The government has its priorities all over the place. At a time of high inflation rate, declining wages, and worsening quality of life, its best bet is to place the country’s money in a high-risk investment fund, rigged with economically and politically unsound elements.

On November 28, the Maharlika Investments Fund (MIF) Act was filed by President Ferdinand Marcos Jr.’s cousin, son, and several other lawmakers. The entire process from proposal to passage in the House of Representatives took only 18 days.

It was initially a bill that sought to create a sovereign wealth fund (SWF) for the Philippines aimed at economic development. SWFs are state-owned funds typically financed by a surplus in revenue or reserve, and are invested in real and financial assets.

The bill proposed pooling funds from the Social Security Services (SSS), Government Service Insurance System (GSIS), Landbank of the Philippines (LBP), and the Development Bank of the Philippines (DBP) for its capital. But, with the public apprehension on the use of pension funds, a newer version of the bill excluded SSS and GSIS as capital sources. 

The bill also had other changes, such as the addition of penal provisions where stockholders who violate the guidelines of the fund will be jailed for one to five years, and the shift of focus to an investment rather than a wealth fund, among others.

But no amount of revisions nor additional provisions can redeem a faulty bill that runs contrary to the needs of Filipinos today. With the ails and wails of the people, even just the proposal of the MIF is misplaced and unscientific.

Social Services Sweetener

The proponents of the bill claim the MIF will be used to promote social development. A quarter of the fund's net profit will be given as subsidies to families below the poverty threshold, beginning with those earning P12,030 per month for a family of five. The remainder of the profit would be allotted for “social welfare programs and projects, excluding infrastructure projects.”

But for Mimi Doringo, secretary general of the urban poor group Kadamay, this is nothing but a deception for the easy passage of the MIF bill. “Kung gusto talagang magbigay ng social services sa mga maralitang katulad namin at sa lahat ng mga nangangailangan, dapat inuuna ang batas na makakatulong sa atin,” she said. 

It has been not uncommon for Congress to add social welfare provisions to questionable laws. For example, the TRAIN Law in 2018 included an Unconditional Cash Transfer Program, which provides cash grants to poor families affected by the law. The law, however, increased the excise tax on petroleum products, among others, which heavily increased the prices of basic commodities as well.

The MIF bill does not say outright whether the 25 percent allotted for poverty subsidies would be given on top of the already existing social assistance programs or if it would merely fund the said program. If the allocation would just fund existing programs, then there would be no net addition in the amount of assistance beneficiaries will receive.

If the government is really keen on helping the poor, it would not look into an economically unsound investment fund to do it. After all, it is the most vulnerable sectors that bear the most weight of their bad economic decisions. 

Amid the 8 percent inflation rate, the highest it has been in 14 years, the urban poor sector–with no prospects of a decent paying job–is subjected to increasing prices, yet the government has not offered any help. The labor agenda of the Marcos administration remains missing despite the paltry P570 minimum wage in Metro Manila, which is just half of the amount needed to support a family of five members in 2022, according to economic think tank IBON Foundation.

Sonny Africa, IBON executive director, also echoed Doringo’s sentiments, calling the provision a “sweetener.” For him, the formulation of the provision is vague and non-committal. 

“Di pa nga sumabay ang 2023 budget sa pagtaas ng bilihin. Ibig sabihin, ipit talaga ang budget ng gobyerno,”  Africa told the Collegian. IBON finds the 2023 national budget to be rigged with misprioritization despite the economic crisis. Crucial service-oriented institutions, such as the Department of Social Welfare and Development that offer much needed aid for the poor, have been defunded.

“Bakit ka maglalagay ng pondo sa investment fund na unang una, hindi mo ginagastos sa pangangailangan ngayon at pangalawa, hindi garantisado ang kita?” Africa said.

In Bad Faith 

A state investment fund involves magnitudes of risk and thus, requires magnitudes of trust from its stakeholders—two things that Filipinos cannot afford. 

At first glance, the idea to pool billions of funds to invest in business ventures for economic development seems like a good idea. But, here is the pièce de résistance: The Philippines has no excess funds, only a deficit. As of December 2022, the general government debt of the country stood at P13.64 trillion.

To compensate for the lack of excess funds, the MIF proposes taking its initial investments from government banks such as the LBP, DBP, and BSP. 

In the first iteration of the bill, it was proposed that the initial investments would take P125 billion from GSIS, P50 billion each from SSS and LBP, and P25 billion each from DBP and the annual budget. In the version approved by the House of Representatives, the initial investment would be composed of P50 billion from LBP, P25 billion from DBP, and 100 percent of the BSP’s declared dividends for the first and second fiscal year of the bill's implementation.

The LBP and DBP are government-owned and controlled corporations (GOCC). This means that they receive funds from the government and in return are mandated to serve Filipinos. The LBP is mandated to provide financial assistance and support services to the farmers and fisherfolk, while the DBP serves the micro, small, and medium enterprises in the country.

“They’re already doing development work and yet, we're trying to get funds from them and to put on this investment fund, and we’re not even sure that the new fund that we’re putting it into would actually work well,” said Enrico Patiga Villanueva, a senior lecturer of economics at UP Los Baños. 

The independence of the BSP also comes into question as not so long ago, the same family who proposed the MIF bankrupted the Central Bank of the Philippines. The bank had reported a P300-billion worth of losses by the end of Ferdinand Marcos Sr.’s term in 1986, due mainly to the foreign debt he acquired to finance crony businesses.

For Africa, the chances for a BSP bankruptcy are slim as the 1987 Constitution has safeguards in place. However, the broad list of the MIF’s possible investments might be steered in favor of the administration’s allies. Under the current language of the MIF bill, virtually any investment approved by the board can be allowed.

With the bill spearheaded by the Marcos family in Congress and masterminded by the president himself, the real objective behind the MIF is dubious.

“Sino-sino ba naman ang mga nagsulong? Wala naman silang kredibilidad para humawak ng malalaking pondo,” said Doringo. “Yung pamilyang Marcos, may utang pa nga silang P203 billion, hindi pa nababayaran.” 

In the bill approved by the House Committee on Banks and Financial Intermediaries, the president was to be designated the chair of the Maharlika Investment Corporation (MIC). This was later revised as questions on the safeguards of the bill were raised. In the current legislation, the secretary of finance–a president’s alter ego–would sit as the chairperson of the MIC.

But despite the revision, the governance of the MIC is still disreputable as only five out of the 15 board members are independent directors. The rest would still be under the influence of the chairperson, who is appointed by the president.

The apprehension regarding MIC’s leadership comes as no surprise as our neighboring countries' state investment funds have fallen into corruption schemes by their managing bodies. 

The 1Malaysia Development Berhad (1MDB), for example, has been subjected to embezzlement by then-Prime Minister Najib Razak. It was found in 2015 that Razak had stolen approximately USD 700 million from 1MDB. In 2020, the company acquired an outstanding debt of US$7.8 billion.

If the MIF were to follow the same path as the 1MDB, it would place the GOCCs’ already suffering beneficiary farmers, fisherfolk, and MSMEs at more risk.

Issues on the bill’s safeguards coupled with its economic unsoundness are nothing but colossal caution signs to rethink its passage. 

Tax the Maharlikas

After two and a half years of lockdown that crippled the economy and amidst all-time high inflation, now is not the time for the MIF. 

Even if the MIF were to churn out profit, it does not already guarantee development for the country. “Kahit i-assume na natin na kumita ng 7 to 8 percent ang MIF, kung ang naging kabayaran ay hindi pinondohan ang ayuda, hindi pinondohan ang sistema ng edukasyon, hindi tinulungan ang mga magsasaka, mangingisda, at mga MSMEs, hindi tama na sabihin na pakinabang yan para sa publiko,” said Africa. 

If the Philippines is really in dire need of funds, then risking the already limited funds of the public is not the way. According to IBON, a guaranteed way to earn money for the government would be to venture into wealth taxes.

By taxing the 2,945 billionaires in the country, the government could earn P469 billion, which is more than four times the proposed capital sources from the national banks for the MIF. The estimated total revenue for the wealth tax comes from a one percent tax on wealth over P1 billion, two percent on wealth over P2 billion, and three percent on wealth over P3 billion. 

“Bakit hindi yun ang i-pursue ng gobyerno kung sinsero siya na gusto niya ng kita? Bakit pa apektado ang ibang mga existing funds ng gobyerno?” said Africa. 

The MIF is a bill out of thin air. The country’s economic situation does not warrant its passage or its creation. As it is transmitted to the Senate for its concurrence, the loud voices of the house minority and the public majority must be heard: Focus on the existing economic problems at hand and do away with investments that place public funds in grave danger. ●