Ex-president Arroyo: Management key to the success of sovereign wealth fund
MANILA, Philippines — The success of any proposal to create a sovereign wealth fund (SWF) relies heavily on proper management of the investment corporation handling it, former president and now Senior Deputy Speaker Gloria Macapagal Arroyo said.
Arroyo, in a statement, noted that House Bill No. 6398, which contains the proposal to create a Maharlika Investment Fund (MIF) — managed by a Maharlika Investment Corporation (MIC) — has issued a bold statement by having the sitting president as the head of the MIC board.
Arroyo added that accountability regarding the MIC’s performance rests on the president being the governing board’s chairperson.
“The success of any fund, sovereign or private, lies in the quality of its management. In the current version of the Maharlika Wealth Fund, the President of the Philippines chairs its governing Board. This is a powerful statement that the highest official of the land will hold himself ultimately accountable to the Filipino people for the performance of the Fund,” she explained on Monday.
Arroyo, a known economist who was president from 2001 to 2010, said that President Ferdinand “Bongbong” Marcos Jr. could rely on the Department of Finance for its fiscal policy — noting that the country has had a record of good Finance Secretaries.
“Once the Fund is operational, the President will also be able to count on advice from the Department of Finance, the nation’s steward of sound fiscal policy,” she said.
“Historically, the Philippines has had a good track record insofar as its Finance Secretaries are concerned, so this is a valuable resource that our country can count on as available,” she added.
House Bill No. 6398 has gained a lot of flak from opposition lawmakers and netizens as the proposed SWF would tap into the funds of government-owned and controlled corporations like the Government Service Insurance System (GSIS) and the Social Security System (SSS) — at P125 billion and P50 billion, respectively.
This means the premiums or monthly contributions of workers in the government (GSIS) and the private sector (SSS) would be used — something that lawmakers questioned if it is ethical because the government could lose money when investments do not reap high returns.
However, proponents of the bill, like Marikina 2nd District Rep. Stella Quimbo and Ilocos Norte 1st District Rep. Ferdinand Alexander Marcos, promised to put in place safeguards and that the House is not rushing the bill.
Arroyo, for her part, said that having an SWF would benefit the country.
“First, the Fund is seeded by investible funds from GFIs that they would invest, anyway, in order, ideally, to maximize returns and generate funds that contribute to or supplement the financial resources at the disposal of the government for programs and projects that benefit the Filipino people. Second, the Fund will have an established mechanism for future contributions,” Arroyo said.
“Third, the Fund will benefit from a centralized, specialized, and accountable management. Fourth, the Fund will in essence be housed in what can be thought of as a special purpose vehicle, and thus its operations can more transparently be observed, tracked, and monitored, not just domestically, but by the international financial community as well,” she added.
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