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Romualdez suggests establishing a sovereign wealth fund.

For the benefit of all Filipinos, Speaker Martin Romualdez filed a measure on Monday to establish a sovereign wealth fund (SWF) to optimize the profitability of investable government assets.

The establishment of the Maharlika Wealth Fund (MWF) is proposed under House Bill No. 6398, which would primarily rely on donations from the Land Bank of the Philippines (Land Bank), Social Security System (SSS), Government Service Insurance System (GSIS), and Development Bank of the Philippines (DBP).

The planned MWF is based on the SWFs of 49 nations, including East Timor, Singapore, China, Hong Kong, South Korea, Malaysia, Indonesia, and Taiwan.

In introducing the bill, Romualdez stated that in order to fulfill the goals of the Agenda for Prosperity and President Ferdinand R. Marcos Jr.’s eight-point socioeconomic roadmap, the government must “improve investment opportunities, promote productivity-enhancing investments, and ensure that the Philippines becomes an investment destination.”

“State-owned investment funds known as sovereign wealth funds are often financed by a nation’s excess revenues or reserves. Governments invest this cash in a variety of physical and monetary assets to balance their national budgets, provide savings to their inhabitants, or spur economic growth, according to Romualdez.

He stated that “the proposed MWF will provide for the management, investment, and usage of the fund profits.”

He claimed that HB 6398 would provide the GSIS, SSS, Land Bank, and DBP with the chance to ensure that their respective funds’ optimal asset allocation and that resources are effectively directed to investments that will provide the most value not only to the participating GFIs but also to the nation, was accomplished.

Romualdez noted Singapore and Indonesia as examples of countries that had utilized their sovereign wealth funds to good effect.

As he pointed out, “Singapore’s SWFs provide the financial wherewithal for the city-state to manage its foreign reserves, defend itself and maintain its sovereignty without jeopardizing its domestic agenda, and augment its land-limited economic area with global investments.”

When it comes to Indonesia, the country has attracted foreign investors to jointly fund its SWF in order to attract much-needed investments in industries like transportation, including airports, supply chains, logistics, digital infrastructure, the green economy, health care services, the financial sector, technology, and tourism, ultimately accelerating the nation’s growth.

The establishment of the MWF, according to Romualdez, “becomes necessary as the Philippines solidifies its place not merely as the ‘Rising Star of Asia’ but as a real economic leader in the Asia Pacific.”

The MWF would follow the Santiago Principles to guarantee accountability and openness.

These are the 24 generally accepted rules and guidelines that international organizations, nations having SWFs, and nations that receive investment all agreed upon in Santiago, Chile in October 2008.

The stakeholders pledged that, among other things, SWFs will have in place an open and sound governance structure that offers sufficient operational controls, risk management, and accountability, and that SWFs will comply with all applicable regulatory and disclosure requirements in countries in which SWFs invest.

The proposed MWF will be administered by a governing body made up of representatives of the contributing GFIs under HB 6398.

Two additional independent directors are on the board.

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