Escudero on Maharlika fund bill: ‘A leap of faith to the great unknown’ ​

Senator Francis “Chiz” Escudero on Friday, May 26 expressed concern that the proposed Maharlika Investment Fund (MIF) bill will have the potential to deplete the funds of the two government banks, despite the positive projections aired by state economic managers.

 Chiz .jpgSen. Francis “Chiz” Escudero, during the period of interpellation on Senate Bill No. 2020 or the Maharlika Investment Fund (MIF) on Wednesday, May 24, 2023. (Senate PRIB Photo)

Escudero said the bill, as presently worded, “is a leap of faith to the great unknown.” 
As such, the senator said there should be more “earning guarantees” in the Maharlika fund bill, which would allow the sovereign fund to surpass the six percent (6%) income threshold that the two state-owned banks currently earns from their investments.
Otherwise, without “benchmark in yields,” the senator said the billions the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) will be forced to put in the Maharlika Investment Corp. (MIC) will be earning less than their present return of investment (ROI).
“Ang ideya ay dapat lumago ang pera ng Land Bank at DBP, at hindi malugi (The idea is that Land Bank ad DBP will earn more rather than lose money).  Remember, the bill makes their  equity compulsory. So in exchange, will there be guarantees as to their returns  as well ?” Escudero pointed out.
Escudero, likewise, echoed the Senate minority bloc’s concern over the possible railroading of the MIF bill’s passage, considering that the government has yet to answer the question on whether the state can surpass the investment earnings of these two banks.
Malacañang has certified the passage of the measure as urgent. 
“Kung may pag-aalinlangan, bakit napaka-aggressive yata ng marketing ng bill na ito (If there are doubts, then why is there an aggressive marketing on this bill)?” he said.
“If a ten-peso headache pill carries therapeutic guarantee, bakit sa pondong ito (why does this fund), with its price tag in the hundreds of  billions price tag,  tila wala (there is none)?” he pointed out.
During the floor debates on Senate Bill No. 202, the Senate’s version of the bill  last Wednesday, May 24, the lawmaker said  he has yet to hear a full explanation on how much these two banks will earn from their Maharlika investments.
“Landbank and DBP, during the hearings, said they were earning on average six to eight percent (6% to 8%). So, let us average it up at seven percent (7%). You have to give Landbank and DBP a return of at least  seven percent (7%) per annum on what they invested in MIC,” he said.
On top of that is the two percent (2%) administrative fee cap the MIC  may use, Escudero pointed out.
“Then we have to factor in inflation. So easily, the yield will be in the two-digit zone,” he said.  
“An investment is made because one is convinced that it will make money. Not behest. Not something  coerced through legislation,” he warned.
Under the bill, the total authorized P500-billion in capital stocks of the MIC, the initial P125 billion worth of MIC common stocks to be subscribed by the national government amounting to P75 billion shall be fully paid by the following: P50 billion by the LBP and P25 billion by the DBP.
The two banks can seek regulatory relief from the Central Bank if their position fall  below standards, based on the measure.
“Pero dapat hindi umabot sa ganoon (But it should not reach that point). And to dangle this as the standard reply to issues validly raised is not the comforting answer we want to hear,” Escudero said.
He pointed out that once a regulatory relief is sought “that means the banks already lost a lot of money.”