More fun(d) in the Phl

Last Thursday I learned that within just two years, my nest egg that I have plunked into an investment fund had shed 30 percent of its value over just two years. I had entrusted my hard-earned money to a Paris-based life insurance and investment giant, which put my money into an endless black hole of bad investments.

I’m cutting my losses and pulling out what’s left of my money – plus all the savings I have with the bank that I trusted enough to let it cajole me into the investment. I’ll be dividing what’s left between BDO and BPI, which I hope will do a better job of taking care of my money.

The amounts involved are a drop in the bucket of the .001 percent of the population that controls wealth and power in this land. But for us working stiffs, such losses can drive one to either suicide or homicide.

I’m telling this story not only as a cautionary tale in this period of global economic uncertainty, but also to express concern about the plan being pushed by the current ruling clan to create a “Maharlika” sovereign wealth fund, to be sourced partly from our pension funds.

This is a bad time to invest in anything. The investment firm promised to put my nest egg in the supposedly blue chip Chinese Tycoon Fund. When this tanked last year, with my investment shedding a tenth of its value, my money was moved to yet another supposedly blue chip Global Advantage Fund. Now my investment is down by over 30 percent.

Fund managers say it’s paper value and investors should just wait for better times, when the investment can recover. But considering that even the International Monetary Fund is warning that “the worst is yet to come” for the global economy in 2023, what happens if my account hits zero and there is nothing more to invest? And how long before I see my investment turning even a centavo of profit? I might be dead – and not even of COVID, but of old age and natural causes – before this happens.

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From January to June this year, Norway’s much-touted sovereign wealth fund lost $174 billion. It might be small considering that the fund is worth $13 trillion, but how much can heavily indebted Filipinos afford to lose to risky investments?

The world could be awash with blue chips-turned-junk bonds for the next four years. Where do the usual suspects pushing for Maharlika intend to put our pension funds, painstakingly saved up through a lifetime?

The sponsors are citing the countries that have such funds, conveniently omitting mention of Malaysia, which this year sent its former prime minister Najib Razak to prison for 12 years for looting $4.5 billion of that country’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB), with $9.4 million going to Najib’s personal account.

Najib’s wife, Rosmah Mansor, also faces a stint behind bars for bribery and corruption. In raids on the former first couple’s residences, Malaysian authorities seized Hermes Birkin handbags ($8,500 to $300,000 for a brand-new genuine article), expensive jewelry including 14 tiaras, 423 watches and about $246 million in cash.

The story gave Pinoys who know that history is not just chismis a chilling sense of déjà vu – except in Malaysia, they send even top-level crooks to prison. In our country, we send them back to power.

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A sovereign wealth fund can help grow public assets. But this is in countries with surplus wealth, where the rule of law and regulatory environment are strong such as in Singapore, and where politicians have little propensity to treat people’s money as their own.

Where is our surplus? We’re drowning in debt that has hit P13.52 trillion (so far). Sure, we have gross international reserves. But Bangko Sentral ng Pilipinas Governor Felipe Medalla is vehemently opposing the use of the GIR for Maharlika. The BSP must also function independently of Malacañang or Congress, and entities outside the BSP cannot interfere in decisions governing GIR utilization.

Only lawmakers now railroading Maharlika the way they railroaded yet another postponement of the barangay elections refuse to see that most of the conditions that make sovereign wealth funds work are missing in our country. Instead, politicians and other public officials keep finding creative ways of blurring the line between public and personal funds.

We have a respected economic team, but can they resist political pressure to prevent the fund from being used like the notorious behest loans during the Marcos dictatorship? The behest loans fueled crony capitalism.

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What’s to stop the use of the sovereign wealth fund to expand the businesses of the well connected, regardless of the viability of the business and the competence of the managers? After six years, will they end up like the businesses of Davao’s Dennis Uy, who engaged in an awesome expansion spree during the Duterte administration?

Ferdinand Marcos Jr. promised that Marcos 2.0 would be an improvement of the original. Junior might be sincere in his intentions, but can he resist pressure from his staunch supporters seeking expansion funds or a financial lifesaver for their private businesses courtesy of taxpayers?

Proponents are promising layers of oversight to prevent any misuse of Maharlika. Considering that such promises are coming from the House of Representatives, a.k.a. the HOR, however, the public can be forgiven for being skeptical.

The Formula One enthusiasts in government may also want to rethink the revival of the term “maharlika” for Marcos projects. It evokes the ruling clan’s seeming fixation with nobility and all its trappings – palaces, fantabulous jewelry, expensive gowns, mind-boggling art collection and let-them-eat-cake attitude toward the hoi polloi.

BBM is getting unnecessary flak over this proposal. At least a member of the clan, the super ate ng Pangulo, has publicly expressed misgivings about the proposal, and has warned against touching the SSS and GSIS funds in particular.

There are also vague references to the possible use of remittances from overseas Filipino workers. It’s bad enough that our consumption-driven economy is heavily dependent on the blood, sweat and tears of Filipinos who can’t find decent livelihood opportunities in their own country. Now they want to put OFW money into what could turn into the Pinoy version not of Singapore’s Temasek Holdings Ltd. but of Malaysia’s 1MDB.

Last Friday, a joke went viral: “May intelligence fund! May confidential fund! May Maharlika fund! It’s more funds in the Philippines!!!!”

If the possible dire consequences weren’t so terrifying, we could afford to laugh.