Unlike the Pharmally fiasco and the P200 million SSS thievery back in the day of then President Erap, there are probably sincere objectives for national progress behind the sponsors of the proposed Maharlika Wealth Fund bill. The fact that otherwise admirable Congresswoman Stella Quimbo is so passionately for it indicates this. However, there are too many issues that have not been studied adequately.
Thank God, the pension funds which pays for my many maintenance meds are not to be touched. The SSS (Social Security System) funds are private sector funds. Government has no right to risk it on investments. There is an SSS Board that decides that.
A straightforward look at reality should tell them that government corporations do not make money. There are too many examples of this. Aside from outright fraud, the bureaucracy makes it just too difficult to get things done in the speed that enables private business to compete and make a profit. Also, political pressures bring about over-staffing with generally unqualified relatives and constituents of those in office.
As Congresswoman Quimbo points out, the devil is in the details. Let us move further to what kind of investments the Fund will get into. Certainly not in the stock market, as it seems to be forbidden by law. Will it be infrastructure? Does this mean that the Fund will compete in bidding for projects with the likes of the Department of Public Works and Highways, and Department of Transportation? Therefore, will the Fund compete with private businesses in the bidding process? Will private business bother to compete in such a situation? Will the project therefore be subject to friendly negotiations between government entities? This looks ridiculous, if not questionable.
We should also note that government corporations are inept at maintenance of services and utilities. Look at the overhead trains. For years, spare parts were not ordered to replace aging devices. This brought about stoppage of services. Or worse, risks of accidents. Either way, the citizenry, or users of the services suffered greatly. Public service?
Why don’t we just continue with the Public-Private Partnership arrangements? Let private firms bid for infrastructure projects and charge users for their services? The bidding process helps ensure the best terms for government and the citizenry. The partnership also saves government money (which technically adds income). The business firms generate jobs and earn profits, on which they pay taxes. More government income. And maintenance of the equipment, infrastructure, and utilities are more likely ensured, since business wants to gain user satisfaction over the long term.
Safeguards? They will just make it harder for the proposed investment firm to be effective as a provider of goods and services. There will be too many regulations to follow before they can, for example, buy spare parts. Add to this the competition for suppliers among various actors, who will find a way around the “safeguards” anyway. Reality is full of these wasteful cases.
The proposed Maharlika Wealth Fund will just add another administrative and operational layer to government structures. Why put Central Bank “surplus” in another entity; why not just allow it to invest the money directly, if at all?
An economically advanced nation like Norway has lost money on this kind of deal. Malaysia had to put a former Prime Minister in jail for personally abusing a sovereign wealth fund. Why are we even considering this ridiculous idea? Our government cannot even get its act together, without investing in yet another structure for making money. Why don’t we just collect our taxes properly; including those billions that are still unpaid? The structures are in place. We need only to execute the law and impose the penalties, come hell or high water.
Teresa S. Abesamis is a former professor at the Asian Institute of Management and fellow of the Development Academy of the Philippines.