It was a cakewalk for oppositors of the proposed Maharlika Wealth Fund or MWF to convince the public that their savings and pensions will be used to fund it.
It was a governance issue, kids — I will explain this to my children decades from now on how the Philippines had trouble establishing its first sovereign wealth fund. My humble opinion is that the country would benefit from the wealth fund, but the timing is quite questionable. And like any fund managed by third persons, you will not have good days every day. There will be instances when the investment will go sour, and the investments would be in the ‘red’.
Aside from governance, another question is whether the Philippines, rather than the Filipino people, is financially wise enough to comprehend the effects, consequences, and interpretation of what it is like to have a sovereign wealth fund. Or are our leaders acting smarter than their electorate, using ‘big words’ to dizzy and awe-struck them, and willfully take advantage of their negligence while (indirectly) taking a few pesos of their pockets as placements on this wealth fund that is expected to benefit the entire country? A doomsday scenario lurking.
Take Singapore for example, a reported $275 million was invested by its wealth fund, Temasek, in FTX, one of the world’s largest cryptocurrency exchanges that came crashing down reminiscent of Enron.
Details have emerged on how FTX was being run and managed by seemingly immature, scrappy, and socially awkward individuals in their late 20s. How can a country such as Singapore, led by morally upright, brilliant, and astute, fall for putting in a sizeable investment in FTX? Now that the cat is out of the bag, we would expect turmoil and unrest. But no, we are seeing mature Singaporean people, fully comprehending the situation, not calling for anyone’s head, but rather more stringent guidelines in the investor protection on digital payment token service providers.
The Philippines may still be considered an ‘unbanked’ nation with the number of Filipinos without a bank account, but this is changing rapidly. I recall when I was in the BSP around 2013, only around 25% of Filipinos had a bank account. Now, as of 2021, the majority of adult Filipinos, or 56%, already have accounts in some formal institutions such as banks, e-money issuers, cooperatives, and microfinance institutions. (I can’t imagine how many Filipinos opened GCash accounts during the pandemic.) Give this a few more years, the number will climb to around 80 percent, and that time may be right to introduce complex financial instruments that shall involve taxpayers’ money with proper explanation, no rail-roading.
It was a cakewalk for oppositors of the proposed Maharlika Wealth Fund or MWF to convince the public that their savings and pensions will be used to fund it. This was fueled by the note prepared by retired Supreme Court Justice Tony Carpio that was circulated on social media and chatgroups. What was not explained was that the GSIS and SSS will be using their excess funds to invest in the fund, but of course, it is now too late with the backtracking recently announced by Rep. Stella Quimbo, designated ‘chief economist’ of the House of Representatives. But stating that funds will be taken only from the BSP does not make really change the story since it remains to be the people’s money.
The bottom line is the country must be doing well, financially, for it to be able to set aside funds of this size, the effects of which would not be immediate, and somewhat speculative. Our leaders have the challenge to convince the people that, despite our deficit and debts, we can invest $4.9 billion in the MWF, and how the everyday Juan de la Cruz will benefit from it.
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