NextGen Day

According to Benjamin Diokno, the secretary of finance, the proposed sovereign wealth fund (SWF) could be approved by the middle of 2023 and will have long-term economic benefits.

Diokno downplayed the likelihood that the proposed legislation would be approved before the end of 2022 in an interview with journalists that followed the economic managers’ meeting on Monday.

Not by the end of the year because the schedule is so tight. Before the budget is filed, perhaps (by) the middle of the following year. As it will take time to organize, please be patient. (Not by the end of the year, as things are already crammed in. Before the budget is filed, perhaps by the middle of the following year. It needs to be organized, so it will take some time,” he remarked.

The modifications made by the technical working group for the planned Maharlika Investment Fund, which was created by House Speaker Martin Romualdez, were approved and adopted by the House Committee on Banks and Financial Intermediaries last week.

The SWF will be financed by pooled funds from state-owned financial institutions and state pension funds under the proposed plan.

The Government Service Insurance System will specifically donate the largest portion of PHP125 billion, followed by the Social Security System, the Land Bank of the Philippines, and the Development Bank of the Philippines, each of which will give PHP50 billion and PHP25 billion respectively.

A three-tiered auditing process that will be carried out by an internal auditor, an external auditor, and the Commission on Audit is planned to guarantee the safety of the SWF’s capital.

Through the Board of Directors, the advisory body, the risk management teams, and the congressional oversight committee, a four-layer sound corporate governance structure will also be in place.

Given the number of anticipated infrastructure projects and the availability of finances, such as the government’s portion of the Malampaya Fund, Diokno claimed that the Philippines had long needed an SWF.

He claimed that the SWF might also be funded by royalties that the government would get from mining endeavors.

The national government’s portion could rise to PH50 billion or possibly PH100 billion as state revenues keep growing, he said, adding that each proponent’s stake is subject to alter based on the decision of their separate Boards.

He stated that eventually, they might also permit overseas investors to make contributions to the SWF.

By pointing out that the assets invested in the welfare fund are long-term investments, he also disputed the need to provide national guarantees for cash placed in the SWF.

Some have criticized the planned welfare fund and questioned why the President of the Republic must serve as its chairman.

However, Diokno asserted that the management of the welfare fund will be free of politics and that best practices will be applied.

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