SPEAKER Martin G. Romualdez during the opening of the 19th Congress at the House of Representatives in Quezon City on July 25, 2022. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Beatriz Marie D. Cruz

THE proposed Maharlika Wealth Fund (MWF) continues to be saddled with governance “red flags” even after the withdrawal from participation of chief funders the Government Service Insurance System (GSIS) and Social Security System (SSS).

Filomeno S. Sta. Ana III, co-founder and coordinator of the Action for Economic Reforms think tank, told BusinessWorld Live that House Bill 6398 creating the MWF retains “very controversial provisions which are inconsistent with good institutions, good governance, potential care, (and) good oversight regulations.”

Mr. Sta. Ana said that the Philippines currently isn’t suited for a sovereign wealth fund. “Even if we get the concept right, we just don’t have the right conditions. It depends on the surplus that we have, and it has to be a very huge surplus,” he said.

Interview by Brontë H. Lacsamana, Reporter. Editing by Earl R. Lagundino.

On Wednesday, House committee on appropriations senior vice chair Stella Luz A. Quimbo said that the GSIS and SSS have been excluded as Maharlika funding sources.

David Michael M. San Juan, a professor at De La Salle University and convener of the Professionals for a Progressive Economy (PPE), said some reservations were addressed somewhat by the withdrawal of the two pension funds.

However, another proposal to use central bank profits will reduce funding for education, healthcare, and housing.

As alternatives, Mr. San Juan proposed “imposing a wealth tax on Filipino billionaires and trimming down/reducing the salaries of BSP, GSIS, SSS bureaucrats, senators, and Palace executives. Ending corruption and wasteful expenditure in government must be also done,” he said in an e-mail.

He also proposed the “abolition of agencies like NTF-ELCAC (for which P10 billion was allotted for next year) and the reduction, if not total removal of confidential funds.”

He was referring to the National Task Force to End Local Communist Armed Conflict.

Jose Enrique A. Africa, executive director of IBON Foundation, said that the changes “(do not) remedy so many other deficiencies of the proposal,” calling it “maliciously opaque.”

In a text message, he said, “There are no real safeguards and, with the sweeping mandate on the use of funds, it seems designed to be used for narrow self-serving purposes beyond public scrutiny.”

“The proposal clearly isn’t supported by any proper staff work, wasn’t consulted with key stakeholders, and was just railroaded at the committee level. This is apparent from the muddled explanations about the fund’s objectives where there are public justifications by proponents that are inconsistent with the bill’s provisions,” Mr. Africa said.

Senate Minority Leader Aquilino Martin D. Pimentel III said in a statement that the changing proposals for the Maharlika funding set-up indicates that the bill remains “an idea which… hasn’t been thought out well and was rushed (and) will have a difficult time in the Senate.”

Sen. Emmanuel Joel J. Villanueva welcomed the changes in the bill, but proposed the plastics and mining industry as alternative sources of seed money for the fund. He said in a statement that there is a need “to be circumspect about the sources of the funds and how it will be managed.”

House Senior Deputy Minority Leader Rep. Paul R. Daza said there should be no hurry to pass the bill. In a statement, Mr. Daza said, that “there is a proper way to execute this fund. Let us please not rush this through Congress. We must study this carefully and create a working MWF that would suit our current economic situation.”

According to Ms. Quimbo, the House committee on appropriations will meet on Friday to discuss how much the central bank should contribute to the P275-billion fund.

As originally written, the bill called for the GSIS to provide P125 billion in capital to the fund, the SSS and Land Bank of the Philippines P50 billion each, and the Development Bank of the Philippines P25 billion.