Divisive politics can wait
Unless the bottlenecks to development are addressed, primarily social inequality, the Philippines will find it hard to become a middle-income country, the WB indicated.
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Daily TribuneUnless the bottlenecks to development are addressed, primarily social inequality, the Philippines will find it hard to become a middle-income country, the WB indicated.
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While taking potshots at the Maharlika Investment Fund, the critics have exposed themselves as anti-development merely driven by a partisan agenda.
None of the arguments have a leg to stand on since the MIF bill continues to evolve and the Senate which will scrutinize the measure is expected to introduce radical revisions, if not block the proposal despite the certification of President Ferdinand "Bongbong" Marcos Jr.
The objectives of the fund were responses to a recent World Bank report on the pace of post-pandemic recovery.
In the paper "Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future", it was cited that the pandemic has "partly reversed decades-long gains in reducing poverty and inequality in the Philippines."
The report said policy priorities to reduce inequality must involve healing the pandemic's scars and building resilience, setting the stage for a vibrant and inclusive recovery, and promoting greater equality of opportunity.
Specifically, the government should heal the pandemic's scars by promoting greater vaccine booster uptake, overcoming the learning loss, strengthening social assistance, unemployment insurance programs for the informal sector, and taming inflation, the report said.
Setting the stage for a vibrant recovery entails reskilling workers, promoting entrepreneurship, increasing the participation of women in the labor force, and raising the productivity of agriculture, it added.
All such programs would entail a massive infusion of funds which the government can only obtain at the moment from its revenues and from borrowings to plug the deficit.
The MIF opens a new source of financing which is derived from the Indonesia Investment Authority or INA which is aimed at drawing foreign capital instead of being a straight-up pool of state financial surplus.
Experts said the strict definition of a sovereign wealth fund does not apply to Indonesia and the Philippines
INA was established by leveraging the role of foreign investors in financing the fund.
Foreign investors are already waiting to act as key stakeholders in the MIF since they consider ASEAN as the global growth center of the future.
Nonetheless, with the unfounded attacks, investors may take a wait-and-see approach to see how it takes shape if and when the Senate passes the bill.
Among the projects that the MIF is intended to finance, based on the House bill, are those that would address the significant infrastructure deficit that limits economic development.
Unless the bottlenecks to development are addressed, primarily social inequality, the Philippines will find it hard to become a middle-income country, the WB indicated.
Inequality remains high, "the top 1 percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent," according to the report.
"The Philippines aims to become a middle-class society free of poverty by 2040, but we know from global experience that no country has managed to make this transition while maintaining high levels of inequality," said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand.
The report underlined the expansion of secondary education, mobility to better-paying jobs, access to basic services, and government social assistance have started to reduce inequality since the mid-2000s.
Making the Philippines a more attractive destination for foreign investment of all kinds and multiplying the availability of jobs offer opportunities to solve inequality.
The sovereign wealth fund opens a path toward resolving most of the financing gap while reducing the dependence on foreign borrowings.
Ironically, the detractors have highlighted the high debt level for opposing the MIF, a situation that the proposal seeks to solve.
