Boarding Pass
In the United States, for instance, Chinese wealth funds are gobbling up assets including those considered America’s pride.
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In the United States, for instance, Chinese wealth funds are gobbling up assets including those considered America’s pride.
When news broke that a House bill was filed seeking to create the country's first sovereign wealth fund, Bangko Sentral ng Pilipinas Governor Felipe Medalla was among the skeptics.
Medalla raised the issue of transparency and the bill's implication on the independence of the BSP which was identified as a key source of funds for the Maharlika Investment Fund.
Since its introduction, the bill has tremendously evolved. While its seed capital was drastically reduced, most of the contentious provisions primarily the use of the pension funds as incorporators and thus, a heavy source of the financing, were deleted.
Medalla now believes that the version which the House passed would help attract foreign direct investments.
"From our point of view, the way it's done now, the BSP's ability to maintain price stability will not be negatively affected by the current version," Medalla said.
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"If this fund can be used to attract foreign investors, as in Indonesia, it could be good for the country," he said.
Under the bill, the BSP would contribute 50 percent of its dividend to the proposed fund.
The real battle for MIF, however, had just started as the House bill is transmitted to the Senate which, overall, has been lukewarm to the proposal.
Some of the senators tried to be better experts than the top economists such as Medalla, Finance Secretary Benjamin Diokno, and Socioeconomic Planning Secretary Arsenio Balisacan in claiming that the country is not ready for a sovereign wealth fund.
One of the senators said the SWF was meant to come from excess funds "that we just don't have" citing the budget deficit and the country's level of debt.
Yet, economic managers have pointed out that the budget shortfall was the result of the massive spending on infrastructure that will spur the economy and consequently raise government revenues.
Similarly, the amount of debt, according to the economic managers, is not a cause of concern since the economy is growing by leaps which makes the borrowings, which are mostly long-term, affordable.
The wealthiest nations such as Norway, China, and the United Arab Emirates have geometrically increased their financial wealth through sovereign wealth funds which, in turn, creates a huge fear among the biggest economies.
In the United States, for instance, Chinese wealth funds are gobbling up assets including those considered America's pride.
There are comments that the sovereign wealth funds have grown so big that they are now more powerful than multilateral organizations such as the International Monetary Fund, the World Bank, and the Asian Development Bank in terms of influence.
The advent of sovereign funds and the opportunities from the trend towards the setting up of state-managed investment vehicles may again skip the country as the legislators wrangle over the MIF.
Experts said the start of the MIF need not make a big splash, the important thing is that the country is on board when the boat sails.
The MIF should be its boarding pass to the prosperity ship.
