Answering a need
Without making an endorsement, ADB country director Kelly Bird said that generally, the establishment of a sovereign wealth fund could deepen the capital market.
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Daily TribuneWithout making an endorsement, ADB country director Kelly Bird said that generally, the establishment of a sovereign wealth fund could deepen the capital market.
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Based on the narration of Budget Secretary Amenah Pangandaman, the idea of a sovereign wealth fund was conceived at the height of the Covid-19 pandemic in the previous administration.
At that time, the government was scrounging for sources of funds for projects that respond to the challenges of the global scourge.
Finance Secretary Benjamin Diokno, then Bangko Sentral ng Pilipinas governor, took notice of Indonesia's initiative which was the establishment of the Indonesia Investment Authority, its sovereign wealth fund.
"It was all over the news during that time," said Pangandaman who was then BSP assistant governor. "Governor Diokno then asked us to review and check if the BSP can establish its sovereign wealth fund."
INA is a model of the Philippines since among the different types of wealth funds, it functions as an investment vehicle of the government drawing from its idle resources to generate more revenues.
Thus, the Maharlika Investment Fund which was the result of a long process of review that started even before the term of President Ferdinand "Bongbong" Marcos Jr.
The Asian Development Bank also weighed in on the MIF. Without making an endorsement, ADB country director Kelly Bird said that generally, the establishment of a sovereign wealth fund could deepen the capital market.
"The benefit of a sovereign wealth fund is it can help deepen the domestic capital market. It creates a lot of institutional investors and then the mobilization of savings within the economy for investments," Bird said.
Mobilization of savings is also the key aim in the evolving bill that would establish the MIF.
MIF's changes prove that House proponents of the bill led by Speaker Martin Romualdez and Deputy Speaker Sandro Marcos are willing to engage the public to come up with the best bill for creating the sovereign wealth fund.
MIF will become the vehicle of the country for global investments and the returns from its pursuits will be used for key projects and the provision of social programs.
The purpose of the sovereign wealth fund is to provide the government with another option for spending aside from raising taxes and borrowing to fund projects.
The concerns raised about the use of the investable money of pension fund Government Service Insurance System and the Social Security System were promptly addressed by the revision of the provisions of removing both as sources of funds, reducing the estimated capital of the MIF from P275 billion to P110 billion.
President Ferdinand "Bongbong" Marcos has appealed to the MIF critics to give the House the chance to perfect the bill.
Perfecting the MIF is not on the agenda of the detractors who are milking the wealth fund issue for partisan propaganda.
