BACK FROM DAVOS | President Marcos and first lady Liza Araneta-Marcos arrive at Villamor Air Base in Pasay City on Saturday afternoon from his weeklong participation in the World Economic Forum meetings in Davos, Switzerland. —PNA PHOTO
ZURICH, Switzerland — The Philippines’ soft launch of Maharlika Investment Fund (MIF) has drawn “substantial” interest — as well as concern — from global investors here as President Ferdinand “Bongbong” Marcos Jr. kept the doors open to suggestions on how to customize the proposed sovereign wealth fund to the country’s needs.
“The more we study it, the more it’s clear that although the sovereign wealth funds around the world have the same name, they’re all very different. They’re different in purpose, they’re different in methodology and of course, they operate in a different context of law,” Marcos said at a press briefing on Friday at the end of his weeklong participation in the World Economic Forum (WEF) meetings.
“So, we have to design it very specifically to the Philippine condition, and that’s what the legislators are trying to do now: to make sure that it is customized for us and it will be a good thing for us. So that’s the process that we’re undergoing now,” Marcos said.
In a separate interview, Speaker Martin Romualdez, who was part of the Philippine delegation, said the MIF became a “topic of discussion and interest” during their meetings with global investors.
“It is the vehicle that most countries, not just developed countries but developing countries, utilize to attract investments for development, for infrastructure projects that need a long gestation of capital investments into these ventures,” Romualdez said.
“This will guarantee solid returns, not just for the local investors, but of course, for the international investors from which we’ve already received substantial interest and, well, concern in terms of what will be the final makeup,” Romualdez said.
Villar to file Senate bill
After the MIF bill was approved by the House of Representatives, Sen. Mark Villar, who was also part of the Marcos delegation, agreed to sponsor the Senate version.
Back home, various groups earlier raised concerns that the proposed sources of funding, namely the Land Bank of the Philippines (Landbank), the Development Bank of the Philippines (DBP), and the Bangko Sentral ng Pilipinas (BSP), all have histories of government bailouts and recapitalization.
There have been proposals to address governance concerns by having the government own less than 50 percent of the fund, with the balance best taken up by multilateral organizations like the Asian Development Bank, International Finance Corp., Asian Infrastructure Investment Bank, and private investors.
Finance Secretary Benjamin Diokno has said in an interview with the Inquirer that taking in external multilateral investors would be on the table.
On the proposal for the MIF to go public or sell shares through an initial public offering (IPO), Mr. Marcos said this was a suggestion from one of the CEOs.
“We’ll see if that is suitable for the Philippines because some funds have done it,” he said.
Salceda statement
But Marcos was baffled when asked about a new framework cited by House ways and means committee chair Joey Salceda to make the fund private sector-driven.
Instead of tapping dividends or assets from BSP, DBP, and Landbank, Salceda said the seed money should be sourced from the securitization of dividends from government-owned and -controlled corporations (GOCCs). This means selling securities backed by future GOCC dividends.
“I don’t know what he is saying that I approved. It may be the original language for the bill. There were consultations on that,” Marcos said.
“Maybe Cong. Joey is referring to our exchange of communication before the bill was filed to see if that’s the direction that we wanted to do. So, we came to a consensus,” he said.
For his part, Romualdez said there were many ways to structure the fund and raise funding but he noted that economic managers led by Diokno agreed that “you have to put your money where your mouth is.”
This suggested that the government must still have a greater stake in the fund, even if it were to be opened up to external investors.
Asked about criticisms that the soft launch was “premature,” Romualdez said: “On the contrary, we’re late — we really were; we’re really far behind … You see the better performing sovereign funds; they’ve been around for decades.”
Lagman: Recall House bill
Opposition Rep. Edcel Lagman on Saturday said House Bill No. 6608, which set up the Philippines’ sovereign fund, should be recalled to discuss the “belated innovations” proposed by Salceda.
Salceda said in interviews with the Inquirer and ANC that GOCC dividends, or “real surpluses,” would be used as initial funds for the MIF. These total to about P44.3 billion annually and would be securitized in 20 years and that amount could grow to P765.96 billion.
An IPO would follow, which means that MIF Corp. will become a listed company in the Philippine stock market.
He said the latest version would make the MIF more attractive to foreign investors and would allow more private-sector participation.
Lagman disagreed with using GOCCs’ dividends, which have been allocated annually for “budgetary support.”
“These dividends must not be parked in long-term contingent investments as they are urgently needed for immediate utilization to address the requirements of basic services like education, health, employment, fund security, and infrastructure,” he said.
Lagman also opposed an IPO because a sovereign wealth fund “must be essentially controlled by the government.”
Possible amendments
Senate President Juan Miguel Zubiri on Saturday said the latest revisions proposed by Salceda “may be part of amendments that can be adopted by the Senate” to be tackled by Villar, chair of the Senate Committee on Banks, Financial institutions and Currencies.
But like Lagman, Zubiri said getting dividends from GOCCs could be a problem because “the funds will no longer form part of the income of the government once we start framing the (national budget).”
But with the president’s certification of the measure as urgent, the Senate is inclined to accede to the executive’s thrust, he said.
“The bottom line is that this bill will pave the way to improve the country’s economy through development programs, development projects; it will aim to increase—could double, triple or quadruple—the growth of this fund,” he said.