This creature, called Maharlika Investment Fund, is a re-proposed legislative measure initially filed by former Senator Bam Aquino. Aquino, at that time, thought of creating a sovereign fund patterned after those in first-world countries such as Singapore, Malaysia, and others. Reports say 98 sovereign wealth funds (SWF) active in 2021 from 70 countries concluded 450 operations, up 171% from the previous year (see link: https://www.ie.edu/university/news-events/news/sovereign-wealth-funds-triple-investments-450-2021-according-ie-university-icex-invest-spain-report/.
China has the most prominent sovereign fund at 1,744 billion dollars, France at 1,670 billion, and Norway at 1,388 Billion. From the list of about 49 countries with substantial sovereign funds, two (2) observations: first, these are first-world countries with advanced economies, and second, most are oil-producing countries. Except for some, most countries with sovereign funds have strict law enforcement systems, particularly addressing white-collar crimes such as financial crimes.
Question: are we ready for such a wealth management scheme?
First, have we fully recovered from the damaging effects of a two-year pandemic-initiated economic shutdown? Many of our industries are still licking their financial wounds because of the previous policy of the Duterte administration. So, expect low to medium-level tax revenue collection to be generated for next year.
Second, do we have excess funds at our disposal right now coming from regular revenues generated by the government? We have no excess. Why? Because the government admitted that the reason why they are proposing a sovereign wealth fund is to augment the budget gap. The Marcos administration submitted a 5.26 trillion peso budget with fingers crossed that such an amount would be generated to fund various government services and projects.
The thing is, the government is salivating to get privately owned monies held by its agencies, such as the Bangko Sentral ng Pilipinas (BSP), and publicly owned banks, the Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP). Remember that these banks hold both private and public monies. So, even if Congress proposes not to touch pension funds held by SSS and the GSIS, still plans of getting monies from these financial institutions would involve the use of private monies owned by Filipino citizens.
Before the government can even get these funds from these banks, the Marcos administration should consult these banks’ thousands of private depositors. These depositors should be consulted first before any move by this administration to involve their monies in this venture. And any use of their funds should be covered by an expressed agreement.
Likewise, since these are private monies to be invested, it is but proper for these depositors to get a share of the proceeds of these investments. Government must report how this wealth fund performed and give private individual-depositors their due share of the proceeds.
Third and last question just for this post— is it good timing for government to indulge in such a risky investment venture? Look at how several financial institutions perceive how the global economy would perform by 2023.
IMF (International Monetary Fund) “Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.” see link: https://www.imf.org/en/Publications/WEO
The World Bank (WB) is anticipating a global recession beginning 2023 see link: https://www.worldbank.org/en/news/press-release/2022/09/15/risk-of-global-recession-in-2023-rises-amid-simultaneous-rate-hikes and
even predicts slower growth for the Philippines see link:https://www.bworldonline.com/top-stories/2022/12/07/491439/world-bank-lowers-2023-phl-growth-forecast/. Worse, Philippines is expected to lose its growth momentum by 2023 see link: https://business.inquirer.net/376678/philippines-on-track-to-lose-growth-momentum-in-2023-says-world-bank
How about the performance of the global and local bourse by 2023?
Goldman Sachs says global stocks had fallen to dismal lows see https://www.goldmansachs.com/insights/pages/why-the-bear-market-in-global-stocks-is-forecast-to-get-deeper-in-2023.html
S&P Global lowers growth forecasts for 2023 see link: https://www.reuters.com/markets/sp-global-lowers-2023-growth-forecast-emerging-markets-2022-11-29/
and Reuters say 2023 is expected to be a lackluster year for the world see link: https://www.reuters.com/markets/poll-global-stocks-grind-higher-lacklustre-year-ahead-2022-11-30/
The True Reason Why This Sovereign Wealth Fund is being proposed right now
Okay, let’s be men and admit that the only reason why this Sovereign Wealth Fund is being proposed right now for us is that close oligarchs of this Marcos Junior administration wants to get their hands on public funds to protect their businesses against enormous risks and financial hits they expect to get come 2023 and beyond.
Obviously, if we agree on this proposal, the Marcos administration will invest our monies to these big corporations managed by you know who–oligarchs close to the Powers-that-be. These investments will mean a lot for these companies and will be used to insulate them from the global financial shocks that every government and every bank expects beginning 2023. I learned that these shocks would extend until 2025-2026. We will see global markets recover only by 2025. Or worse–war will expedite the recovery of global markets.