MANILA, Philippines (First published on Dec. 9, 2022, 5:53 p.m.) — House lawmakers pushing for the creation of a sovereign wealth fund (SWF) introduced "refinements" to the controversial bill in response to simmering public backlash.
During the House Committee on Appropriations hearing on Friday, proponents of the still unnumbered bill, which would create what would be known as the Maharlika Wealth Fund, finalized the changes meant to pacify negative reactions over the piece of legislation, particularly its funding provisions.
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Here are the key amendments to the Maharlika bill:
GSIS, SSS removed as funding sources
Under the revised version of the bill, the Government Service Insurance System (GSIS) and Social Security System (SSS) have been removed as sources of seed money for Maharlika.
This, amid public anger over the original version’s provision requiring the two state pension funds to inject a combined amount of P150 billion to the SWF, which critics said could put retirement funds of contributors and pensioners at risk of losses.
READ: Biz groups oppose creation of Maharlika Wealth Fund
GSIS, SSS can still invest in Maharlika, but...
At a press conference also on Friday, Finance Secretary Benjamin Diokno said that while the GSIS and SSS were no longer included in the list of funders, the two state pension funds can still invest in Maharlika should their respective boards decide to do so.
"We are not mandating them to contribute. But if they are looking for higher returns, they may contribute. But that is up to the respective boards of the SSS and GSIS,” Diokno said.
BSP earnings as seed money
The new version of the Maharlika bill proposes that profits of the Bangko Sentral ng Pilipinas be used to bridge the funding gap left by the removal of GSIS and SSS. If enacted into law, the BSP would be mandated to put 100% of its declared dividends into Maharlika during the first two years of the fund’s establishment.
After the first two years, the BSP will only need to remit 50% of its declared dividends to Maharlika, while the remaining 50% would be deposited to a special account meant to raise the P200 billion capitalization of the BSP. Under the revised central bank charter, the declared dividends that the BSP remits to the government must be used to raise the higher capital requirement of the central bank so it can perform its functions.
Once the BSP is fully capitalized, Maharlika could again receive 100% of the BSP’s declared dividends.
Last year, the central bank netted P34.81 billion and declared dividends of P17.41 billion. For this year, central bank lawyer Leila Rivera told House lawmakers that the BSP's income is forecast to range between P60 to P70 billion, which would translate to dividends of P30 to P35 billion.
Apart from the BSP, the following government institutions would also contribute to the initial capital for the SWF:
- Land Bank of the Philippines – P50 billion
- Development Bank of the Philippines – P25 billion
- Philippine Amusement and Gaming Corporation (PAGCOR) – 10% of its online gaming proceeds
The House appropriations panel also approved the proposal to exclude the General Appropriations Act (GAA) as one of the mandatory sources of funding for Maharlika.
DOF chief to head Maharlika board
Another salient feature of the amended bill is the designation of the Finance Secretary as chairman of the board of governors, replacing the Philippine president. The revision was meant to “insulate (Maharlika) from politics," lawmakers said.
Rep. Irwin Tieng (Manila 5th district), chair of the House Committee on Banks and Financial Intermediaries, also disclosed that the 15-man Maharlika board would have four independent directors instead of the original two.
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