NextGen Day

In response to concerns expressed by a number of sectors regarding the potential depletion of pension funds in the event that the investments should fail, former president and senior deputy speaker of the House Gloria Macapagal-Arroyo defended the House measure proposing the establishment of a sovereign wealth fund, known as the Maharlika Wealth Fund, on Monday.

Arroyo emphasized that sovereign wealth funds are not a new concept, citing Temasek Holdings and the Government of Singapore Investment Corporation, both of which have been in operation since 1981 and 1974, respectively, in Singapore.

The government, she added, always has money to invest.

Any fund’s performance, whether public or private, depends on how well it is managed. The President of the Philippines serves as the board’s chairman in the current iteration of the Maharlika Wealth Fund. This is a strong declaration that the nation’s highest office will be held ultimately responsible for the performance of the Fund by the Filipino people, she added in a statement.

The President will be able to rely on advice from the Department of Finance, which is responsible for the country’s good fiscal policy, once the fund is functioning. This is a vital resource that our country can rely on as being available since historically, the Philippines has had a strong track record in terms of its Finance Secretaries, she added.

The Maharlika Wealth Fund (MWF), which would be modeled after successful sovereign wealth funds around the world, will be established under House Bill 6398, which was introduced on November 28.

According to the proposal, the Land Bank of the Philippines, Social Security System, Government Service Insurance System, and Development Bank of the Philippines will each contribute PHP250 billion in equity to launch the fund.

Arroyo pointed out that the government financial institutions would invest the money nonetheless “in order, ideally, to optimize returns and create funds that contribute to or augment the financial resources at the government’s disposal for programs and initiatives that benefit the Filipino people.”

She added that the MWF would benefit from consolidated, focused, and accountable management and would have an established method for future contributions.

According to Arroyo, “the fund will essentially be housed in what might be looked at as a special purpose vehicle, and so its operations can be viewed, followed, and monitored more transparently, not just by the domestic financial community, but by the international financial world as well.”

She added that in 2016, former senator Paolo Benigno “Bam” Aquino also submitted a measure to establish such a fund.

Sandro Marcos, a senior deputy majority leader, made a similar observation.

“Well, if you give it some thought, this isn’t a novel concept. During the administration of [President Rodrigo] Duterte, Secretary (Benjamin) Diokno already stated that they were investigating it. After the Bicameral Conference Committee meeting on the 2023 national budget on Monday, Marcos told reporters in the House, “If I’m not mistaken, former Senator Bam Aquino introduced a bill in 2016 trying to achieve the same thing.

He continued, “This is something that has been in the works or something that has been promoted by former administrations, not just this one.

The President of the Republic, in this case, President Ferdinand R. Marcos Jr., is required to head the 15-man Board under the present version, he added, but it just so happens that the proposal was reintroduced at the beginning of the Marcos administration.

Therefore, he said, “we have six years to try to construct a piece of legislation that will see out and go beyond the President’s tenure.”

Yes, the President will preside over the board, but the bigger picture must be considered. This is something that will continue, not just for the next six years, according to Marcos.

Speaker Martin Romualdez, Senior Deputy Majority Leader Marcos, Yedda Romualdez, Chair of the Accounts panel, Majority Leader Mannix Dalipe, Deputy Majority Leader Jude Acidre, and Stella Quimbo, Vice Chair of the Appropriations panel, all contributed to the creation of HB 6398.

The establishment of the MWF, according to Romualdez, will give fund managers “the opportunity to ensure their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled to investments that will provide the most value not only to the participating GFIs but also to the country.”

He added that having the MWF will contribute to achieving the goals of Marcos’ “Agenda for Prosperity” and the socioeconomic roadmap’s eight points.

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.”

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