The Philippines moves a step closer to having its own sovereign investment fund after legislators approved a controversial bill on the proposal.
The Senate on Wednesday (May 31) approved on third and final reading the proposed Maharlika Investment Fund (MIF) Act with several important revisions, including the proposed fund’s funding source, as well as some limitations when it comes to the appointment of the MIF’s board of directors.
Senate Bill 202 (SB 2020) hurdled its last obstacle at the Senate just nine days after President Ferdinand Marcos Jr. certified it as “urgent”. Marcos has been a vocal proponent of the bill, even speaking with foreign heads of state and business leaders during his trips overseas to promote the fund.
The country’s two legislative bodies, the House of Representatives and the Senate, will soon convene in a bicameral committee to reconcile the two versions of the bill, before the same is transmitted to the president for his signature, thus creating the sovereign investment fund.
In a statement following the bill’s passage in the Senate, budget secretary Amenah Pangandaman called the development a “great stride” towards the country’s long-term progress and will boost its efforts for economic growth.
Former central bank governor and current finance secretary Benjamin Diokno thanked the Senate for their “thorough deliberation and prioritization” of the bill.
“The Senate leadership has pulled out all the stops to ensure that the bill we bring to the President reflects the administration's objective of creating a profitable and secure investment fund," Diokno adds.
Pension funds excluded
In the revised bill, the Senate removed all provisions that will see the MIF take funds or investments from the country’s pension systems, including the Social Security System, Government Service Insurance System, Philippine Health Insurance Corp., Home Development Mutual Fund, Overseas Workers Welfare Administration, and Philippine Veterans Affairs Office.
Previous versions of the bill had proposed that the MIF be funded by contributions from pension funds, something that civil society as well as numerous business groups opposed.
The current version of the bill says the seed capital will be provided by the Landbank of the Philippines and the Development Bank of the Philippines. The MIF will also be infused with dividends from the Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank.
For its first two years, the BSP will contribute 100% of its dividends to fund the MIF. After the first two years, the central bank will keep contributing 50% of its dividends to the fund, the bill says.
Amid vocal opposition from critics of the fund, Pangandaman has sought to assure Filipinos that the current version of the MIF has sufficient safeguards against corruption.
The MIF will have an audit committee, an advisory board, as well as a congressional oversight committee. It will also adhere to the internationally-known Santiago principles, and will be subject to audits by the Philippine Commission on Audit.
The bill also prohibits any person who has any pending administrative or judicial case relating to fraud, plunder, corrupt practices, money laundering, tax evasion or other related crimes in the past five years prior from serving on the MIF’s board.