Whose brainchild is SWF?
To begin with, does our economy really have — excess foreign currency reserves, large surplus revenues, capacity to embark on foreign investment?
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To begin with, does our economy really have — excess foreign currency reserves, large surplus revenues, capacity to embark on foreign investment?
The 19 priority bills enunciated at the beginning of the President's administration should be the first set of legislated enactments to be minted as an integral part of the overall policy architecture.
However, changes in design, purpose, and utilization are constantly made in the course of construction.
Thus, like lightning, the proposed "sovereign wealth fund" in House Bill 6398 suddenly popped out of the blue. Ranged against FM Jr.'s earlier priority measures proposed to Congress, this instant bill is not remotely related nor connected to any such measure.
There are chaotic signs that policy directions are in constant flux. Establishing the so-called Maharlika Investment Fund sets a new direction that has repercussions — either advantageous or disadvantageous — to our collective existence in social and economic terms.
A cursory reading of the 16-page bill triggers a feeling of indifference, dismay, and ambivalence depending on how and when all chips eventually fall in place. There's a need to examine it with a modicum of cynicism whether it's headed in the direction of failure or success, for our betterment or peril, redemption or deprivation.
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Indisputably, the fate of most government-owned and controlled corporations leads to one of three possibilities, viz: merger, privatization, abolition — all on account of failure to fulfill their mandate which is essentially to generate revenues for the government as public enterprises. HB 6398 creates a GOCC called Maharlika Investment Corporation.
Strikingly, HB 6398 sends an irreverent message that it enjoys a broad array of exemptions resembling blanket immunity; call it that, against taxes, regulatory restrictions, the reach and whip of landmark laws. Its vision to build a powerful investment backbone might alter if not influence the "command and control" of our existing governance structure.
The sovereign wealth fund is drawn from the "astronomical" rates of equity mandated or imposed upon the Government Service Insurance System, Social Security System, LandBank, Development Bank of the Philippines, plus the annual contributions to the fund by the Bangko Sentral ng Pilipinas, and the General Appropriations Act, among other sources. The BSP will render 10 percent of foreign currency remittances of overseas Filipino workers, and another 10 percent of the annual contribution of the business processes outsourcing sector. PAGCOR will also cash in 10 percent from gaming proceeds, and annual contributions from GAA or SA and "other sources" inflows.
The political risks attendant to the operationalization of the fund's investment objectives validate the question: What if something goes wrong? Indeed, why would the state ask for front money on the pretext that by commandeering the operations, it can better run the show?
But how strange for the bill to have defined the owners of the fund or its "legal ownership as the founding GFIs? When was the last time that public and private employees rightfully owned the contributions accumulated in the pension funds of GSIS and SSS, respectively?
Even more strange are the "seven deadly" exemptions enjoyed by the fund (i.e. taxes, regulatory restrictions, procurement and competition laws, CSC law and salary standardization, and GCG law). Who could ever imagine the "obscene" privileges that HB 6398 grants to both MIF and MIC?
It may be too early to inquire as to which companies — foreign or domestic — will the fund invest until the true owners of the fund are correctly designated. How wrong is it to say that government and private employees in regularly-paid contributions accumulated through the years own GSIS and SSS, respectively? Why further cut 10 percent each out of OFW remittances, BPO sector annual contribution, and PAGCOR's gaming proceeds?
This "Big Bang" approach reflects a total departure from the state's much-vaunted policy on private sector organizations to deliver public services. On the contrary, this is "commercializing the public sector." In one push of a pen, how can enormous amounts of monies be "pooled in" for investment purposes and designated, however, inchoately as a sovereign wealth fund?
To begin with, does our economy really have — excess foreign currency reserves, large surplus revenues, capacity to embark on foreign investment — to have the freedom to go into SWF? In this light, should not pension funds be beyond the contemplation of investible assets?
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