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House approves Maharlika Fund bill

A Philippines peso note is seen in this illustration on June 2, 2017. — REUTERS/THOMAS WHITE/ILLUSTRATION

THE HOUSE of Representatives approved on third and final reading the bill creating the Maharlika Investment Fund (MIF), just over two weeks after it was filed by Speaker Ferdinand Martin G. Romualdez.

At Thursday’s session, 279 lawmakers voted in favor of the MIF bill, while six voted against. The six lawmakers who opposed the measure are Camarines Sur Rep. Gabriel H. Bordado, Jr., Gabriela Party-list Rep. Arlene D. Brosas, ACT Teachers Party-list Rep. France L. Castro, Albay Rep. Edcel C. Lagman, Kabataan Party-list Rep. Raoul Danniel A. Manuel and Basilan Rep. Mujiv S. Hataman.

President Ferdinand R. Marcos, Jr. on Wednesday certified the MIF bill as urgent. This allowed the House to approve the measure on second and third reading on the same day before adjourning for Christmas break.

In a Dec. 14 letter to the Speaker, Mr. Marcos said immediate enactment of House Bill (HB) No. 6608 is needed “in order to establish a sustainable national investment fund as a strategic mechanism for strengthening the investment activities of top performing government financial institutions (GFIs), and thus pump-prime economic growth and social development.”

Mr. Marcos signed the letter while he was in Brussels, Belgium to attend the Association of Southeast Asian Nations-European Union (ASEAN-EU) Commemorative Summit.

Several lawmakers led by Mr. Romualdez, the President’s cousin, and Deputy Majority Leader Ferdinand Alexander Marcos, the President’s son, filed the bill seeking to create the country’s sovereign wealth fund on Nov. 28.

A consolidated version, HB No. 6608, was approved last week by the House committees on banks and financial intermediaries, appropriations, and ways and means.

Lawmakers on Thursday agreed to include a provision in the bill that would prohibit the Government Service Insurance System (GSIS) and Social Security System (SSS) from contributing to the MIF, and that 25% of Maharlika Investment Corp. (MIC) profits would be distributed as ayuda or cash subsidies for vulnerable sectors.

The proposed MIF has been heavily criticized by economists, former Cabinet officials, business groups and civil society organizations over the lack of transparency and safeguards. They also raised concern over the bill’s earlier version that required state pension funds to pour money into the MIF, which prompted lawmakers to remove this provision.

Finance Secretary Benjamin E. Diokno has urged Mr. Marcos to certify the MIF bill as urgent since this would help create more jobs, promote trade and investments, fund infrastructure projects, and achieve food and energy security.

In the six-page memo to the president through Executive Secretary Lucas P. Bersamin, Mr. Diokno said the MIF could be a catalyst in transforming the economic landscape and help the country reach its full potential.

“With professionals managing the investment of public funds, the MIC would ensure the availability of alternative high return investment platform, obtain the best absolute return for the funds, find additional sources of liquidity as the need arises, and perform better risk management, given the additional layers of checks and balances it offers,” he said.

Under the approved version, the initial funding of the MIF will come from the Land Bank of the Philippines (P50 billion), Development Bank of the Philippines (P25 billion) and Bangko Sentral ng Pilipinas (BSP). The BSP will initially put in the MIF 100% of its dividends to be declared as income.

Subsequent annual contributions will come from BSP dividends, and part of the gaming revenues of the Philippine Amusement and Gaming Corp. and other state-owned gaming operators, among others.

BSP Governor Felipe M. Medalla on Thursday said the central bank’s ability to maintain price stability “will not be negatively affected by the current version (of the MIF bill).”

“I think times like this, let’s support the president… If this fund can be used to attract foreign investors… it could be good for the country. And, therefore, given that our concerns in the central bank have been completely addressed, and the criticism on inclusion of the pension funds has been addressed as well, I support the passage of the bill,” Mr. Medalla told reporters on Thursday. — Beatriz Marie D. Cruz, John Victor D. Ordoñez with Keisha B. Ta-asan

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