Upscaling the ‘Funds’

Now that the proposed creation of the Maharlika Investment Fund (MIF) breezed through the House of Representatives in record fashion, the national focus shifts to the Senate for its counterpart bill. Approved on second and third reading, the proposed creation of the MIF under House Bill (HB) 6608 got through swiftly on Thursday night after President Ferdinand “Bongbong” Marcos Jr. (PBBM) certified it as urgent administration measure.

Malacanang’s speedy transmittal of the certification became clear signal to his House administration allies to speed up the approval of the President’s pet bill. Call it the Christmas spirit.

But down the wire, the Lower House leadership waited until Thursday night for the certification of the President before voting upon HB 6608. During those hours, PBBM was still airborne in a return chartered flight from Brussels, Belgium where he attended the European Union (EU)-Association of Southeast Asian Nations (ASEAN) Partnership Summit.

House Speaker Leyte Rep. Ferdinand Martin Romualdez who was part of PBBM’s official delegation to Brussels arrived a day earlier to preside the last session day for this year of the 19th Congress. Thus, the plenary deliberations of HB 6608 were suspended until the Speaker arrived back to the country.

The Speaker co-authored the original version under HB 6398 to create a sovereign wealth fund (SWF). Before this was taken up at the plenary debate last week, co-authors and co-sponsors of HB 6398 went back to the drawing board over strongly objected sources of its initial capitalization. They announced having removed the most questioned use of State-managed pension funds as well as portions of the annual budget as “seed capital” for the country’s proposed SWF.

A key member of PBBM’s economic team, Department of Budget and Management (DBM) Secretary Amenah Pangandaman welcomed the amendments introduced in HB 6608. Speaking in our Kapihan sa Manila Bay breakfast news forum last Wednesday, Pangandaman noted these new inputs were the result of ensuing public debates that enhanced the virtues for our country having its own SWF.

Once the MIF bill is approved into law, Pangandaman disclosed, the next step is to get the Philippines enlisted with the Sovereign Wealth Fund Institute (SWFI) as part of the transparency and built-in safeguards. Along with internal and external auditors, an advisory council, and oversight from Congress, she added, the SWFI will keep close tabs on the funds being invested.

For now, the DBM chief echoed the call of the President to wait for the final outcome of the proposed legislation. She strongly believes though it is “high time” for the Philippines to create the SWF given the very limited fiscal space of the government.

When deliberations of HB 6608 resumed, 279 House lawmakers voted for it. Out of 312 House members, 280 of them – in the end – signed up as “co-authors.” The lawmakers of both chambers adjourned last Thursday for a one-month Christmas recess. The sessions will resume on Jan. 23.

At this early, many are expecting a tougher fight ahead for the MIF bill when it reaches the Upper Chamber. Senate President Juan Miguel Zubiri took a cautious stand he cannot guarantee the same expeditious approval of HB 6608. Not all of the so-called “24 independent republics” of the Senate were obviously impressed by the presidential certification.

Except, however, for Sen. Mark Villar who had been spoken of already by the Speaker as filing soon the counterpart proposal at the Senate. The Speaker found a champion for the MIF bill in Sen. Villar who has been travelling with him as part of the official delegation in the past six trips of the President abroad.

Under the downscaled version of the MIF bill, the original “seed capital” of P250 billion has been reduced to P110 billion. This will come from the government-owned Land Bank of the Philippines (P50 billion); the Development Bank of the Philippines (P25 billion); the dividends to the national government from the Bangko Sentral ng Pilipinas (BSP); and, ten percent of gross revenues from the Philippine Amusement and Gaming Corp.

At an estimated P110 billion, this is too small a fraction compared to the newly signed 2023 General Appropriations Act amounting to P5.27 trillion. About P1 trillion of it is earmarked for infrastructure spending.

When it comes to investments, amounts matter.

Such bigger investments can deliver more projects to spur jobs and greater economic activities. And, generate bigger profits. The P110 billion may only be good for four or five big-ticket projects. And lesser number if the Fund goes for capital-intensive investments like power plants, or airports, or inter-island bridges. This seems to escape the appreciation of the critics to the MIF.

By opposing more sources of seed funds, the critics effectively crippled the MIF’s chances to go for bigger investments that could generate greater momentum for economic development. This will hopefully be addressed in a counterpart bill of the MIF at the Senate. Looking at the bigger picture and generations of Filipinos ahead, the MIF bill should transcend the politics of the present times.

Sen. Villar, who is reported to be very enthusiastic about the MIF counterpart bill, has a good background and understanding about the importance of size of investments. His family has been making huge investments spanning decades, and the results are very clear. His father, former Senate President Manny Villar, earned the monicker “the brown Taipan” not because of investing peanuts but by going big. The Villar family business empire has expanded through the years from real estate to other big-ticket investments across the Philippines.

As the former Public Works Secretary during the administration of former President Rodrigo Duterte, the young Villar has first-hand knowledge about the pay-out of huge budgets completed the big-ticket infrastructure projects.

Now, will he be able to champion upscaling the MIF at the Senate? This we got to see.