We, concerned citizens from the civil society, academe, and private sector, ask the Executive and Congress to scrap the Maharlika Wealth Fund (MWF) bill or House Bill (HB) 6398.
Establishing a Sovereign Wealth Fund (SWF) is not novel. Given the right conditions, institutions, and governance, it is a relevant investment fund.
Unfortunately, HB 6398 distorts the core concept of a sovereign wealth fund, and it is an ineffective measure to address the bill’s stated intentions.
The MWF is a warped version of what the SWF should be. Sovereign wealth funds usually solve a problem of excess. Some examples: excess revenues in a situation of consistent large budget surpluses, windfall revenues from booming extractive industries, and excess foreign currency reserves from enduring balance of payments surpluses, which are invested abroad to help stem currency overvaluation. But the Philippines does not enjoy such excess. Instead, the country has a heightened fiscal deficit, has a so-so export performance, and has not enabled the major commodity exports to bolster foreign currency reserves.
Furthermore, the MWF’s stated intention to “create jobs, promote trade and investments, strengthen connectivity, expand infrastructure, achieve energy and food security” can be achieved more effectively through other established measures.
The administration’s goal of promoting infrastructure spending can be more efficiently facilitated through annual appropriations, concessional lending, or public-private partnerships (PPP).
House Bill 6398 establishes a Maharlika Investment Corporation and a corresponding Maharlika Investment Fund, but it fails to establish a clear operationalization of its principles; lacks proper safeguards and disciplining mechanisms; and only pays lip service to the “Santiago Principles.” It is also alarming that the Fund pulls primarily from the pension funds of the Government Service Insurance System (GSIS) and Social Security System (SSS), exposing contributors’ savings to unnecessary, unmitigated risk.
The Maharlika scheme is essentially a “behest” transfer by ordering entities like the GSIS, SSS, Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and the Banko Sentral ng Pilipinas (BSP) to participate by quota when there is no inherent reason for these to do so. It undermines the autonomy of their investment decisions and pre-empts their portfolio choices, not necessarily in an optimal fashion. In other words, the Maharlika Wealth Fund Corporation usurps the investment decision-making of independent institutions, thus weakening them and undermining their credibility.
For instance, a provision in the MWF bill deprives the BSP of 50% of what it should be receiving in dividends to be counted as equity infusion, undermining its independence and ability to stabilize prices and the exchange rate.
A sovereign wealth fund should mitigate the impact of volatility and unpredictability while enabling a nation to achieve its long-term macroeconomic objectives. The rules of the game—the institutions, governance, and incentives—that define HB 6938 run counter to principles of prudential regulation and risk management, conflict-of-interest avoidance, transparency, and accountability. This muddled, inconsistent, and redundant bill is only setting the MWF up for failure, and will only enable cronyism, rent seeking, and corruption.
While the Philippines may someday see the windfall revenues to sustainably fund its sovereign investments, this current proposal misses the mark by far. We are better off pursuing the necessary fiscal reforms to achieve our socioeconomic objectives; enacting an inclusive and sustainable budget that prioritizes health, social protection, and infrastructure; reforming our pension system; and improving the country’s governance and institutions to enhance our prospects for investment.
Thus, we call for the scrapping of House Bill 6398.
Signatories:
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Filomeno Sta. Ana III
Jenina Joy Chavez
Nepomuceno Malaluan
Jessica Reyes-Cantos
Victoria Viterbo Quimbo
Janet Carandang
Jo-ann Diosana
Ma. Teresa Habitan
Milwida Guevara
Eddie Dorotan
Fernando Aldaba
Randy Tuaño
Alberto Lim
Solita Collas-Monsod
Florencio Abad
Emmanuel de Dios
Diwa Guinigundo
Cielito Habito
Benjamin T. Tolosa, Jr.
Dan Gatmaytan
Dante Canlas
Rowena Guanzon
Kenneth Isaiah Ibasco Abante
Laurence Go
Michael Ocampo
Jerik Cruz
Carmel V. Abao
Arjay Mercado
Niza Zuñiga-Salinas
Nadine Agustin
Adolfo Jose Montesa
Sofia Rodrigo
Georgina Hernandez Yang
Loreli C. de Dios
Joyce Enriquez Sierra
Toby Monsod
Maria Socorro G. Bautista
Maria Serena I. Diokno
Buenaventura Dargantes
Menandro Berana
Eirene Jhone E. Aguila
Carlo Angelo Z. Cordero
Emmanuel Esguerra
Melissa F. Encarnacion
Mario Lamberte
Germelino Bautista
Cynthia B. Bautista
Reycel Hyacenth Nacario Bendaña
Lyonel Tanganco
Carlos C. Bautista
Fides Lim
Rene Raya
Rafael Parede
s
Nancy P. Rodrigo
Fabian Dayrit
Maricor Baytion
Isabel Rodrigo
Arturo Hilado
Jude Esguerra
Edita Tan
Agustin Arcenas
Norkaya Mohamad
Sittie Nur Dayhanna Mohamad
Maria Helen Dayo
Rhio F. Nuylan
Wondielyn Manalo-Macua
Jojo T. Macua
Dinah B. Gusto
Anatoly Gusto
Ro-Ann A. Bacal
Debbie Gundaya
Eric Boras
Prince Cruz
Bernard Ong
Florabelle Santos-Madrid
Caryl Valdez
Conrad S. Tolentino
Floyd Buenavente
Maya A. Tamayo
Nathalie Africa-Verceles
Rodelio F. Subade
Michael Gonzalez
Elirine Siwa-Yaneza
Christina Novera
Ladylyn Erica Adarve
Gina Grace Villanueva
Jeshamar C. Villasis
Cecilia D. Laison
Jayson Cruz
Deborah Cruz
Gilbert Llanto
Kit Melgar
Mylene Hega
Odette Magtibay
Maria Paz Jaranilla
Jerchiella B. Corpuz
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