Why Maharlika authors are intransigent
The cat is out of the bag or stated otherwise, the elephant in the room has finally come out.
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The cat is out of the bag or stated otherwise, the elephant in the room has finally come out.
In our preceding column, this writer asked the authors of the Maharlika Wealth Fund Bill, why they are so intransigent or bullheaded in pushing for its passage despite the vigorous and mounting opposition from business groups, economists, and legal minds against it, citing the illegality of sourcing the funds from the Social Security System and the Government Service Insurance System, the lack of surplus funds for its capital, the potential source of corruption owing to the composition of the managing board — the majority of which comes from the government sector dwarfing the proposed four-member minority and the untimeliness of its creation.
This columnist asked what their hidden agenda is in not making a justified retreat. The cat is out of the bag or stated otherwise, the elephant in the room has finally come out. The idea of putting up the Maharlika Wealth Fund comes from the President himself!!!
It was quite a revelation when he confessed to owning the brainchild of a sovereign wealth fund in an ambush interview inside the aircraft that was to carry him to Belgium on Monday, his 7th official trip abroad. He has been silent about the burning and controversial issue from its inception except only for a statement coming from the Secretary of Finance who was quoted as saying that the Maharlika investment has PBBM's blessings.
Now we know why the Maharlika authors are bent on passing House Bill 6398. It's the pet bill of the Chief Executive. It would be embarrassing if they will drop Maharlika. No wonder they have been receptive to revising the draft bill almost immediately after it was slammed and frantically removed the contentious provisions. They will have to shepherd the bill to its successful hurdle. They cannot afford to disappoint the principal proponent. And as the usual political practice in the country, the majority party and its allies will go where the presidential wind goes.
As certainly as the sun rises on the east, there will be a mad rush from the lawmakers to join the few authors of the Maharlika controversial measure to co-author it, unless the voice of the people is heard thunderously as to herald a political whirlwind which will blow them away or put them at bay.
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The universal sentiment of a universal wealth fund is one of acceptability. The concept of investing surplus state funds to exponentially increase it to finance state projects that will bring a windfall for the development of the country is noble as it is creative, and more than 40 countries have embraced it.
In pushing for approval of the wealth bill, Malacañang, in a statement said, "the wealth fund seeks to attain economic growth by generating consistent and stable investment returns with appropriate risk limits to preserve and enhance its long-term value; obtaining the best absolute return and achievable financial gains on its investments; and satisfying the requirement of liquidity, safety, security, security, and yield to ensure profitability. "
The economic managers have thrown their support to the bill, arguing that it would make the country move forward and achieve its goal of prosperity. Former Bangko Sentral ng Pilipinas, Secretary of Finance Benjamin Diokno is pushing for its passage saying that " it's a tried and tested investment vehicle citing the fact that other countries have used it to achieve their economic agenda.
In an attempt to deodorize the bill, its authors yielding to the legal challenge on the sourcing of funds removed the SSS and the GSIS as contributors to the capital fund. They also struck out the provision of getting 20 percent of the annual budget as an additional fund source.
They named the Secretary of Finance to head the governing body, replacing the President to address the issue of conflict of interest and politicizing the project. But it's a case of replacing the collar of the same dog — the finance chief being the alter ego of the Chief Executive.
They have increased the number of independent members of the Maharlika board making it four, but they constitute the minority with the majority directors holding sway in the decision of investment ventures and administrative matters, with the potential of giving themselves skyrocket salaries, allowances and bonuses, what with a provision in the bill exempting the Maharlika from the operation of the civil service rules.
They introduced a new provision setting aside 20 percent of the fund profits for social welfare projects. The BSP will be tapped to contribute 100 percent of its dividends in the first year of the fund but BSP officials are reportedly against it as the use of the banks' funds may compromise its independence.
The opposition to the Maharlika bill is mounting and has snowballed. Several business groups and economists have issued joint statements expressing serious concerns about the establishment of the wealth fund.
The Makati Business Club, Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Competitive Currency Forum, Filipina CEO Circle, Institute of Corporate Directors, Integrity Initiative Inc., Movement for Good Governance, Philippine Women's Economic Network, Management Association of the Philippines, UP School of Economics Alumni Association, and the Women's Business Council of the Philippines Inc., in their collective statement, said:
"There is at present no gap nor missing institution in the economy that needs to be solved by the creation of the SWF (Sovereign Welfare Fund). The country does not have a bonanza of commodity surpluses that need to be deployed.
Instead of leaving a legacy of surplus funds to be managed for future generations, the current generation is leaving a legacy of indebtedness which future generations need to pay or refinance."
Until now, we are unconvinced that the country has surplus funds to establish the MWF. Apart from the resounding voice of dissent from the economic experts, there is the issue of public trust. The proponents of the bill have not hurdled that and it is an albatross that remains constant.
Unresolved trust issues triggered the downfall of governments in many parts of the world. The untimeliness of the birthing of this wealth fund may contribute to the hardening of the trust issue. The MWF Bill proponents are cautioned and gently advised not to tempt the gods of destiny for they may reap the powerful and dangerous winds of discontent.
