February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Maharlika was still flawed after pensions were excluded as funders

SPEAKER Martin G. Romualdez during the opening of the 19th Convention at the House of Representatives in Quezon City on July 25. – PHILIPPINE STAR/ KRIZ JOHN ROSALES

By Beatriz Marie D. Cruz

THE proposed Maharlika Wealth Fund (MWF) continues to face governance “red flags” even after the chief financiers of the Government Service Insurance System (GSIS) and Social Security System (SSS) withdrew from participation.

Filomeno S.Sta. Ana III, co-founder and coordinator of think tank Action for Economic Reforms, told BusinessWorld Live that House Bill 6398 creating the MWF “retains very controversial provisions that are inconsistent with good institutions, good governance, potential caring (and) good oversight are regulations.”

Mr. Sta. Ana said that the Philippines is currently not eligible for a sovereign wealth fund. “Even if we get the concept right, we just don’t have the right conditions. It depends on the surplus we have and it has to be a very big surplus,” he said.

On Wednesday, Stella Luz A. Quimbo, Vice Chair of the Budget Committee, Stella Luz A. Quimbo said that GSIS and SSS had been excluded as sources of funding for Maharlika.

David Michael M. San Juan, a professor at De La Salle University and organizer of the Professionals for a Progressive Economy (PPE), said some reservations were somewhat alleviated by the withdrawal of the two pension funds.

However, another proposal to use central bank profits will reduce funding for education, health care and housing.

As alternatives, Mr. San Juan suggested “imposing a wealth tax on Filipino billionaires and cutting/reducing the salaries of BSP, GSIS, SSS bureaucrats, senators and palace executives. Corruption and wasteful spending in government must also end,” he said in an email.

He also suggested the “abolition of agencies like NTF-ELCAC (which has been allocated 10 billion pesos for the next year) and the reduction, if not complete removal, of confidential funds.”

He was referring to the National Task Force to End Local Communist Armed Conflict.

Jose Enrique A. Africa, executive director of the IBON Foundation, said the changes “(don’t) fix so many of the proposal’s other shortcomings” and called it “maliciously opaque”.

In a text message, he said: “There are no real safeguards in place, and with the extensive mandate on the use of funds, it appears designed to be used for narrow self-serving purposes outside of public scrutiny.”

“The proposal is clearly not backed by proper human resources work, has not been consulted with key stakeholders and has only been pushed forward at committee level. This is evident from the muddled declarations of the fund’s objectives, where there are public justifications from proponents that are at odds with the provisions of the bill,” Mr Africa said.

Senate Minority Leader Aquilino Martin D. Pimentel III said in a statement that the changing Maharlika funding proposals indicate that the bill “remains an idea that was … not well thought out and hasty (and) one.” will have a difficult time in the Senate.”

Senator Emmanuel Joel J. Villanueva welcomed the bill’s changes but suggested the plastics and mining industries as alternative sources of seed capital for the fund. He said in a statement there was a need to be “careful about the sources of funds and the way they are managed.”

Rep. Paul R. Daza, senior deputy minority leader in the House of Representatives, said there should be no rush to pass the bill. In a statement, Mr. Daza said that “there is a right way to run this fund. Let’s not rush this through Congress, please. We need to look at this carefully and create a working MWF that fits our current economic situation.”

Ms. Quimbo said the House Budget Committee will meet on Friday to discuss how much the central bank should contribute to the $275 billion plague fund.

As originally written, the bill provided for the GSIS to provide capital of 125 billion pesos, the SSS and Land Bank of the Philippines 50 billion pesos each, and the Development Bank of the Philippines 25 billion pesos.