House approves Maharlika fund bill on second and third reading continued from a2

The number of independent directors on the board was increased from two to four to widen private sector representation.these directors should have no conflict of interest in relation to the fund.

Operational expenses of the corporation shall not exceed 2 percent of the funds managed.

The MIF Corp. would have an advisory body with members: the secretary of the Department of Budget and Management, director general of the National Economic and Development Authority, and the National Treasurer.

The body’s tasks include advising and assisting the board of directors in formulating general policies on investment and risk management.

The corporation would have an internal and an external auditor, aside from being subjected to examination by the Commission on Audit.

The bill lists “allowable investments,” like foreign currencies, metals, fixed-income instruments, domestic and foreign corporate bonds, equities, real estate, infrastructure projects, loans and guarantees, and joint ventures or co-investments.

The proposed law mandates the National Treasurer, in consultation with the founding government financial institutions, to issue implementing rules and regulations.

The bill also provides the right to freedom of information of the public.

It said all documents of the MIF and the MIC, shall be open, available, accessible to the public, including but not limited to: all investments thereof, whether planned or under negotiation by the mic and on the portfolio of the MIF; the statements of assets and liabilities (SALNS) of the members and officials of the board of directors, risk management unit, and advisory board; the SALNS of those who appointed and designated the said members and officials; audit documents from the internal auditor, external auditor, and the COA; and similar documents and information.

House Ways and Means panel chairman Joey Sarte Salceda said the fund utilizes the investible funds of government financial instruments with excess funds—because as government depositories, they have access to billions of low to non-interest bearing monies that they can invest towards national development.

“The MIF begins with an initial capitalization using just 1.6 percent of LBP assets, and around 2.5% of DBP assets. In other words, there are very little to no financial systemic risks involved. At the same time, however, it allows GFIS to be more directly involved in infrastructure and investments that will contribute to lowering power and other costs—through dams, grid inter connectivity, and minority positions in energy and other key sectors,” he added.

“I also cannot stress enough that the mere entry of the government into a position that allows it greater oversight over traditionally oligopolistic sectors will encourage these firms to behave better, especially with regards to pricing. In other words, with regard to criticisms that inflation should be the exclusive priority of the government, this Fund helps address structural price issues in key sectors of the economy,” Salceda said.

At the same time, Salceda said the fund is not allowed to have a controlling stake or direct management involvement in investee firms—“a safeguard to address fears of corporate takeover by the government.

Salceda said the bill went through at least seven rounds of revisions.

“The committee on banks and financial intermediaries also held at least four meetings and briefings with stakeholders.the committee son ways and means and Appropriations also held their own hearings of the proposal,” he added.

Salceda said the House leadership conducted at least three meetings with the GFIS.