Suspension

Filipinos’ loss of English proficiency must be serious, if we can’t even agree on what “suspension” means.

The Maharlika Investment Fund is still on. Or at least that’s the latest word from President Marcos. The MIF wasn’t put on hold, he said, clarifying the Oct. 12 memorandum signed with his authority and released by his executive secretary, Lucas Bersamin, suspending the implementing rules and regulations of the fund. The memorandum has not been recalled.

If you suspend the IRR of a project, ostensibly for a review or whatever reason may be cited, aren’t you suspending its implementation? And if it’s on hold, it must have been triggered not by a positive development, but by something negative.

But BBM said the project was merely “being improved [to make it] as close to perfect and ideal as possible.”

Most everyone else interpreted the order as a suspension of the MIF, including lawmakers who had fallen all over themselves to pass Republic Act 11954 in record time, ignoring admonitions about haste making waste.

Reacting to the initial reports of a suspension, the usual sycophantic suspects in Congress gave predictably unctuous comments. The top prize goes to Senate President Migz Zubiri, whose chamber had joined the House in railroading the passage of RA 11954, which created the fund: “When so much money is at stake, it is better to proceed with an abundance of caution than to be reckless.”

Such concerns should have been designed into RA 11954 while it was being crafted, instead of after the fact.

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Despite the suspension, among the highlights of BBM’s brief trip to Saudi Arabia was an announcement from Malacañang that the kingdom, upon the invitation of the Philippine government, would look into possible Saudi investment in the MIF.

What Saudi Investment Minister Khalid Al-Falih said was that his government and Saudi businessmen wanted to “learn more about the newly launched Maharlika Investment Fund...”

As we still recall from all the billions in Chinese investments that were touted by the China-loving Duterte administration but which never materialized, there’s a long way from learning more, deciding and then actually proceeding to invest in anything.

There was a stampede in the House to approve the MIF in December last year, mainly so BBM could pitch it at the World Economic Forum (WEF) in Davos, Switzerland in January.

There were polite comments in Davos that the MIF rah-rah team described as expressions of interest in the fund. But economists and business moguls who attend the WEF are no naïfs; they can spot a half-baked fund when they see one. If anyone at the WEF had even whispered interest in the MIF long after the forum, it would have been trumpeted ASAP by Malacañang.

Also, Saudi Arabia’s Public Investment Fund, one of the largest sovereign wealth funds in the world, is also controversial for being among the least transparent. It has been described as a “black box” that is funneled to Saudi firms that are in the good graces of the monarchy. The PIF is chaired by Crown Prince Mohammed bin Salman, who was tagged in the gruesome murder of Saudi dissident journalist Jamal Khashoggi in October 2018 by Saudi government agents inside their consulate in Istanbul, Turkey.

Still, the Saudi statement was clearly appreciated by two of the principal drivers of the MIF, who were part of BBM’s “lean” (by Philippine standards) delegation to Riyadh: Finance Secretary Ben Diokno and Speaker Martin Romualdez. (The No. 1 promoter, of course, is BBM himself.)

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Twenty-one economists and professors at the University of the Philippines School of Economics had given a detailed assessment of what was wrong with the MIF, describing it as “beyond repair… defective” and with “confused goals.” Their 28-page discussion paper said the MIF “violates fundamental principles of economics and finance.”

Felipe Medalla initially opposed the MIF, warning of its adverse impact on the Bangko Sentral ng Pilipinas. His belated tepid support for it failed to win him a fresh term as BSP governor.

Surely the Oxford-educated BBM didn’t think the UP professors weren’t worth his time; the members of his economic team are alumni of the same UP school along with his administration’s deodorizer in the House of Representatives, Marikina Rep. Stella Quimbo.

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Because of the timing of the release of Bersamin’s memorandum, the (non-)suspension of the MIF is seen to have been triggered by the request of the Land Bank of the Philippines and Development Bank of the Philippines for regulatory relief from BSP requirements on bank capitalization.

As required under RA 11954, the DBP and Landbank recently remitted their contributions to the MIF seed capital, at P25 billion and P50 billion, respectively. With their capacities for lending reduced, they sought some exemption from BSP capital requirements. BSP Governor Eli Remolona Jr. initially said a temporary relief might be approved, but later said there would be no special treatment given to the two government banks.

The two banks’ remittance of the funds before the IRR is out is being questioned by the same party poopers who have brought the MIF issue to the Supreme Court. The case not only questions the creation of Maharlika, but also the way RA 11954 was railroaded through the House and Senate.

There’s some speculation that Malacañang might have been tipped off about an SC decision unfavorable to the MIF, and the (non-)suspension is a preemptive tack for a graceful way out.

Norway’s sovereign wealth fund is built on its substantial North Sea oil and gas reserves. Efficient management grew the fund into its current $1.4 trillion in assets. One of the world’s best managed sovereign wealth funds, the Norwegians still lost an eye-watering $164 billion in 2022. But it recovered this year, posting a profit of $143 billion in the first half on its overseas investments in tech companies heavily into artificial intelligence.

Saudi Arabia’s sovereign wealth fund ($778 billion in assets) also springs from its enormous oil reserves, the world’s second largest. But the way it is being utilized smacks more of the scandal-wracked 1Malaysia Development Berhad than the Norwegian fund.

In our case, what’s our surplus wealth? We’re buried in record debt, although the ruling class thinks there are excess funds that they are entitled to corner and use at will as confidential and intelligence funds. Yet BBM and the MIF proponents say they expect Maharlika to be operational by yearend.

Considering all the issues raised about the fund, the suspension of the IRR implementation should serve as a prudent pause. As BBM’s ally said, even if belatedly, an abundance of caution is needed.