed bill, saying while private money will be involved in the fund, the MIF is not a savings account where people park money and where it stays.
The multibillion-peso Maharlika Fund will serve as the seed money for the country’s sovereign fund, Mr. Marcos explained.
“Now, whenever we come into partnership, we do a G2G (Government-to-Government) with Japan, for example, or we do a PPP (public-private partnership) with some big outfit, then that is only the time that the money has come into the fund to be used for the program,” he pointed out.
“It’s not like, OK give me a billion dollars then we’ll put it carelessly anywhere. It’s not like that at all. And in fact, even on our end, we will only deploy funds when there is a very specific project to be paid for. So, money laundering just won’t come into it,” Mr. Marcos said.
The President also responded to comments by some lawmakers about the use of money coming from government-owned and controlled corporations (GOCCs) for the sovereign fund, saying it is not allowed under the law.
“I agree with that. You cannot use funds from the GOCC; it is a government fund. What will the government spend? It was a proposal. It’s not something that we have adopted,” the President told the press.
According to Mr. Marcos, every single GOCC has its own charter, and the government has to revise all of those charters to align them with the Maharlika Fund, noting this is not the purpose of the government company.
“This is a lot of income that goes to the national government that will go into the Maharlika Fund and cannot be used for the budget of the national government. And we have many things… that we would like to appropriate in the coming years, and we will need those funds,” Marcos said.
“So, I don’t think that’s a viable proposition, at least not for us… I know that there are other sovereign wealth funds that have been in that way. But it’s like, it’s not compatible with us. that is why we are a little lukewarm about that idea,” Mr. Marcos said.
Meanwhile, the President told senators: “Suriin ninyo nang mabuti para magandang-maganda ‘yung batas natin. Suriin niyo nang mabuti (Examine it carefully so the law comes out beautifully. Examine it).”
He said it would be good for the MIF bill to be passed sooner but said it should not be rushed since “every word that you put into it is so important.”
“For me, it’s more important that the law is correct rather than hastily formed,” he said in Filipino.
Meanwhile, an opposition congressman on Monday said the version of the MIF that the President presented before the World Economic Forum (WEF) last week was not the bill that was passed by the House of Representatives and must be recalled.
Albay 1st District Rep. Edcel Lagman said the version of the MIF bill presented to global leaders and top business executives in Davos, Switzerland had been “re-engineered” to remove provisions that were controversial.
The new version of the bill presented by Rep. Joey Salceda said the funding would be taken from dividends of GOCCs or the securitization of some P42 billion in dividends.
Salceda said the new bill drops the Bangko Sentral ng Pilipinas and the Development Bank of the Philippines as funding sources, adding that GOCC dividends were “surplus.”
But Lagman said a 1993 law dictates that 50 percent of GOCC dividends should be remitted to the national treasury to fund socio-economic projects. The other 50 percent must be reinvested into GOCC operations, he said.
GOCC dividends, therefore, are not surpluses since they are earmarked to support the national budget, Lagman said.
“The income of these corporations should not be sequestered or securitized because they are invariably used to fund the national budget,” he said, adding that these funds were used to directly address the socio-economic needs of the people like health, education, food security, basic infrastructure.
In 2021, remitted GOCC dividends were at about P58 billion. If some P42 billion of that were channeled to the MIF, how much would remain for budgetary support, Lagman asked.
“You are depriving our people of the necessary funding for basic services,” he said. “It’s the people who are getting hurt.”
Lagman said the approval of the bill—which he said showed signs of hasty legislation—should be recalled so the House can deliberate on the “re-engineered provisions” that were not presented to the lawmakers when they voted on the bill.
The Albay solon also said the fund should not be privatized because it represents the work of the state and should be controlled and owned by the state.
Meanwhile, the Senate version of the bill filed by Senator Mark Villar aims to give P12,030 monthly in financial help to a family of five members.
It also provides that instead of remitting taxes and dividend remittances to the national government, at least 25 percent of the net profits of the Maharlika Investment Corporation (MIC) will be directly distributed in the form of poverty and subsistence subsidies to families below the poverty threshold as determined by the Philippine Statistics Authority (PSA).
The MIC will be created to oversee the Maharlika Investment Fund and its earnings.
The distribution of cash assistance will start with 18.1 percent of the population, or 19.99 million Filipinos living below the poverty threshold.
However, the remainder of the net profits will be remitted to the national government.
Villar said the MIF can be funded by the Land Bank of the Philippines with P50 billion and the Development Bank of the Philippines with P25 billion, as well as funds from other national government agencies, including declared dividends of the Bangko Sentral ng Pilipinas.
Villar said each founding GFI may increase its investment above the required equity contribution.
The MIF will be allowed to be invested in cash, foreign currencies, metals, and other tradable commodities.
Also over the weekend, Senate President Juan Miguel Zubiri said hoped that through the MIF, the government can “buy back” the so-called crown jewels that were sold off in the past.