Critics roll out petition against Maharlika fund
Batasang Pambansa plenary. —MALACAÑANG FILE PHOTO
An online petition is seeking to block the creation of the Maharlika Wealth Fund principally because it will use pension funds from the Government Service Insurance System (GSIS) and the Social Security System (SSS) which will be placed in high-risk investments with no representation from pension contributors.
The “Hands off our SSS and GSIS contributions, NO TO House Bill 6398!” petition was launched on Change.org on Thursday by David Michael San Juan, a professor at the De La Salle University and the third nominee of ACT Teachers party list.
It noted that the bill’s prime movers included Speaker Martin Romualdez, a cousin of President Ferdinand Marcos Jr., and Deputy Majority Leader Ferdinand Alexander Marcos, the President’s son.
In the version of the bill approved by the House banks and financial intermediaries panel on Thursday, the President was to be the chair of the state-owned Maharlika Wealth Fund Corp. that will manage the sovereign wealth fund.
Mr. Marcos is the son of the late former President Ferdinand Marcos Sr., who was ousted by the 1986 Edsa People Power Revolution.
“We don’t want the fox to guard the chicken coop, right? We will lose all the chickens! Have we not learned from 1972 to 1986?” the petition said.
As of 11:35 p.m. on Friday, the petition had more than 3,800 signatures.
Finance Secretary Benjamin Diokno told reporters on Wednesday that the idea of a sovereign wealth fund was conceived during the previous administration.
He said an interagency committee, which included officials from agencies, such as the National Economic and Development Authority and government financial institutions, “talked among ourselves” and presented the sovereign fund proposal to former President Rodrigo Duterte. The officials then prepared a bill, he said.
Diokno said he was asked to make sure that the fund would not be identified with the president, “so that whoever is in office could not meddle with how the fund will be used.”
The proposed sovereign wealth fund will be an investment fund that will draw money from GSIS and SSS contributions and two state banks, the Land Bank of the Philippines and Development Bank of the Philippines (DBP).
House Bill No. 6398, proposes an initial investment of P250 billion from the state-run pension funds and the two banks, plus P25 billion from the national government.
The proposed fund received a lukewarm response from several senators, with the President’s own sister, Sen. Imee Marcos, warning the government against gambling state-managed pension funds in high-risk investments.
“This is worrisome. We really need to think if it’s the right time and if the Philippine is ready for a sovereign fund now,” Marcos told reporters in an interview on Friday. “Our foreign debt is still huge, but we’re [investing in this] sovereign fund? Is it the right time to make high-risk investments when the global economy is in bad shape?” she said.
The senator said the government should not wager the retirement funds of state workers as it might end up in a “disaster” like what happened to 1Malaysia Development Berhad (1MDB).
1MDB scandal
Malaysia lost about $4.5 billion from the corruption-tainted 1MDB from 2009 to 2014. It ended the political career of then Prime Minister Najib Razak, who was convicted in 2020 for illegally receiving $10 million from a unit of 1MDB.
The 1MDB scandal led to a string of investigations in at least four countries, including the United States, where the Malaysian fund supposedly kept part of the money through questionable investments and money-laundering activities.
Sen. Risa Hontiveros shared Marcos’ concerns, pointing out that pension funds being managed by the GSIS and the SSS were still owned by public and private sectors workers.
“Given very strict rules … laid out in the charter (of GSIS and SSS), the state cannot just utilize these funds because [these are just] held in trust by the government for the members,” Hontiveros said.
The petition said the bill had no clear provision for worker or employee representation in the fund’s governing body despite the fact that the money from GSIS and SSS members would form the bulk of the fund.
Salceda vows ‘zero risk’
In response, one of the bill’s chief proponents, Albay Rep. Joey Salceda, said a technical working group had proposed that one of the independent directors of the government corporation that would manage the fund would serve as their representative. Workers could also be represented in the company’s advisory body, he added.
Salceda assured the public of “zero risk” to GSIS and SSS investments, which would be in the form of preferred shares or convertible notes as they are “100-percent government-guaranteed.”
“In other words, the GSIS and SSS are not exposed to the downside, but they can benefit from the upside,” he said.
Among the 13 objections to the fund presented in the petition was the absence of any “mechanism to directly give profits to citizens” especially the SSS and GSIS members.
It added that the allocating money for the fund in the annual national budget or supplemental appropriations could “possibly reduce available funds for vital social services, such as health care, education, housing, etc.”
The petition also questioned the bill’s limit on administrative and operating expenses, alleging that public funds may be used by bureaucrats “who know nothing and do nothing for the country.”
Salceda downplayed the possible reduction of DBP and Landbank funds that could otherwise be used to support micro, small and medium enterprises (MSMEs).
The two banks already have diverse investment portfolios, and that returns from potentially high-yield investments will expand, not diminish, their capacity to lend to MSMEs, he said.
Salceda said the initial contributions will amount to just 1.9 percent of Landbank assets and 2.1 percent of DBP’s.
Angara to lead group
“This is hardly the size of investment that would threaten MSME lending,” he said.
As to the state-run pension funds, Salceda said the Maharlika Wealth Fund seeks to improve the performance of the SSS and GSIS since their investment portfolios were restricted from investing in any foreign stock.
In addition, the 2-percent limit on expenses is consistent with national and international benchmarks, the lawmaker said.
Senate President Juan Miguel Zubiri said he will assign a group to be led by Senate finance committee chair Sen. Juan Edgardo Angara, to closely look into the proposed sovereign fund to determine if it was “necessary.”
“If so, we need to ensure that it is managed properly and the safeguards are in place so that it would not be misused or [be] prone to corruption,” Zubiri said.
“We owe that to the public as this fund will involve public funds borne out of the taxes from the sweat and tears of our people. We must make sure that there is full transparency and efficient utilization of this fund,” he added.
Senate Minority Leader Aquilino Pimentel III said the seed money should come from “surplus funds and it must be ‘ours,’ meaning belonging to the Filipino people as a collective.” Sen. Sherwin Gatchalian supported the creation of the fund despite the country’s ballooning budget deficit and external debts.
“We’re ready for this,” he said. “The concerns about corruption will be addressed through the safeguards … Of course, there should be transparency.”
Gatchalian said he would file a counterpart measure, containing safeguards to protect the fund from corruption and ensuring “professional management, checks and balances, and disclosure.”
He said the concept was not new as some senators had previously filed a similar measure, including one by former Sen. Bam Aquino during the 17th Congress.
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