Economic managers said the Senate version of the Maharlika Investment Fund (MIF) bill that was approved early Wednesday morning has more safeguards against potential abuse and is also more acceptable to everyone.
The economic team lauded the approval in the Senate on the third and final reading of Senate Bill 2020 that proposes the establishment of a sovereign wealth fund or the MIF.
“The economic team commends Senate President Senator Migz Zubiri and Senator Mark Villar for their thorough deliberation and prioritization of the proposed Maharlika Investment Fund Act,” Finance Secretary Benjamin Diokno said in a statement.
“The Senate leadership has pulled out all the stops to ensure that the bill we bring to the President reflects the administration’s objective of creating a profitable and secure investment fund,” Diokno said.
Budget Secretary Amenah Pangandaman said the approval was a “great stride towards our long-term progress and will boost our efforts for economic growth.”
“Thank you to Senator Mark Villar for leading the debates and to all our senators for staying in session until 2:30 a.m. to thoroughly debate this bill,” Pangandaman said.
Earlier, Pangandaman assured the public that the Senate’s version of the MIF has a lot of safeguards against possible abuse, and might be more acceptable to the people.
“I think we’ve exhausted all our, their time and effort in making sure that the law that we’re going to pass is something that is more acceptable,” Pangandaman said.
“There are several safeguards— we have an audit committee, there’s an advisory board, and there’s a congressional oversight committee. It adheres to the internationally-known Santiago principles, there is also COA [Commission on Audit], procurement law, so I think we have enough safeguards,” she said.
She also said the funding sources are the Land Bank of the Philippines, the Development Bank of the Philippines, privatization proceeds, the Philippine Amusement and Gaming Corporation, and Bangko Sentral ng Pilipinas dividends.
“The major change from the first one they filed,” she said, noting that pension funds have been removed as a source of funding. “So I think it will be more acceptable to everyone.”
Michael Ricafort, the chief economist of Rizal Commercial Banking Corp., said the MIF would unify how investible funds of government financial institutions are used to help fund priority infrastructure projects.
Ricafort said these infrastructure projects and other government projects are important for economic development for the long term and for the coming generations.
Earlier, Philippine Chamber of Commerce and Industry (PCCI) president George Barcelon said the law should make it clear the composition of the MIF board.
“We think it will be important if we have a representative from the finance sector who will be capable of reviewing foreign investments and determine up to how much will foreign ownership be allowed,” he said.
He added that since foreign entities will be allowed to invest, the fine details of the bill should be able to put a cap on foreign ownership.
“Those were not discussed yet, but I’m sure it will be discussed down the line,” he said.
Also on Wednesday, a former Bangko Sentral ng Pilipinas official said the government will have to compensate for the public money that will be poured into the MIF, which could be in the form of higher taxes.
Retired BSP deputy governor Diwa Guinigundo told CNN that “under the one single fund concept, whatever public money is earmarked for the Maharlika Investment Fund and away from the national budget, the national government will have to compensate for that. And to be able to do that, the national government will have to borrow or to impose higher taxes or more taxes. There is no other way,” Guinigundo said on the program “The Source.”
Guinigundo said the need for the government to fill in the gap will only worsen the financial problems of the country.
“Instead of addressing and mitigating the problems of high fiscal deficit and increasing level of public debt, this Maharlika Investment Fund may, in fact, worsen it,” he said.