Senator Sherwin Gatchalian said he believes the privatization of key government assets is a more logical source for the proposed Maharlika Investment Fund (MIF).
Gatchalian said doing this would shield key financial institutions, particularly the Bangko Sentral ng Pilipinas (BSP), from potential risks and unforeseen challenges.
“Privatization seems to be less controversial and more logical because the assets being sold now can be enjoyed by future generations by investing in infrastructure and other things,” Gatchalian said at a recent public hearing by the Senate Committee on Banks on the MIF bill.
“We must put that on the table for the body to study,” said Gatchalian, chairman of the Senate Committee on Ways and Means.
Gatchalian’s suggestion follow yet another remark, made by Bankers Association of the Philippines President Antonio Moncupa, Jr. that generating MIF capital from fund sources that contribute to government coffers could become problematic.
Moncupa pointed out tapping government financial institutions (GFIs) like the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), and the BSP, could either result in a wider budget deficit or reduced social services that could hamper the country’s future economic growth.
Gatchalian noted that the top three assets the government is looking to privatize could yield up to P130-billion in capital for the MIF.
These assets are the government’s mining rights estimated at P100-billion; a land parcel at the Food Terminal Inc. (FTI) in Taguig worth around P22-billion; and the government’s Mile Long property in Makati estimated at P8-billion.
Proceeds from the sale of these assets would be P130-billion, which is more than enough, Gatchalian noted.
“That’s double the amount of the initial capital,” the senator said, upon learning that the target horizon for the three government assets set to be privatized is three years.
“If privatization is the mode, then there will be a sense of urgency. The 3-year horizon can be shortened. So, if there’s a compelling reason, for example, if it will be pumped into the Maharlika Fund then there’s a compelling reason to expedite the privatization,” he explained.
“Privatization is actually a model used in some of the sovereign wealth funds -- proceeds from oil and gas, proceeds from resources, and from privatization,” the lawmaker said.
Moreover, Gatchalian also said annual proceeds from the privatization of government assets could become a regular source of additional capital for the MIF.