Maharlika Fund

[JJReyes]

Anyone heard of the proposed Maharlika Fund?  The initial amount is estimated at 275 billion pesos.  Sounds similar to the 1Malaysian Development Berhad (1MDB) fund, one of the biggest global scams that left Malaysia with over USD 13 billion debt.  I thought sovereign funds are for countries with excess money like those in the Middle East from oil revenues. Philippines has a negative budget, negative trade balance and excessive foreign borrowing.  Where's the money coming for the Maharlika Fund?

[Jollygoodfellow]

12 minutes ago, JJReyes said:

 I thought sovereign funds are for countries with excess money like those in the Middle East from oil revenues. Philippines has a negative budget, negative trade balance and excessive foreign borrowing.  Where's the money coming for the Maharlika Fund?

Where will the money come from?
The bill’s explanatory note drew inspiration from the successful sovereign wealth fund of other countries in Asia, such as Singapore and Hong Kong.

But unlike the sovereign wealth funds in Singapore or Hong Kong, the Philippines won’t be financing the Maharlika fund from the country’s excess wealth or foreign reserves. It also won’t be funding it from natural resource extraction profits, unlike Norway and Kuwait.

Instead, the fund will be taking P275 billion in start-up capital from government financial institutions (GFIs):

Government Service Insurance System (GSIS) – P125 billion
Social Security System (SSS) – P50 billion
Land Bank of the Philippines (Land Bank) – P50 billion
Development Bank of the Philippines (DBP) – P25 billion
National budget – P25 billion
There are also expected annual contributions to the fund:

Bangko Sentral ng Pilipinas (BSP) – 50% of annual dividends
Philippine Amusement and Gaming Corporation (PAGCOR) – at least 10% of gross gaming revenue streams
National government – yearly contributions as determined in the annual national budget
Other sources such as special assessments on natural resources and public borrowings

https://www.rappler.com/business/things-to-know-maharlika-wealth-fund/

[JJReyes]

So, this means the government will move money from zero or low risk investments like Bangko Sentral bonds to high-risk investments like projects proposed by political cronies.  Still sounds like the left hand is borrowing from the right hand.

[Old55]

Bong Bong games.

[Dave Hounddriver]

2 hours ago, JJReyes said:

Where's the money coming for the Maharlika Fund?

They may have learned from Powell

[Possum]

Congress has to approve this and if they do I'd say corruption has gone to 100%

[Freebie]

A bill proposed by the cousin and seconded by his son..... and not entirely agreed to by the Senator sister.... Philippines inc.....well you get who you elect.

[Possum]

Seems like another political slush fund. Geez, the public hospitals have 2 people to a bed and people in the halls but the politicians want another 'investment' fund?? Of course politicians and their families don't use public hospitals

 

"But unlike the investments of government financing institutions, the Maharlika will be exempted from laws and regulations on public procurement, regular auditing, taxation and accountability.

So the HOR financial geniuses can forgive the economics-challenged folks if Maharlika looks like an effort to short-circuit good governance rules, all on the pretext of speeding up development projects without burying the country deeper in debt."

[Mike J]

Looks like the GSIS P125 billion, and SSS P50 billion, are being dropped as contributing to the fund.   Those two comprised over 63% of the fund.   Apparently this is not the "first rodeo" for some lawmakers.   

https://www.cnnphilippines.com/news/2022/12/7/Lawmakers-to-remove-SSS--GSIS-as-funding-sources-in-Maharlika-Wealth-Fund-bill.html

Metro Manila (CNN Philippines, December 7) — The Maharlika Wealth Fund (MWF) bill will be amended to remove major pension funds as funding sources, Marikina Rep. Stella Quimbo said Wednesday.

In a press statement, Quimbo — one of the bill’s authors and vice chairperson of the House appropriations committee — said the proposed sovereign wealth fund will utilize profits of the Bangko Sentral ng Pilipinas (BSP) instead of sourcing it from the Social Security System (SSS) and Government Service Insurance System (GSIS).

Under House Bill 6398 creating the fund, proponents identified the initial investment of ₱250 billion to come from the GSIS (₱125 billion), SSS (₱50 billion), Land Bank of the Philippines (₱50 billion), and Development Bank of the Philippines (₱25 billion).

Quimbo said the decision to amend the bill was a result of legislators' meeting with economic managers Wednesday morning.

"The discussions on the amendments shall be taken up by the Committee on Appropriations on Friday upon the instruction of (House) Speaker (Martin) Romualdez," she added.

SSS and GSIS officials earlier allayed concerns over the initial plan to invest a combined ₱175 billion, saying the income will benefit the country.

READ: GSIS, SSS allay concerns over ₱175-B investment in Maharlika Wealth Fund

Various groups had protested against the proposed fund, with some arguing that pensioners were not consulted.

According to Quimbo, public concerns over the nature of investment that the SSS and GSIS will make prompted lawmakers to remove them as contributors to the MWF.

She added, however, that the state pension funds are still welcome to invest "if they deem it appropriate in the future and obviously on a voluntary basis."

"It's not going to be closed doors for them as long as we set up the fund and it becomes a going concern at makikita naman na mataas ang returns [and there would be high returns], why not?" Quimbo said.

Quimbo also said the exact amount that the BSP will contribute will be decided on this Friday.

For Senate Minority Leader Koko Pimentel, the planned amendments showed that the measure was not well thought out, and should be returned to the authors.

Speaking to CNN Philippines' Politics as Usual, Pimentel said senators are "lukewarm" to the idea, and will only study the bill once submitted properly.

"Siguro balik na lang tayo sa talagang problema ng ating bansa, 'yung inflation, kakulangan sa pagkain, kahirapan," Pimentel added.

[Translation: Maybe we should just focus on the real problems of the country: inflation, lack of food, poverty.]

Safeguards
Quimbo assured the public that lawmakers will put safety nets in place as they tackle the Maharlika Wealth Fund bill.

The Bureau of the Treasury also said it supports calls to study the measure, but noted that there are already eight measures that will safeguard the fund's integrity.

"We agree that we need to ensure that all these safeguards are in place for the protection of the funds of the people," National Treasurer Rosalia de Leon said in a statement Wednesday.

"However, with the proper safety measures, I believe we should be able to proceed with the Maharlika Wealth Fund as this will ultimately benefit our people," she added.

De Leon also said internal audit is ensured in the bill  with an internationally recognized auditing firm to stand as the fund's external auditor, along with the Commission on Audit.

An advisory body composed of various secretaries will likewise assist the Board of Directors in formulating policies for investment and risk management.

"The Advisory Board will be sought for consultation in case of transactions that will affect Balance of Payments and monetary aggregates, especially those which impact domestic liquidity and reserve money," De Leon said.

Also, a Joint Congressional Oversight Committee will be tasked to oversee, monitor, and evaluate the implementation of the Maharlika Wealth Fund Act.

De Leon further pointed out that there is a specific provision to prevent unnecessary withdrawals from the fund.

"Section 15 of the bill states that no withdrawals of equity shall be made before 2028 and that, thereafter, equity withdrawals shall be made in accordance with the guidelines prescribed by the Board or the implementing rules and regulations of the Act," De Leon stressed.

[scott h]

22 hours ago, Jollygoodfellow said:

Instead, the fund will be taking P275 billion in start-up capital from government financial institutions (GFIs):

I believe this type of program is quite common in the states and elsewhere, both local government and private pensions are invested this way with fairly good results. HOWEVER when those few that fail, they fail spectacularly. 

The stumbling blocks here is the propensity of corruption and the lack of trust in all levels of government. The public firmly believes that public officials are more concerned with their own wealth and not the good of the constituents.

I am always remined of when Ponce Enrile ran for senator when he was well into his 90's. He was asked why he was running again. His answer was not for the good of the nation or to help implement his vision for improvements, it was, "I want to ensure my family is set up well for when I am gone" (or words to that effect"