Maharlika revisions show authors’ unpreparedness (1)

The country has no surplus funds, the critics argue, as it is mired in indebtedness by the trillions and it’s been operating on a current account deficit.

To recall, the Maharlika bill, which is the proposed Philippine version of the sovereign wealth fund, was approved in record time by the House of Representatives, after it was certified as an urgent bill by the President.

A sovereign wealth fund is simply an economic venture where a country invests excess capital into markets or other investments. Several countries, like China, France, Singapore, United Arab, Saudi Arabia, Kuwait, Qatar, Australia, Hongkong and Norway, have used it to accumulate profit for the benefit of their respective economies and their citizens.

China is ranked as having the largest sovereign wealth fund with an asset of 1,380,863,000,000. Norway places second with 1,136,144,193,600 while Abu Dhabi is in third place with 790,000,000,000 in assets.

With much media funfair, the principal authors touted the Maharlika bill as an excellent economic project that will increase dramatically the country’s coffers which can accelerate economic growth. They proposed to get the capital of the wealth fund from the Social Security System and the Government Service Insurance System.

Such proposal drew a barrage of opposition coming from various sectors of our society including their own colleagues in Congress, owing to its unconstitutionality — the SSS and GSIS funds, being contributions of their respective members which makes them private funds, not public, and therefore cannot be used by the government for the benefit of non-members.

Realizing their booboo, they backpedaled and dropped SSS and the GSIS as sources of funds. They also dropped PAGCOR and a portion of the national budget as sources of funds, again bowing to the criticisms hurled at such propositions.

Well-meaning critics pounced on their bill and educated them on the basic concept of a sovereign wealth fund, which is the investment of surplus funds. The country has no surplus funds, the critics argue, as it is mired in indebtedness by the trillions and it’s been operating on a current account deficit.

They left the Landbank, and the Development Bank of the Philippines as sources for the capital of the wealth fund and included Central Bank. They want it to pump 100 percent of its dividends into Maharlika. The inclusion of the former, as this column pointed out, is a violation of its charter and the Constitution which grants it autonomy and independence. Its primary function is maintaining the country’s financial stability. Granting arguendo that it can contribute to Maharlika, its contribution could be a dislocating factor in the financial stability of the country.

So is getting funds from the Landbank and the DBP. Those institutions have their own mandates, and they cannot even fully fulfill their assigned tasks of helping the farmers and developing the countryside.

After the blitzkrieg passage of the bill in the lower house, here comes a congressman publicly announcing that he and three other lawmakers have “re-written “and “re-engineered” the Maharlika bill meaning they made radical revisions and removed the government entities as sources of sovereign funds, and instead make it “more private sector-led with the government having less than 50 percent stake.”

Explaining the revisions, the lawmaker said they improved on the measure by “using only dividends of government-owned and controlled corporations or GOCCs and listing the fund in the Philippine Stock Exchange to make it more private sector with the government having less than 50 percent stake.”

(To be continued)

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