House passes disputed Maharlika fund

The new version of the Maharlika Bill, HB 6608, now called Maharlika Investment Fund, was recently approved by the House of Representatives. This Bill will then be forwarded to the Senate of the Philippines for the senators’ deliberation.
The old version of the proposed Maharlika Bill met with adverse resistance from different sectors mainly because of the inclusion of the Social Security System (SSS) and Government Service Insurance System (GSIS) as funding sources.
Earlier also, concerned citizens from the academe, former government officials and private sector, asked the Executive and Congress to scrap the Maharlika Wealth Fund (MWF) bill or House Bill (HB) 6398; claiming that it is an ineffective measure to address intended programs. They said that the MWF is not like the Sovereign Wealth Funds that solve a problem of excess funds, such as, excess revenues of large budget surpluses, windfall revenues from booming extractive industries, and excess foreign currency reserves.
But they said that the Philippines does not enjoy such excess. Instead, the country has a heightened fiscal deficit, has a so-so export performance, and has not enabled the major commodity exports to bolster foreign currency reserves. They also suggested that infrastructure spending can be more efficiently facilitated through annual appropriations, concessional lending, or public-private partnerships (PPP).
The revised Maharlika bill removed the two state pension funds, GSIS and SSS, as sources of seed money with a mandated combined amount of P150 billion.
However, the new Maharlika bill proposes that profits of the Bangko Sentral ng Pilipinas be used to bridge the funding gap left by the removal of GSIS and SSS, if enacted into law. In addition, the Land Bank of the Philippines, Development Bank of the Philippines, and the Philippine Amusement and Gaming Corporation would also contribute to the initial capital for the Maharlika Investment Fund.
The House appropriations panel also approved the proposal to exclude the General Appropriations Act as one of the mandatory sources of funding for Maharlika.
Southern Leyte’s Second District Representative Cristopherson Yap is a principal co-author of the Maharlika Bill, which he says is different from the one initially proposed.
It’s only from Landbank and DBP’s investible funds, which they will invest in other securities for earnings from their deposits to give to their depositors whether they invest or not their funds in the Maharlika, they will still invest as banks do.
“There is certainty of earnings because the fund will be managed by experts in trading; fund managers who have track records in the growth of invested funds. There are many safeguards specially because the use of the Santiago Principle is mandated or other guidelines used on sovereign investment funds worldwide.”
“There is a Governing Board, and Advisory Board and a Risk Management Unit to assure that the investment will gain. Unlike other businesses which depend on luck in order to grow. Also this is subject to COA audit. I supported its endorsement as among the sponsors of the bill because 25% of its earnings will go to social services for the people in our district who have not recovered from Odette, specially for those needing hospital services, education, repair for damaged houses cause by disasters. As we are a disaster-prone province, many farmers and fisherfolk still depend on assistance, notably coconut farmers who will wait for years before their coconuts become productive again.”
“This fund will also be used to construct bridges, roads and evacuation centers. Instead of availing of loans in the international market let us use investible funds from our OFWs, financial institutions and private entities.”