Political posturing on the Maharlika Investment Fund
PRESIDENT Ferdinand Marcos Jr. has certified as urgent the Maharlika Investment Fund (MIF) bill, and the Senate responded by approving it on third and final reading in the wee hours of Wednesday morning. The Maharlika Investment Fund (MIF) has been approved by the Senate and the government, with the seed funds now coming mainly from the investible funds of two government financial institutions (GFIs) and the Development Bank of the Philippines (DBP). The bill also includes contributions from the Bangko Sentral ng Pilipinas, revenues of Pagcor, and other government-owned and -controlled corporations (GOCCs). Excluded as fund sources would be GOCCs providing for the social security of government employees, private sector workers and employees. An MIF joint congressional oversight committee will be established to monitor and evaluate the implementation of the proposed measure. The objectives of MIF are to promote economic development by making strategic and profitable investments in key sectors to preserve and enhance long-term value of the Fund.
Опубликовано : 2 года назад от Antonio Contreras в Politics
PRESIDENT Ferdinand Marcos Jr. has certified as urgent the Maharlika Investment Fund (MIF) bill, and the Senate responded by approving it on third and final reading in the wee hours of Wednesday morning.
A closer look at the bill reveals that it is a trimmed down, modest version of the original version previously approved in the House of Representatives.
In the Senate version, the seed funds will now come mainly from the investible funds of two government financial institutions (GFIs) — the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP). Future investments will come from contributions from the declared dividends of the Bangko Sentral ng Pilipinas, revenues of Pagcor (Philippine Amusement and Gaming Corp.) and other government-owned and -controlled corporations (GOCCs), and other sources such as royalties and/or special assessments on natural resources based on the fiscal regime to be implemented by the national government, proceeds from privatization of government assets and borrowings by the MIF itself.
Excluded as fund sources would be GOCCs providing for the social security of government employees, private sector workers and employees, and other sectors and subsectors, which include but are not limited to the Government Service Insurance System (GSIS), Social Security System (SSS) and Home Development Mutual Fund (HDMF).
The exclusion of GSIS, SSS and HDMF from the sources of funds was in response to the widespread adverse reaction from the public generated by their originally planned inclusion. Other fears raised by the public are assuaged by several mechanisms that would ensure adherence to the principles of good governance, transparency and accountability. An MIF joint congressional oversight committee will be established composed of members of the Senate and the House of Representatives to oversee, monitor and evaluate the implementation of the proposed measure. Full transparency will be observed where all documents of the MIF and the Maharlika Investment Corp. will be open, available and accessible to the public.
The Fund will strictly observe the "Santiago principles," which refer to the generally accepted principles and practices (GAPP) voluntarily endorsed by the International Forum of Sovereign Wealth Funds members. The GAPP for sovereign wealth funds (SWFs) are guidelines that assign best practices for the operation of SWFs. They prescribe the rules that should be followed by SWF that would promote stability in the global financial system, set proper controls on investment risks and implement sound governance structures.
The objectives of MIF, as spelled out in the Senate bill, "are to promote economic development by making strategic and profitable investments in key sectors to preserve and enhance long-term value of the Fund, obtain the optimal absolute return and achievable financial gains on its investments, and to satisfy the requirements of liquidity, safety/security and yield in order to ensure profitability."
The MIF offers an avenue for two things — one is to provide another platform to earn or raise revenue, and the other is to provide another means to finance government development projects. It is hoped that in pooling the investible funds from the GFIs and channeling them to diversified financial assets and development projects, the establishment of the fund shall contribute to a prudent and transparent management of the government resources. It is envisioned for the Fund to reap optimal return on investments while contributing to the overall goal of reinvigorating job creation and poverty reduction.
Under normal circumstances, the government finances development projects through congressional appropriations using government funds that are either generated from taxes and other sources of revenues, or from loans from multilateral and bilateral financial institutions. The return on investment will come in the form of increases in the economy's supply of real resources. The government can also tap the private sector to implement the development projects, for which it will be given incentives and concessions. Take note that in both arrangements, the government and the public will benefit from employment, improved productivity and services. However, there is no revenue returning to the government in the form of investment earnings. Private investors are in fact even given tax breaks and incentives as part of the package to entice them to invest in public infrastructure and other development endeavors.
Having an SWF through the MIF enables the government, indirectly through the fund, to generate revenue from investments without increasing the tax burden on the people, or adding on to our debt, even as it is able to finance vital development and infrastructure projects. This would have the same effect on employment, productivity and income of people without the usual political inertia that attend government projects handled by national government agencies using funds appropriated by Congress.
And yet, Sen. Risa Hontiveros was unconvinced to the very end. She argued that investments coming from DBP and LBP would undermine the welfare of small farmers and business owners who will now be denied the opportunity to take out loans. Hontiveros does not tell us that the DBP and LBP, even without the MIF, have investible funds separate from the funds they loan out. These are funds that they are already investing anyway because that is what banks do to grow their assets.
Hontiveros further argued that instead of establishing the MIF, the government should just prioritize funding the country's social services, agriculture, transport sector and energy sector. This is a hollow argument simply because it is a false choice. The Fund can be established, and it can be used precisely to invest in these sectors, albeit using a funding platform that does not rely on congressional appropriations using people's taxes or from borrowed funds.
This is the problem with those who pander to the left-wing mantra of emphasizing government spending on projects to benefit people, yet would also oppose increasing the tax burden of ordinary Filipinos and would demonize foreign indebtedness. They expect the government to be innovative and creative, and yet would oppose the adoption of innovative funding arrangements. They demand too much action from a government that they simply do not trust.
This is not what rational politics is all about. It is simply an embodiment of sheer partisan political posturing.