Congress listens

“To address the governance concerns of critics, Bernardo suggested that the government must own less than 50 percent of the shareholdings in the fund.

“The bill listed the Land Bank of the Philippines, Development Bank of the Philippines, Philippine Gaming and Amusement Corp., and Bangko Sentral ng Pilipinas as MIF contributors.

The evolution of the Maharlika Investment Fund, the country’s foray into the global trend of state-managed investment vehicles, up to the final deliberation at the House of Representatives, mirrored a legislature that feels the public pulse.

Speaker Martin Romualdez, the principal author of the bill, mentioned the amendments introduced to the measure, particularly the multiple safeguards against possible abuse and fraud resulting from the intention of the bill’s proponents to address concerns raised.

He indicated that the proposed sovereign wealth fund will help President Ferdinand “Bongbong” Marcos Jr. keep the economy on the high-growth path.

The final House version was also meant to ensure the management of the fund follows best practices and the principles of transparency and accountability.

Other features of the MIF bill were meant to insulate it from partisan influence.

The bill listed the Land Bank of the Philippines, Development Bank of the Philippines, Philippine Gaming and Amusement Corp., and Bangko Sentral ng Pilipinas as MIF contributors.

The contributions are P50 billion for the Land Bank, P25 billion for DBP, and 100 percent of dividends that the BSP gives the national government.

Pagcor’s share will be 10 percent of gross gaming revenues.

Responding to public concerns instigated by detractors, the House removed pension funds Social Security System and Government Service Insurance System as financing sources.

The Maharlika Investment Fund Corp., which the bill seeks to create to manage the sovereign wealth fund will have a board chaired by the secretary of finance, with the corporation’s chief executive officer, Land Bank president, DBP president, seven nominees by MIF contributors commensurate to their contributions, and four independent directors.

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

An advisory body composed of the secretary of the Department of Budget and Management, the director general of the National Economic and Development Authority, and the National Treasurer will also guide the corporation.

The Senate deliberation on the House transmitted bill is expected to center on the sources of funds and the necessity of state banks LandBank and the DBP to infuse money into the MIF since both are already performing developmental lending.

LandBank will put in close to 25 percent of its net worth that meets the prudential cap for bank investment in a single enterprise, according to former finance undersecretary Romeo Bernardo.

DBP will also put in P50 billion, about two-thirds of its net worth, which Bernardo said is quite a high concentration of risk in a single investment.

To address the governance concerns of critics, Bernardo suggested that the government must own less than 50 percent of the shareholdings in the fund, with the balance to be subscribed by multilateral organizations such as the Asian Development Bank or ADB, the International Finance Corp. or IFC, Asian Infrastructure Investment Bank or AIIB and private investors.

His proposal is for the MIF Corp. to be 40 percent — owned by the government, 20 percent by ADB, 20 percent by IFC, and 20 percent by the private sector.

President Marcos Jr. said the MIF proposal is in the process of being perfected.

Hopefully, this will be the same direction that the Senate takes instead of blocking the proposal outright.