Marikina Rep. Stella Quimbo, shown here delivering a privilege speech on Nov. 16, 2020, at the House of Representatives. (File photo from the House of Representatives)
MANILA, Philippines — Lawmakers proposing the Maharlika Investment Fund (MIF) on Wednesday decided to drop the Government Service Insurance System (GSIS) and the Social Security System (SSS) as contributors to the sovereign wealth fund in the wake of mounting opposition from several business groups, civil society, and even legislators.
Marikina Rep. Stella Quimbo, senior vice chair of the House appropriations committee, said in a media briefing that proponents of House Bill (HB) No. 6398, or the Maharlika Investments Fund Act, also agreed to remove the mandatory contribution from the General Appropriations Act or the national budget, noting that the goal was to look for a surplus fund to be an investment vehicle for higher returns and, in turn, result in a bigger budget for government programs.
HB 6398, which was filed last week by Speaker Martin Romualdez, presidential son and Ilocos Norte Rep. Ferdinand Alexander “Sandro” Marcos, and other administration allies including Quimbo, seeks to establish a P275-billion sovereign wealth fund with an initial investment of P250 billion from the GSIS, SSS, Land Bank of the Philippines and Development Bank of the Philippines (DBP), and P25 billion from the national government.
In lieu of funding from state-run pension funds for workers and the budget, Quimbo said profits of the Bangko Sentral ng Pilipinas (BSP) would be added to the seed money from Landbank and DBP, two government banks that would still be required to contribute P50 billion and P25 billion, respectively.
Opposition to the Maharlika Wealth Fund was mainly due to the involvement of GSIS and SSS funds, as members objected to the use of their contributions.
A petition on Change.org seeking to block the passage of the bill has so far garnered more than 48,000 signatures.
Quimbo expressed optimism that the changes to the bill would help lessen the criticism of the Maharlika fund.
“That is the good thing about the consultations we conducted, we saw what the concerns were, where the fears are coming from. And it is important to listen to the voice of the people and respond to these concerns,” she said.
Turning point
Quimbo said their decision came after the proponents of the measure met on Wednesday with the administration’s economic officials, including BSP Governor Felipe Medalla, who earlier expressed reservations about the Maharlika fund.
“Based on our assessment of the proposed changes put forward by the economic team, we are amending the bill to change the fund sources, removing GSIS and SSS as fund contributors and instead utilize profits of the [BSP],” Quimbo said.
She added: “Our countrymen’s reservations were validated, especially those of our Filipino workers who are diligently paying their monthly GSIS and SSS contributions.”
Quimbo said the decision to remove the GSIS and SSS contributions from the picture came from the primary authors themselves.
“There are concerns raised about the nature of the investment to be undertaken by the GSIS and SSS in the Maharlika Wealth Fund, so we thought it better not to compel the GSIS and SSS to contribute initially to the fund,” she said.
Asked if lawmakers were conceding to the argument of critics that GSIS and SSS pension funds are private funds, Quimbo said it “was not the main motivation why we are amending the fund sources.”
“It’s really just to allay the fears of our contributors. We expect this to be a going concern. If our countrymen will eventually see that the returns are good, maybe in the future they can contribute, subject of course to the board’s approval,” she said.
Quimbo added: “Nothing will stop them from investing if they deem it appropriate in the future and obviously on a voluntary basis. It’s not going to be closed doors for them, as long as we set up the fund and it becomes a going concern and the returns are good, then why not.”
The amendments to the bill will be formally introduced during the House appropriations panel’s hearing on the measure on Friday.
House Majority Leader Manuel Jose Dalipe earlier said they were planning to have the bill creating the Maharlika fund approved on second reading before Congress goes on break for the holidays.
He was hopeful that HB 6398 would reach plenary deliberations this month.
Professionally run
“We’re trying to. My estimate is probably by second reading this December,” Dalipe told reporters on Wednesday.
This means that the lower chamber has three plenary session days left to tackle the revised HB 6398 before Congress goes on break on Dec. 17.
Earlier on Wednesday, GSIS President and General Manager Arnulfo Veloso had allayed public fears over the possible misuse of government funds in the MIF.
Veloso, a veteran private banker who previously headed the local HSBC unit and the Lucio Tan-owned Philippine National Bank (PNB), said during the televised Laging Handa briefing that GSIS had allocated P125 billion for the MIF that it initially set aside for investment in infrastructure projects.
He said this would be a “very small amount,” pointing out that the GSIS has P1 trillion under its “Assets Under Management” and collects P26 billion a month from its members.
The GSIS chief said there would be layers of transparency to ensure that the funds would not be misused, noting that an internationally renowned accounting company would be hired to audit the Maharlika fund, while the Commission on Audit (COA) would also exercise its oversight function, in addition to a congressional oversight.
In a separate interview with the Inquirer, Veloso said he had proposed that the board of the Maharlika be augmented by investment professionals and financial market experts such as representatives of the Philippine Stock Exchange and the Bankers Association of the Philippines.
These people, he said, would be able to put their expertise to good use in overseeing the fund, especially since they are experts in managing risk and identifying investment opportunities as part of their profession.
“This will not be the same as 1MDB because, in that case, the prime minister had the sole authority for approving investment decisions,” he said, referring to the ill-fated Malaysian sovereign wealth fund which suffered massive losses as a result of a corruption scandal involving now jailed former Malaysian Prime Minister Najib Razak.
Protests
Meanwhile, fisherfolk, urban poor and wage workers on Wednesday trooped to the House of Representatives to reject the MIF, which they said “reeks of corruption and grave anomalies.”
Anakpawis president and former lawmaker Ariel Casilao likened the Maharlika fund to the Coconut Industry Investment Fund of the late strongman Ferdinand Marcos Sr., which taxed coconut farmers with a promise of a share of the investments in the coconut industry.
“[It] was established supposedly to develop the coconut industry that would be facilitated by the farmers themselves. Billions were stolen from farmers for decades, with the fund used as capital in different corporations, but (the farmers) got nothing from it,” said Casilao.