‘Maharlika Fund listing to boost transparency’

By: Jeannette I. Andrade - 2 years ago

Albay Rep. Joey Salceda

Albay Rep. Joey Salceda on Wednesday maintained that he would not want the Maharlika Investment Fund (MIF) to just be another government entity, as he proposed that the country’s economic managers have it publicly listed and seek out international banks as the sovereign wealth fund’s strategic partners at the outset.

Such a move, as the House committee on ways and means chairperson pointed out, would ensure transparency as well as good corporate governance and oversight of the MIF.

According to Salceda, the administration’s fiscal managers should “commit to listing MIF in the stock markets here and abroad, and engage strategic partners among the multilateral banks” to ensure “good corporate governance and oversight, and to leverage private sector funding.”

“The best way to make it work is through the capital markets. Make Maharlika a listed company. List it secondarily in other stock markets abroad. Engage World Bank, Asian Development Bank and other international banks as strategic partners. That will increase oversight of the bank. More people will want more information before they invest. It will increase transparency,” he said.

The lawmaker noted that the final version of the MIF bill sent to President Marcos may be silent on public listing, but such is implied.

“I hope for a more explicit plan of action in the implementing rules and regulations. This can’t be just another [government-owned and -controlled corporation (GOCC)],” Salceda said, pointing out that the MIF could be President Marcos’ potential economic superpower, or super tool, “only if it’s used to build things rather than hidden in the toolshed.”

“It has to be a publicly listed company with strategic international partners, so it’s out in the open. Otherwise, you end up with a company like the National Development Corp.—an investment GOCC with strategic projects, but acts mostly on its own and has no public ownership.”

Strict disclosure

He explained that listed companies are “subject to stricter disclosure standards. That is why, in the House version [of the MIF bill], we expressly discussed and envisioned eventual public listing. It was in all the presentations. It was in all the discussions. And we believed it to be a very strong safeguard.”

Salceda pointed out that placing independent directors to make up a third of the MIF Corp.’s board members was “designed to prepare MIF for public listing.” “Even companies with legislative franchises are required to list publicly,” he said.

“And of course, we should allow the public to contribute to and share in the success of the MIF. What better way than to list on the stock exchange?” he added.

He further pointed out that the MIF could “energize the capital markets once it lists as a publicly traded company” and improve the “lackluster” performance of the Philippine Stock Exchange Index.

“One of the reasons for the sluggishness of the Philippine stock exchange is the lack of options for investors. Across the Asean 6, we have the fewest public companies, at just 286. Even Vietnam, a communist country, has 745 companies in their stock exchange,” the lawmaker noted.

“Once Maharlika is introduced in the stock market, it could easily command a market capitalization of at least 780 billion, even assuming just that the authorized capitalization will be book value. Government-linked companies tend to command a 20-30 percent premium in valuation, and I see no reason why that will be less of a case with Maharlika.”