The House of Representatives started the first regular session of the 19th Congress on Wednesday, Aug. 3, 2022. (Photo from a livestream posted on the Facebook account of the House of Representatives)
MANILA, Philippines — Less than a week after receiving support from the country’s biggest business organization, the government’s bid to put up the country’s first sovereign wealth fund (SWF) suffered a big blow after the same trade group on Tuesday joined the growing opposition to the plan.
The Philippine Chamber of Commerce and Industry (PCCI) is now urging the government to reconsider the creation of the SWF, reversing its position last week as the first major private sector association to support the proposal contained in House Bill No. 6398, or the Maharlika Investments Fund Act, which was filed by Speaker Martin Romualdez, Ilocos Norte Rep. Sandro Marcos and four other lawmakers.
Since more details have become public about the Maharlika fund, PCCI president George Barcelon recommended that the government reconsider the amount of the seed fund as well as the timing of its creation.
The PCCI noted that drawing funds from government financial institutions (GFIs), including pension funds Government Service Insurance System (GSIS) and the Social Security System (SSS), might impact the sustainability of the country’s welfare system and financial standing among international creditors.
“Our government must make sure that no action will affect our presently good credit standing, which provides us lower foreign loan (rates),” Barcelon said.
The PCCI official cited the necessity of these loans to finance the government’s big-ticket infrastructure projects.
While Barcelon acknowledged that a sovereign wealth fund could serve as a conduit to further grow the Philippine economy, he cautioned that the timing might not be right, considering the uncertainty of financial markets due to geopolitical tensions as well as the recent cryptocurrency crash.
The PCCI’s latest policy statement was a reversal of its initial assessment of and earlier support for HB 6398, joining other private sector groups that made a similar call a day earlier to rethink the measure. These included the Financial Executives Institute of the Philippines, the Makati Business Club, and the Management Association of The Philippines.
Barcelon told the Inquirer last week that they supported the planned measure because it would help fund government activities to spur the economy and that there were safeguards as well as systems in place to ensure transparency.
Other fund sources
In the Senate, Majority Leader Joel Villanueva on Tuesday said the government could infuse about P132 billion in income from nonrenewable resources, such as mining, to the proposed SWF instead of tapping state-managed pension funds.
This would be better than accessing the contributions of GSIS and the SSS members, according to the senator.
“I support the idea of having a sovereign wealth fund. I think it’s a great idea,” Villanueva told reporters. “But for me, as much as possible, we should not include the GSIS and SSS pension funds. These two are pension funds. So their purpose are pretty different.”
He suggested just using P94 billion in taxes and regulatory fees collected from mining last year to bankroll the SWF.
Another P38 billion could also be sourced from the fees collected from the use, manufacture, and importation of single-use plastic products, he added.
“You can always look for other sources other than looking at the pension funds,” Villanueva said.
Sen. Risa Hontiveros insisted that there was no necessity to establish the Maharlika wealth fund, noting that it would be better to allot more funds for other basic sectors, such as education and health care.
In the Lower House, Albay Rep. Edcel Lagman on Tuesday said the proposed measure to create Maharlika should undergo thorough scrutiny.
He said: “Overwhelming issues beset the Maharlika proposals like its fiscal propriety, economic timeliness, legal constraints, protection of pensioners’ and depositors’ benefits, excessive emoluments and allowances of officials, precipitate investments, tax exemptions, and magnet for corruption.”
Other priorities
Activist groups agreed that the government should invest more in social services and production subsidies for rural workers rather than a program they said could be prone to corruption.
Fisherfolk group Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) said the Marcos administration should prioritize social benefits for workers and production subsidies for farmers and fishermen.
This could boost productivity and “ultimately stabilize prices,” according to Pamalakaya national chair Fernando Hicap.
Rather than relying on pension funds for seed money, Eufemia Doringo, secretary general of the urban poor group Kilusan ng Damayang Mahihirap (Kadamay), renewed an old call for the Marcos family to pay their long overdue estate taxes that had reportedly ballooned to P203 billion.
A group of martial law survivors, the Campaign Against the Return of the Marcoses in Malacañang (Carmma), suggested the same, noting that the Marcoses’ unpaid estate tax was almost the same amount being sought as the seed money for Maharlika.