(Leaked photo of Marcos Jr. with Speaker Martin Romualdez, Rep. Yedda Romualdez, and Deputy Speaker Sandro Marcos at F1 Grand Prix in October in Singapore, where they claimed to be following up on foreign investments)
Marcos Jr. speaks from both sides of the mouth. Abroad he courts investors to Manila. At home he crafts Maharlika to invest abroad.
Economists, jurists, academics enumerate Maharlika Investment Fund’s flaws. College dropouts should listen to specialists. Criticisms are summed up into three. MIF is ill-conceived, thus doomed. It encourages corruption. Undue haste taints it.
Bill authors included SSS and GSIS, a basic defect. Ignoring jurisprudence, they mis-labeled the private provident funds as government-owned. In breach of charters, Malacañang appointees committed P125 billion from GSIS and P50 billion from SSS without board trustees’ consent.
Yet there’s no cash to spare. SSS suffers P6.94-trillion deficit; GSIS, P560.6 billion. Rep. Stella Quimbo delisted them as MIF funders. “Their inclusion was a bad idea,” Rep. Joey Salceda conceded. In fact SSS will again forcibly increase members’ contributions P300 a month starting January 1st.
MIF will now rely on P50 billion from Land Bank, and P25 billion each from DBP and national government. Another mistake.
A “sovereign wealth fund” copied from rich countries, MIF should derive from excess earnings, say oil, gas, export and trade taxes. Land Bank and DBP have no surplus, notes ex-Supreme Court justice Antonio Carpio, an economics grad. The state banks’ charters require that they remit half of annual incomes to the Treasury. Remainders go to operational expansions.
Land Bank and DBP’s Malacañang directors already invest in certain portfolios. Placed under MIF, 15 more highly paid directors, four Cabinet advisers and a dozen fund managers will do the investing for the two. Wasteful duplication.
For national government to put in P25 billion, it must first show excess funds in the national budget and at fiscal yearend, Carpio says. It can’t. For decades now government spending has depended on borrowings, P13.64 trillion at last count.
MIF obligates Bangko Sentral ng Pilipinas to contribute. That violates the Constitution, which mandates a BSP autonomous of national government. BSP may not participate directly or indirectly in any enterprise unless approved by its Monetary Board. In which case, the MB should first approve BSP’s entry in MIF, says ex-congressman Neri Colmenares, a law and economics grad.
Speaker Martin Romualdez and Deputy Speaker Sandro Marcos, Marcos Jr.’s first cousin and son, sponsor the bill.
In his first ever national budget, Marcos Jr. inserted P2.5-billion Confidential/Intelligence Funds for himself. Plus, CIFs to officials with no law enforcement/intelligence functions, like the Vice President and Education Secretary. His cousin and son expedited enactment.
MIF is exempt from the Government Procurement Reform Act, Salary Standardization Law, GOCC Governance Act, Tariff and Customs Code and Civil Service Code. A super lawless body.
Whether or not he chairs MIF, Marcos Jr. will appoint the directors, even “independent” nominees, Cabinet advisers, investment managers. Easy to make them invest in losing crony companies, like what happened in 1972-1986.
Salceda claimed all will be subject to internal, external and constitutional Commission on Audit. Yet they will appoint such internal/external auditors, Colmenares points out. And with everyone in MIF exempted from transparency and accountability, COA will have no basis to determine their wrongs.
Wrongdoers will be jailed up to five years and fined P50,000 to P2 million. But government crooks enjoy immunity. Examples: those behind the P42-billion Pharmally pandemic supply overprice, P15-billion missing Philhealth money, P728-million fertilizer scam from Malampaya gas fund.
And what’s the hurry? MIF was filed Monday, Nov. 28. Tuesday, the House committee on banks approved it subject to revising by Salceda’s technical working group. Wednesday, they OK’d the TWG’s addendums. A public hearing was rushed the following Monday.
Norway’s sovereign fund, the world’s biggest at $1.4 trillion, was well thought out. Discussions on a fund for future generations when oil runs out began in 1961, two years after North Sea discovery. Ideas firmed up in 1970. The fund was formalized 12 years later, 1982. The Finance Ministry first infused oil revenues in 1996. Government can spend income only on real returns, meaning, income above inflation rate. If fund returns average 5 percent and inflation is 3 percent, it may withdraw only 2 percent. The fund grew every year but first withdrawal was only in 2016.
Seventeen key officers and 500 professionals manage Norway’s fund round-the-clock, says economics Prof. JC Punongbayan, PhD. It is most transparent. Its website details all portfolios and earnings.
MIF is “broken beyond repair,” National Scientist for Economics Raul Fabella laments. No amount of tweaking can undo its flaws. MIF wrongly assumes that government must finance infrastructure, despite the Build-Operate-Transfer Law and Public-Private Partnerships. It illusions revenue surplus, when overborrowing is fast moving to repayment crisis. It is untimely; all indications are towards global recession. Due to shaky world economy, Norway’s wealth fund lost $174 billion in the first half of 2022.
Yet the House steamroller intends to finish three plenary readings between Dec. 14 and 17. To drown out resistance, authors now insert ayuda for the destitute. Salceda, MIF’s sole defender, taunted that critics talk without reading the latest of ever-changing versions.
Maybe it’s they who should read about the French revolution.
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