On Wednesday, Philippine lawmakers voted to establish a sovereign wealth fund with a value of $8.9 billion. The goal of the fund is to stimulate economic growth and reduce poverty, but detractors have claimed that the plan is a “scam” and should be abandoned.
In order for the government to be able to earn additional revenue to finance infrastructure projects despite its high level of debt, President Ferdinand Marcos Jr. had asked for the speedy approval of the measure that was presented by his son and cousin around the end of last year.
Seed money for the “Maharlika Investment Fund” totaling 500 billion pesos will come from the country’s central bank, gaming revenue, and two banks that are owned by the government. The national government will be the largest contributor to the fund.
In addition to private financial institutions and corporations, individual investors will be permitted.
During the course of the session, the Deputy Speaker of the House of Representatives, Aurelio Gonzales, announced that the bill in its version from the Senate had been adopted. It is going to be delivered to Marcos so that he can sign it into law.
The initial plan called for a fund with a total value of $4.9 billion, a portion of which would be funded by state-administered pensions for workers in the public and private sectors. This sparked public anxiety that people’s retirement savings may be put in jeopardy.
In the bill’s final form, it was stated that pension funds would not be required to make contributions.
“I want to reassure my fellow citizens that there is no need for alarm. According to what Senate President Miguel Zubiri said to the press, “all of the safeguards that could be put in place were put in place.”
According to Senator Mark Villar, the primary architect of the bill that was passed through the Senate, the fund would be used to develop infrastructure projects, which would lead to increased economic growth, an increase in employment opportunities, and a reduction in poverty.
In a statement released on Tuesday, Villar claimed that this would make it easier for the government to manage its budget and reduce the impact of budgetary constraints during times of economic turbulence.
– “Bill shouldn’t even be here.” It will be permissible for the fund to invest in a diverse variety of assets, such as corporate bonds, shares, joint ventures, and infrastructure projects, among other things.
In the poverty-stricken nation, activists and opposition politicians have expressed worries about the possibility of corruption and questioned the necessity of a sovereign wealth fund.
Business advocacy organizations have stated that the federal government already has massive budget deficits and that the new law could result in a downgrade of the nation’s credit rating.
The initial investments in traditional sovereign wealth funds come from unexpected government earnings made off of the sale of natural resources like oil and minerals.
On Wednesday, members of the left-leaning Akbayan Party called the bill “the country’s largest investment scam” and urged members of the public to “remain vigilant.”
In a statement, the party declared that “this bill shouldn’t even exist,” and they meant it.
Even though safeguards have been put in place, a law is only as effective as how it is carried out.
During his two decades in power, Marcos Sr. presided over numerous violations of human rights and corruption. The term “maharlika” is commonly linked with Marcos Sr., the late dictator father of Marcos Jr. and namesake of Marcos Jr. In 1986, he was removed from office.
It has been suggested that Marcos Sr. lied about his military service during World War II, despite the fact that he claimed to have commanded an anti-Japanese guerrilla outfit throughout the conflict called Ang Mga Maharlika.
Given the history of the Marcos family, an earlier version of the bill had designated the president as the head of the board of the fund. This sparked concerns among stakeholders.
This has been updated to refer to the finance secretary since then.
During the reign of Marcos Sr., it is estimated that more than $10 billion was taken from the coffers of the state, while the Marcos family has been accused of owing more than $3.6 billion in inheritance taxes.
Nobody from the family has ever been put behind bars.