Everything everywhere…

Do lawmakers know the exact nature of the Maharlika fund that they have approved with impressive speed?

Investors will want to know where their money will be placed. International investment banker Stephen CuUnjieng says the measure was so hastily passed that provisions allow Maharlika to function both as a national development fund and a sovereign fund that can be invested in “everything everywhere all at once.”

It clearly didn’t matter to lawmakers. Proving (again) that it’s not only the House of Representatives that is a Malacañang rubber stamp, the Senate dutifully passed the bill creating the Maharlika fund in record time. The House, no surprise there, immediately adopted the Senate version. Truly, the two chambers are as thick as thieves.

This was after President Marcos certified the Senate measure as urgent. The nature of the urgency remains unclear. The only thing mentioned by proponents was that ah basta, the Maharlika Investment Fund must be passed by Congress before it adjourns this week, so that the MIF can be touted by BBM in his second State of the Nation Address (SONA) next month.

With everyone in the legislature and Malacañang happy, everyone can now enjoy tax-funded revenge junkets during the break before the SONA, without worrying about losing leadership positions and committee memberships in Congress when the second session opens.

Concerns raised by certain lawmakers at least didn’t fall on deaf ears. The final Senate measure, adopted by the House, expressly prohibits the Government Service Insurance System (GSIS) and Social Security System (SSS) from ever investing in Maharlika, even voluntarily at a later date.

Also barred from investing, whether on a mandatory or voluntary basis, are the Philippine Health Insurance Corp., Pag-IBIG fund, Overseas Workers Welfare Administration, Philippine Veterans Affairs Office and Home Development Mutual Fund.

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BBM apparently was not immediately informed about this development. Attending the GSIS anniversary celebration on Wednesday, he said the state pension fund along with the SSS could still opt to invest in Maharlika, if their Palace-appointed boards of directors decide to do so in the future. This was the original position of BBM’s economic team.

The exclusion of the pension funds isn’t guaranteed at this point. Because of BBM’s statement, there’s speculation that he might exercise his line-item veto power and delete the prohibitions when he signs the measure into law.

To allay concerns about the Bangko Sentral ng Pilipinas (BSP) losing its independence and having its capital buildup to P200 billion stretched to about 14 years instead of just five to seven years, its forced contribution of all its dividends to Maharlika would be limited to the first two years.

But this still weakens the capability of the BSP to respond to an emergency. No one can predict when a financial emergency will strike. The greater the BSP’s arsenal for responding, the better for the country.

In addition to the P50 billion from the national government (mainly from the BSP), the Land Bank of the Philippines will pitch in P50 billion and Development Bank of the Philippines P25 billion. Part of the funds will go to projects that Landbank and DBP are already mandated to finance in the first place, as even their names clearly state.

We still don’t know why another layer of (highly paid) management has to be created for this, with the power to pick big-ticket projects for funding without going through congressional scrutiny. Lawmakers themselves overwhelmingly allowed this diminution of their authority to happen.

The seed capital of P125 billion is just over half of the P200 billion in estate tax that the first head of the Bureau of Internal Revenue under Marcos 2.0 had vowed to collect from the Marcos family – until she was unceremoniously yanked out of the post just a few months into the job.

Ben Diokno has been overheard grumbling that the Marcos estate tax has been a long-running issue and it’s unfair to inflict on him the burden of collecting the tax.

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Several senators, explaining their support for the MIF, said it carries stiff penalties for allowing the fund to be tainted with corruption.

This was to allay concerns that they were creating the Philippine version of Malaysia’s scandal-plagued sovereign wealth fund, 1Malaysia Development Berhad. The Malaysians at least sent their former prime minister to prison for looting the 1MDB, followed by his wife for bribery related to their unexplained wealth. In our case, we have an abysmal record in sending plunderers to prison. We even reward them with election to high office.

Amid accusations that Maharlika would simply be used to prop up businesses of Marcos cronies, proponents also said there would be no politics tainting the MIF.

Also veering from the original, the government will no longer secure any debt instruments or bonds issued by the Maharlika Investment Corp. The MIC will manage the fund.

The attractiveness of an investment or sovereign wealth fund depends a lot on the management team. The MIC, to be chaired by the finance secretary, will have nine directors, with only three from the private sector.

This is unlike Indonesia’s sovereign wealth fund, the Indonesia Investment Authority, wherein private managers make up the majority. Set up in 2021, INA is still a work in progress, but it might have further stoked the push for a sovereign wealth fund in the Philippines.

Investors will compare what different countries have to offer; there are so many investment, development and genuine sovereign wealth funds all over the planet. Some of the biggest and best managed funds bled horribly last year; today the global situation hasn’t much improved. Yet here we are, launching a haphazardly crafted fund, just because someone is enamored with the term Maharlika and the other names associated with the first Marcos administration such as Kadiwa and Masagana.

The scariest suspicion is that Malaysia’s 1MDB, which evokes the bad old days of the conjugal dictatorship, might have actually served as inspiration for the Maharlika Investment Fund.