Other better ‘gambles’ than Maharlika

One of our readers, Marvel Tan, came up with a valid point on why our lawmakers should allot more time to crafting a better bill that would establish and define the operations of the proposed Maharlika Investment Fund (MIF).

In the early hours of Wednesday, the Upper House passed Senate Bill 2020 on its third and final reading, with bicameral discussions likely having convened a few hours later to iron out differences with the House Bill version that had been approved last December.

Bicameral conferences are often tricky undertakings, especially during deliberations behind closed doors, when new provisions can surprisingly make an appearance. Worse, the old and supposedly scrapped provision, like the widely protested inclusion of public pension funds of our private and public employees, could reappear.

‘Unsalvageable’

We will reserve discussion on this in the latter part of the column. Let’s hear first what our reader says:

“SB 2020 is clearly unsalvageable because of many questionable provisions, indicating there could be more provisions ambiguously worded to suit the ends of the administration. My humble take of a Trojan horse provision is Sec 21.

“This particular portion of the bill that involves the incorporation of the Maharlika Investment Corporation (MIC) is worrisome for comfort.”

Tan points out the particular wordings of Section 21 in the latest iteration of the SB 2020, which defines the powers and functions of the MIC Board of Directors. Sec 21 goes on: The primary function of the Board of Directors is to govern and manage the MIC, its assets, and investments in accordance with this Act. The specific functions of the Board shall include the following: (a) To direct the management and operations, and administration of the MIC….

A ‘no-no’

Tan comments: “The management and operations of fund will be in the hands of the government finance officials and functionaries controlling the Board of Directors. With due respect, policy-making and management are two disparate functions and merging them is no-no for astute financial control.

“The bill, in fact, is implying that the Board of Directors will also be managing the corporation/giving themselves salaries and bonuses, at the same time receiving dividends as shareholders! The Board should only be oversight, otherwise, it ridiculously becomes the implementor of its own directives. So, where’s the accountability for the MIC funds if misused?

“This then would be nothing but another bureaucratic government-run bank, which would have contrived to whisk out the funds from the two stable government banks with this difference: the MIC is humongous and will become a potential political gravy.

“The Senate, supposedly our check-and-balance to governance abuse, should have spotted easily this Trojan horse. Unless section 21 is clarified, it’s an idea gone terribly wrong.

“Without a professional reputable international management group hired to manage the new corporation, who among us citizens in his/her right mind will put in a centavo in the Maharlika Investment Fund idea?”

Numerous red flags

Following the Senate hearing last Tuesday on SB 2020, and reading through various many other comments on the idea, I gathered that bill contains many red flags that evoke an uneasiness especially with the current political structure where both Houses of Congress are too meek to go against the Executive’s views.

Statements by Finance Secretary Benjamin Diokno continue to refer to the possibility of pension funds of the Social Security System (SSS) and the Government Service Insurance System (GSIS) as sources of money for the MIF, which clearly goes against what the House version removed before its vote last December.

Even in the latest approved Senate version, despite assurances by administration senators that the GSIS, SSS, and even the Philippine Health Insurance Corp., Home Development Mutual Fund, Overseas Welfare Workers Association, and Philippine Veterans Affairs Office will explicitly be prohibited from investing in MIF, Diokno’s persistent arguments reiterating support for the pension funds’ inclusion are another red flag. Somehow, one may already expect the final version of the bill after bicameral deliberations to once again open and allow investments of these funds.

Better use of development funds

It also just doesn’t sound comforting when Diokno talks about how small P50 billion is, this money being what Land Bank of the Philippines (LBP) will be investing in the MIF. He mentions that LBP’s total investible fund is about P1 trillion, but continues to say that P50 billion is a mere three percent of the investible funds, and implying that its loss will not affect the state-owned bank.

While losing P50 billion, indeed, is something that will not bring about LBP’s ruin, P50 billion is still a huge amount that is too precious to lose at a time when the country is perpetually struggling to raise funds for many of its needs.

The P50 billion, in fact, will be a huge boon to the country’s agriculture sector, especially now that we are seeing a real possibility of increased participation of agri-entrepreneurs who could bring game-changing management standards in land farming, fisheries, and even livestock production.

Even putting funds of the Development Bank of the Philippines (DBP) to support micro, small and medium-sized enterprises (MSMEs) will be a better gamble. Our MSMEs have long been decrying the difficulty of getting even just P1 million from the DBP to finance expansion plans.

Definitely, given the kind of risks we may be putting into the poorly laid out mechanisms of the MIF, the country might be better off “gambling” on the investible funds of DBP or Landbank on the agriculture and MSME sectors.

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