Truly there’s a need to invest (but not at this time)
Everyone appears to be debating on how will it go about funding the Marcos' Maharlika Wealth Fund, especially since most people do not trust the authorities with their contributions as sources of funds, if not seeing the fund, particularly those behind it, may use these for their own self-interest. As the country grapples with the consequences of the COVID-19 pandemic, the government is looking for ways to accelerate financial recovery and means to support existing "developmental programmes," the majority of which are carryovers from previous administrations.
For in contrast to countries where Sovereign Wealth Funds (SWF) are backed by savings, natural resources, and excess cash, the proposed “Maharlika Wealth Fund” will be backed by government funds to invest in various domestic and international sectors. However, this nearly includes pensions from the Social Security System and the Government Service Insurance System, which were recently removed from the initial draught due to public outcry, but instead limiting to that of excess funds from the Central Bank as its main source.
However, why the Central Bank? Being an independent entity to be interrupted again by the government’s wishes? The provision requiring the Central Bank to contribute 50% of its cash dividends to the government seems questionable, especially when it runs contrary to the charter that states dividends should remain under the Central Bank as an equity infusion to complete its capitalisation. The bill however, deprives the authority of quicker capitalisation regardless of being “surplus” and undermines its independence as the central monetary authority and systemic risk regulator.
Furthermore, since the draft “promised national development”, the draft doesn’t even prioritise domestic investment, particularly that of industrialisation, agricultural modernisation, even rural empowerment but instead trying to pursue what is dictated by interest seekers pretending to be that of the folk. For sure one would remember how the coconut levy fund became a disaster as its pretentious stewards failed to uplift the lives and livelihoods of coconut farmers despite investing in stocks or in companies less to do with the development of the industry nor having the producer’s say in managing.
And since this happen in a fund meant for the coconut industry, what more a fund meant for the development of the entire country? Not at all comforting, is it? Despite this, it is impossible to deny that the fund put forth by Marcos and his allies is a corrupt scheme, especially in light of the fact that it calls for the placement of hundreds of billions of pesos—possibly up to a trillion pesos—of public funds under the management of a small group of managers chosen by the administration, with the president serving as its chairperson. They are even willing to invest in risky industries like real estate and local and international financial ones amid recessions that are only getting worse.
Thus, this would imply that it is worth investigating given the fund’s goals and potential sources of funding for investments. Senators, former state officials, and business organisations with a neoliberal bent have all of a sudden started churning out statements on topics ranging from the need for safeguards, stopping the government from using money from pension funds without consent from the pensioners, insisting transparency through popular oversight, to an outright scrapping of the act simply because of downsizing and government non-intervention in economic affairs. And these groups are objecting on valid and reasonable grounds, such as: the country is not yet ready; the country has no commodity-based surplus; the country is experiencing big trade deficit; facing a burgeoning foreign and domestic debts; inflation and high prices problem; the presence of the geopolitical conflict; the uncertainty in the global economic climate, etc. In sum the filing of the bill may not have been done in proper time.
And truly to say that the upper house is concerned about the issue as Senator Ejercito is apprehensive to touch pension funds because of past experiences with those from the military, whose savings and loan association and benefits system did ventured into bad investments. Meanwhile, in countries like Vietnam, it uses its SWF with a strategic view of economic development beyond immediate returns and profit. Its State Capital and Investment Corporation (SCIC) is actively used to foster state-owned industrial enterprises even if there might be greater short-term returns from other investments. The question is, since those behind the proposed SWF is so stubborn on their idea, how come there’s no state owned enterprise to seriously support with (other than those “Government Owned and Controlled Corporations”) Obviously most end privatised with the National Grid Corporation end under the hands of the Chinese!
Again, the fund would function better if the nation has enough surpluses in its trade or in commodities. The nation's natural resource wealth is sufficient to allow for the use of investment proceeds. And while it is true that the government would actively participate and intervene in the economy as a result of this proposal, it also requires responsible individuals whose loyalty to the public comes before personal interests (like Vietnam as stated above). This requires adherence to laws and regulations governing good governance as well as an understanding that working for the government entails sacrificing one's privacy and coming under public scrutiny. But the country must immediately deal with some fundamental problems. If the government truly has excess financial and foreign exchange resources, these would be much better used for more urgent aid, wage subsidies, support for small businesses, building and improving public schools, and hospitals. Compared to an investment fund that is explicitly seeking profits and returns, these will provide more immediate and tangible social benefits.
Otherwise, right is Ibon foundation that: “If the government really is so serious to raise revenues, a billionaire wealth tax or windfall real estate land value tax on just the few thousand richest Filipinos and few hundred largest firms are much more logical alternatives. Not to mention the hundreds of billions in unpaid estate taxes and the many hundreds of billions more in ill-gotten wealth that the president’s family can voluntarily contribute to the state’s revenues.”