The proposed Philippine sovereign wealth fund (SWF) gained the backing of several top-performing government financial institutions (GFIs) when the measure was tackled Tuesday, Nov. 29 by the House Committee on Banks and Financial Intermediaries.
The measure, House Bill (HB) No.6398, was principally authored by House Speaker and Leyte 1st district Rep. Martin Romualdez.
It aims to establish the Maharlika Wealth Fund--patterned after the SWF of other countries--to maximize the profitability of investible government assets for the benefit of all Filipinos.
During Tuesday's committee hearing, representatives from the Government Service Insurance System (GSIS), Social Security System (SSS), Land Bank of the Philippines (Landbank), and the Development Bank of the Philippines (DBP) unanimously supported the creation of the MWF.
“We are very supportive of this bill and we have committed P125 billion to be able to jumpstart the incorporation and help set in motion the principles of the sovereign wealth fund,” said GSIS President and General Manager Jose “Wick” Veloso.
DBP President Emmanuel Herbosa, SSS President and CEO Michael Regino, and Land Bank of the Philippines President and CEO Cecilia Borromeo, likewise informed the committee that they support the proposed MWF.
Under the bill, the four GFIs—which shall be known as the founding GFIs---are mandated to invest equity with a combined total of P250 billion to start up the fund.
GSIS will provide an initial investment of P125 billion, P50 billion for both SSS and LBP, and P25 billion from the DBP.
The co-authors of the measure are House Majority Leader and Zamboanga City 2nd district Rep. Mannix Dalipe, Senior Deputy Majority Leader and Ilocos Norte 1st district Rep. Sandro Marcos, Tingog Party-list Reps. Yedda Marie Romualdez and Jude Acidre, and Marikina City Rep. Stella Luz Quimbo.
The Speaker earlier explained that the creation of MWF will provide an “opportunity to ensure their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled to investments that will provide the most value not only to the participating GFIs but also to the country".
In calling for the approval of the measure, Quimbo said the MWF---managed professionally and guided by the principles of good governance, transparency, and accountability----will yield the best return for the investment, providing the government with additional resources to address the country’s pressing problems.
For his part, Acidre noted that viewed in the context of the recent financial crisis, the Russia-Ukraine conflict, and the pandemic, the impact of sovereign wealth fund employed by many economies have been notably positive.
“This representation earnestly asks this committee for the speedy passage of this bill,” Acidre added.
Speaker Romualdez cited Singapore and Indonesia as countries that have successfully used their sovereign wealth funds.
He said Singapore’s SWFs provide the financial means for the city-state “to manage its foreign reserves, defend itself and protect its sovereignty without compromising its domestic program, and augment its land-limited economic space with global investments".
In the case of Indonesia, Romualdez said it has attracted foreign investors to jointly capitalize its SWF to bring in much-needed investments in such sectors as transportation, including airports, supply chains, logistics, digital infrastructure, the green economy, healthcare services, the financial sector, technology, and tourism, ultimately propelling the country’s growth.
“As the Philippines secures its place not only as the Rising Star of Asia but as a real economic leader in the Asia Pacific, the creation of the MWF becomes imperative,” the House leader said.
The committee will continue discussions on HB No.6398 on Thursday, Dec. 1.