The establishment of the Philippines' first sovereign wealth fund was given an added boost with the filing of a bill by Speaker Martin Romualdez and Presidential son, Rep. Sandro Marcos, last Monday. A bill sponsored by the Speaker of the House carries intense weight, and nearly guarantees its smooth passage by the House of Representatives.
The House Committee on Banks and Financial Intermediaries convened to discuss the measure. The representatives of the government financial institutions in attendance, i.e. Landbank, DBP, GSIS and SSS, all gave their resounding support to House Bill 6398. This seeks to create the Maharlika Wealth Fund that shall have seed money amounting to P125 billion, roughly $4.9 billion, rather small compared to sovereign wealth funds of other countries. But it goes without question that P125 billion is a lot of money, especially for a developing country that was hard-hit by the pandemic, and still reeling from it, such as the Philippines.
Developed countries have successfully created and managed sovereign wealth funds. Most notably would be the largest wealth fund in Norway, at over a trillion USD. Norway is known as the world's best country to live in this 2022. It has a very low population of 5 million, and it has among the lowest crime rates in the entire world. Another known wealth fund is that of Saudi Arabia, which has been using it to fund its acquisition of sports clubs and leagues. Saudi Arabia is among the richest countries in the world and has ambitious plans to build modern cities in the most obscure locations, such as the desert and the sea.
Nearer to home, we have Singapore with a sovereign wealth fund known as GIC, with assets amounting to $690 billion, and Temasek with $630 billion. Singapore is among the most efficient and developed countries in the world and is a known global financial center located right smack in the middle of Southeast Asia. In the discussions on the establishment of our own sovereign wealth fund, named MWF, I am certain that legislators and our GFIs will be brandishing the success stories of these countries.
What the opposition, critics, and naysayers will point out would surely relate to how sovereign wealth funds have been used by certain countries for corruption. The most famous and recent would be the 1MDB scandal in Malaysia that led to the imprisonment of former Prime Minister Najib Razak and his wife. I followed this scandal (there is a nice Netflix documentary on this) without knowing what a sovereign wealth fund was. Little did I know that the Philippines, at that time, already have proposals to establish its own fund, but hopefully not for corrupt reasons.
Indeed, now may be the right time to start the fund, considering our economy is on a rebound. The intent is laudable, but we must ensure that the management of the MWF shall not go into the wrong hands. We may enact all the guidelines, rules, and regulations to ensure zero corruption on this fund, however, we know even the smartest people can act dumb, blind, or just look the other way. The success of the sovereign wealth fund depends on society, the true owners of this fund, not just on our public leaders and future managers of it. The MWF must be given a chance and seen as a source of economic activity and progress, not an expensive piggy bank for a chosen few.
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