Who’s afraid of MWF?
Persistent critics of the administration of President Ferdinand ‘Bongbong’ Marcos had declared victory over the MWF proponents removing the pension funds
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Daily TribunePersistent critics of the administration of President Ferdinand ‘Bongbong’ Marcos had declared victory over the MWF proponents removing the pension funds
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The moment the House of Representatives unveiled the Maharlika Wealth Fund, the sudden outcry from personalities with known past partisan agenda pointed to some forces that are apprehensive of losing their global clout through the rise of pooled government resources among developing countries.
The emerging trend of governments accumulating wealth is considered a threat to security and economic domination among policymakers in the United States.
The funds being used to buy up American assets and businesses triggered paranoia in the superpower against the new-found might. Moreover, multilateral funding institutions which it uses to rein in economies by its global agenda are losing their relevance amid the aggressive employment of wealth funds.
Consider Indonesia which has the Indonesia Investment Authority set up in February 2021 with a seed fund of $5 billion. The wealth fund has grown exponentially to $25 billion in its first year.
In a 2007 US Senate hearing on wealth funds, American legislators voiced their concern about the financial challenge from the developing world.
US Senate committee on banking, housing, and urban affairs chairperson Evan Bayh expressed worry in the probe that "the size of these funds is growing. There are now seven over $100 billion in assets, including Abu Dhabi at $625 billion, Singapore at $215 billion, Norway at $322 billion, Kuwait at $231 billion, China at $200 billion, Singapore at $108 billion, and Russia now at $127 billion.
That was in 2007. China Investment Corp., the biggest sovereign wealth fund, now manages $1.35 trillion in assets worldwide, mostly in the US.
Bayh added that sovereign wealth funds now dwarf the size of multilateral organizations "designed to be the governing architecture of the global financial system."
For perspective, Bayh then cited the International Monetary Fund which holds assets with a market value of $76.9 billion, and the World Bank with $40 billion on its balance sheet.
The American senator said the situation presents "both opportunities and challenges" to the US.
"It is better for the United States to have capital invested here to create jobs, improve our productivity growth, keep interest rates low, and our standard of living high. But sovereign wealth funds are inherently different from private investors," he warned.
Bayh quoted then US Securities and Exchange Commission head Christopher Cox who said "government ownership of companies and investment funds poses a fundamental challenge to the market premise upon which the SEC operates."
Cox expressed his discomfort over the lack of transparency "that characterizes many sovereign wealth funds, which undermines the theory of efficient markets at the heart of our economic system."
Bayh added that unlike private investors and their representatives — pension funds and mutual funds, for example — government-owned entities "may have interests other than and that occasionally will take precedence over profit maximization."
"Just as the United States has interests in addition to financial ones, so do other countries. Just as we value some things more than money, so do they. Why should we assume that other nations are driven purely by financial interests when we are not? Or are we?" Bayh said.
Persistent critics of the administration of President Ferdinand "Bongbong" Marcos Jr. have declared victory over the MWF proponents removing the pension funds of SSS and GSIS as a source of its capital thereby hobbling the proposal.
The question is, a victory for whom?
