The Palace has given the go ahead for the Maharlika Fund. This is according to Finance Secretary Benjamin Diokno.
However, Diokno clarified that the idea for the Maharlika sovereign wealth fund goes back to the Duterte administration.
Diokno, who served under Duterte as Budget secretary and Bangko Sentral governor, relayed this information to journalists at the Kapihan sa Manila Bay forum.
“The idea was to create a fund that will take care of future generations of Filipinos,” he said.
All hands on deck
In addition, Diokno revealed that there was an inter-agency committee that helped build the idea. The group was composed of officials from agencies like the National Economic and Development Authority (NEDA) and other government financial institutions (GFIs).
“We talked among ourselves and presented our proposal to the president, and we prepared a draft bill,” added Diokno.
He also stressed that President Marcos requires the fund be unaffiliated with the Palace. And that there would be a governing council composed 100% of the private sector.
“…But I think the secretary of finance is a member, the only representative of the government,” he clarified.
Not a novel idea
Diokno also shared that in other nations, a sovereign wealth fund similar to the Maharlika fund was supported by government revenue from depletable resources. The example given was Norway. Singapore, Australia, and Indonesia were also given as examples of nations with sovereign wealth funds.
“Ideally, part of revenues from the Malampaya natural gas should have been set aside for a sovereign wealth fund,” added Diokno. “Same with revenues from telecommunications bandwidth and mineral resources.”
As to why Maharlika is coming from pension and state banks, Diokno’s reasoning was that said institutions “needed more diversified options for their investments“ hence the difference from countries he mentioned.
The Maharlika fund was proposed in House Bill 6398 (HB 6398). It is also known as the Maharlika Investments Fund (MIF) Act. The funding will come from GFIs, and then placed in a wide range of outlets which includes [foreign currencies, metals, fixed-income instruments, domestic and foreign corporate bonds, listed or unlisted equities, mutual and exchange-traded funds, commercial real estate, and infrastructure projects.]
Initially, the measure proposes an investment of P250-B from the Government Service Insurance System (GSIS), Social Security System (SSS), Land Bank of the Philippines, and Development Bank of the Philippines (DBP). On top of this will be P25-B from the national government.
The product is the Maharlika Investments Corp., an independent corporate body headed by a 9-member board of directors representing the GFIs.
Last Tuesday, December 29, the banks and financial intermediaries committee of the House of Representatives approved in principle HB 6398. This was a mere one day after it was filed by Speaker Martin Romualdez and six other solons.
“As the Philippines secures its place not only as the Rising Star of Asia but as a real economic leader in the Asia-Pacific, the creation of the (Maharlika fund) becomes imperative,” said Romualdez.
Critics warn that in other countries, such funds have been a source of corruption.
In Malaysia, the 1MDB sovereign wealth fund gained notoriety after it was used as part of a multibillion-dollar corruption scheme. The scandal implicated former Prime Minister Najib Razak, leading to a 2020 conviction. The sentence was 12 years imprisonment, with a $46.88 million fine for illegally receiving $10 million from a unit of 1MDB.
Hopefully, no such thievery will befall the Maharlika fund, and it only serves the best interests of the Filipino people.