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: 

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 Paredes

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