Law provisions, IRR to be reviewed
MANILA, Philippines — President Marcos yesterday suspended the implementation of the sovereign wealth fund or Maharlika Investment Fund (MIF) to further study its implementing rules and regulations (IRR) and ensure that safeguards are in place “for transparency and accountability.”
“Upon the directive of the President, the treasurer of the Philippines, in coordination with the LBP (Land Bank of the Philippines) and DBP (Development Bank of the Philippines), is hereby directed to suspend the implementation of the IRR of RA (Republic Act) No. 11954,” Executive Secretary Lucas Bersamin said in a memorandum dated Oct. 12.
Budget Secretary Amenah Pangandaman told The STAR that the President’s economic team will abide by his decision to suspend the MIF’s implementation.
Finance Secretary Benjamin Diokno, who will chair the Maharlika Investment Corp., has yet to comment on the suspension.
The controversial Maharlika Investment Fund Act of 2023 was signed into law on July 18 and its IRR was issued on Aug. 28.
Last month, sovereign wealth fund critics challenged the legality of the measure before the Supreme Court (SC), arguing it was not duly enacted in accordance with the Constitution.
Solicitor General Menardo Guevarra yesterday said his office is preparing to defend the MIF before the SC.
“If they (petitioners) don’t (withdraw) and the SC does not suspend the proceedings either, the OSG will be prepared to submit its comment on the validity of the MIF law,” Guevarra told reporters.
The SC had ordered the government to comment on the petition filed by Sen. Aquilino Pimentel III and former Bayan Muna party-list lawmakers.
The petitioners argued that the MIF should be declared unconstitutional as its passage “bypassed” the constitutionally mandated legislative process.
The test of economic viability, as required by the Constitution, was also not complied with and the MIF violated the central bank’s independence, the petitioners added.
Albay 1st District Rep. Edcel Lagman yesterday said that Marcos should suspend the “entire implementation” of Maharlika, as it was enacted with “inordinate alacrity without adequate and searching studies from the President’s economic advisers and congressional allies.”
“Since the MIF Act bled dry the (LBP and DBP) of their capital assets for infusion to the MIF, the two government banks suffered depletion of their resources so much so that they had to plead for exemption from the reserve requirements of the Bangko Sentral ng Pilipinas. No foreign investor has come to the rescue of the MIF,” he explained.
Lagman was referring to LBP and DBP’s respective P50-billion and P25-billion contributions to the MIF in September.
House Deputy Minority Leader Rep. France Castro said the MIF’s suspension showed that the measure was “rushed and flawed on so many levels.”
“Right from the start, the MIF had flaws because we don’t have excess funding for it. Secondly, it will be using public funds instead of utilizing them for social services,” she noted.
Albay Rep. Joey Salceda said that the IRR “should anticipate future issues.”
Deputy Speaker Gloria Macapagal-Arroyo said she trusts Marcos’ instincts in suspending the MIF’s implementation.
Pimentel said the suspension is “a very good development (because) the law has a lot of defects.”
Sen. Risa Hontiveros said Diokno misled the Senate.
“It is now clear that Finance Secretary Diokno misled the Senate when he said that the (LBP and DBP) had excess funds which were idle and could be used for the MIF. At best, he simply did not have the competence to understand the repercussions of messing with the finances of (LBP and DBP),” she said.
Sen. Francis Escudero urged the LBP and DBP to take back its contribution for the MIF’s seed capital, as he questioned the remittance to the Treasury when fund managers have not yet been appointed.
“The fund lacked direction... That’s why I did not vote and support it,” Escudero said in Filipino in an ambush interview yesterday.
Sen. Sherwin Gatchalian, who voted for the passage of the law, said that the “mere fact that they (LBP and DBP) sought regulatory exemption means they saw a problem which could affect the whole banking industry.”
Sen. Mark Villar, the law’s principal author and sponsor, has yet to respond to reporters’ requests to comment on the suspension.
Senate President Juan Miguel Zubiri said the suspension is a “prudent move” to ensure MIF will be effective.
“When so much money is at stake, it is better to proceed with an abundance of caution than to be reckless. During the debates on the Maharlika bill, we reminded the Executive of the need for responsible stewardship and installed guardrails against fund placements that would result in losses,” he said in a statement yesterday. — Sheila Crisostomo, Daphne Galvez, Emmanuel Tupas, Louise Maureen Sison, Marc Jayson Cayabyab, Delon Porcalla