More on Maharlika
FIRE, Ready, Aim. I am a lapsed lawyer, but from what I remember, laws are supposed to be passed by the Congress with three readings. In more organized places, when preparing an important law, you have studies and papers prepared, discuss and vet the issues at committee. Then the committee agrees on what should be sent to the entire body to further discuss and vote on, then more of that as it gets to the second and third reading. Then it moves to the Senate, where the same happens. Then the president signs it and it becomes law, or he vetoes it and it dies unless overridden. I don’t think the Constitution envisioned a process where one passes a bill first and without much vetting, then study, revise and approve something very different from what was passed in the other chamber. Unless it’s an emergency or urgent. And the other chamber treats it with the same urgency and importance.
With Maharlika, the bill passed by the House seems to have little resemblance to what is emerging from the Senate. While they are also treating it as urgent, both the Senate and the president agree it should be carefully analyzed and vetted. Then why the rush last December at Congress? How do you then reconcile in conference such different bills, or will the Congress defer to what comes out of the Senate? This whole process seems to be unfolding in a haphazard way as if someone said, “Look at those sovereign wealth funds. They are good. We should have our own.” Many then agreed. Without realizing it, the GSIS and SSS already play that role. Then the problem was instead of studying and preparing for it in depth and detail, then weighing how we should craft one that meets the needs and purpose, we just had a bill that did not seem fully formed to me.
3 types and key aspects
By the way, I am in favor of a Philippine-driven development fund. It must be properly done and alas, that remains the challenge. I am also not a partisan in favor of or against this administration, as I hope readers can glean from this and prior columns. I have never been in government and am also not seeking a government post and more importantly, the government is not seeking me!
Before we get to what should be in the type of fund I would prefer and my suggestions on what are critical to its success, there are three major types of these funds and three key aspects to these types of funds. It is time for a holistic and comprehensive discussion if we want to be clear on what we are hoping to achieve and get it going or drop it. There are three general types of what can be considered sovereign wealth funds. The first is how most except those who are dealing with a windfall (like oil-related revenues in Norway and the Middle East) started out with a fund that concentrates on domestic investments and developments to help give it a start. Temasek, which is not a sovereign wealth fund, started that in the 1970s. They were put in charge of government-owned assets and were responsible for helping them grow, selling them and later acquiring other assets. So it started like a National Development Corp. that did well. It never had government pensions or reserves. Just started with those assets and when they needed funding issued bonds. Some of the recent discussions seem toward something in that direction which I agree with.
Then those that were successful like those in Norway, Singapore, the Middle East, China and now Malaysia, after an initial period of local only investments, moved beyond their home markets for lack of sufficient opportunities or diversification given