House committee approves bill on Maharlika Investment Fund 

A measure seeking the creation of a sovereign wealth fund (SWF) to maximize the profitability of investible government assets for the benefit of all Filipinos hurdled committee level at the House of Representatives, according to a report by Philippine News Agency.

During the hearing Thursday, the House Committee on Banks and Financial Intermediaries approved and adopted the amendments introduced by the technical working group (TWG) on House Bill No. 6398, which proposes to establish the Maharlika Investment Fund.

The funding sources shall be drawn primarily from government financial institutions to start up the fund with PHP125 billion from the Government Service Insurance System (GSIS), PHP50 billion from the Social Security System (SSS), PHP50 billion from the Land Bank of the Philippines (Land Bank), PHP25 billion from the Development Bank of the Philippines (DBP) and PHP25 billion from the National Treasury.

Speaker Martin Romualdez, author of the measure, said it is essential for the government to “improve investment opportunities, promote productivity-enhancing investments and ensure that the Philippines becomes an investment destination” to achieve the objectives of the Agenda for Prosperity and the eight-point socioeconomic roadmap of President Ferdinand R. Marcos Jr.

"Sovereign wealth funds are state-owned investment funds typically financed by a country’s surplus revenues or reserves. Governments invest these funds in an array of both real and financial assets to stabilize national budgets, create savings for their citizens, or promote economic development,” Romualdez said.

He said the bill would give the GSIS, SSS, Land Bank and DBP the opportunity to ensure their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled to investments that will provide the most value not only to the participating government financial institutions (GFIs), but also to the country.

The TWG has introduced sufficient safeguards to ensure that the fund will be governed properly and will yield returns to pension funds and government banks.

Albay Rep. Joey Salceda, head of the TWG, said among the safeguards include three layers of audit (internal, external and the Commission on Audit); as well as four layers of good corporate governance (in the board of directors, the advisory body, the risk management unit, and the congressional oversight committee).

"We imposed regular booking of losses and profits in the books, and annual reporting by the government financial institutions to their members or shareholders,” Salceda said.

He assured that there will be no shadow accounts or investments since multiple audit requirements, independent directors and the Treasurer of the Philippines, who will sit on the board, will ensure that.

Salceda noted that the intention of the Fund, “apart from exposure to higher upside for the GFIs, is greater investments in critical infrastructure such as dams and energy.”

“The President’s expressed aspiration is for the Fund to contribute to nation-building. The Fund will pool resources towards that direction, since many of these projects are capital-intensive," he said.

Marikina City Rep. Stella Quimbo, meanwhile, said the initial investment the GFIs start up the Maharlika Wealth Fund will not have any negative impact on the delivery of services or benefits to the stakeholders of these institutions.

“Their investible funds are separate from the funds earmarked for benefit payments,” Quimbo said.