No, the title is not about questioning the resurrection of the word “maharlika,” which at one time a former president thought of re-naming the Philippines with.
Renaming the country is not exactly a bad idea, if we are to recall that our country is named after the crown prince Felipe who eventually became king of Spain, and under whose rule the empire’s power began to wane.
Having fought against our colonial masters, only to surrender as quickly to another, this time the US of A whose president, William McKinley believed it was their “manifest destiny” to colonize other countries to “educate” the natives into the American way of life, Philippines as country name evokes colonial subjugation.
In the case of Bolivia, they named ttheir country after the Libertador, Simon Bolivar whose struggle culminated in the independence of Colombia, Venezuela, Peru, Ecuador and Bolivia from Spanish rule.
In our case, we are named after a colonial master whose beautiful language we have discarded for the language of a new imperialist. But enough of historical trivia that is not too trivial.
The House of Representatives seems all set to pass legislation creating a sovereign investment fund, and it is to be named Maharlika Sovereign Wealth Fund.
Patterned after those of Norway, and nearer to home, Singapore’s Temasek and Malaysia’s 1MDB, the fund hopes to pool surplus revenues (do we have any?) or idle funds of GFIs and GOCCs, in this case, initially from government employees’ pension funds (GSIS), or private sector employees’ (SSS) plus the supposedly agricultural-funding bank, Landbank, and the industrial development-supporting DBP.
As the investment fund’s life continues, the authors, headed by no less than Speaker Martin Romualdez and presidential son Rep. Sandro A. Marcos, are also looking at excess funds of Pagcor, PCSO, and government shares in whatever mining and natural gas exploration activities there would be prospectively.
The opposition to the sovereign wealth fund comes from several factors, principal among which are (1) the use of pension funds, which in truth are not government-owned, being fiduciary instruments gathered from contributions of the labor sector, both private and public; the possibility of graft and corruption in a massive scale, reminiscent of Najib Razak’s plunder of the 1MDB which has, in a rule of law system alien to our country, resulted in his imprisonment; and
(3) the timing of the creation and its eventual operationalization at a time of more urgent needs, and a massive legacy debt amounting to 13.54 trillion pesos.
On the use of pension funds, one is reminded of the shortened actuarial life of the Social Security System, borne by leakages in collection on top of recently mandated increase of pensions.
In the shortened presidency of Joseph Estrada, controversy swirled about the risky investments allegedly incurred by the private employees’ pension fund.
The GSIS was likewise embroiled in fund management controversies in the past, such as its ownership of Philippine Airlines and the mismanagement thereof, although learning from such financial misadventures, successive GSIS administrators have improved the actuarial life of the fund, and given government employees better than fair shake.
The pension fund for military and uniformed personnel, through the now defunct RSBS, has become another sticking point in how government-appointed managers oversee such fiduciary monies.
With populist measures such as doubling of uniformed personnel salaries thus increasing pension requirements, one of the fiscal nightmares of the State is how to fund the same.
There is a proposal to get the GSIS to oversee the MUP system, but no sane GSIS manager would allow co-mingling of military pensions with its current fund.
Unless of course, Congress appropriates a separate financing support for these. Given our parlous finances, that is not easy.
So why touch 125 billion of GSIS, 50 billion each from SSS and Landbank, and 25 billion from DBP as initial funding for Maharlika SWF?
GSIS is presently liquid, true, but government pensioners and civil servant contributors will howl at the potential risk of improper fund management. SSS has shortened actuarial concerns.
At a time when agriculture and food security is our main problem, should not the Landbank concentrate on its raison d’etre, which is to assist agricultural production and help improve farmer incomes, insulate them from climate risks?
And how about these government institutions’ exposure to failed massive projects like Hanjin Shipyard which went under, and now given a new lease by little-financed Cerberus of the US?
And on the second front, if Najib could do what he did to 1MDB in such a short period, would the same not be replicated in a country like ours, where people are ever-suspicious, and rightly so by experience, with government?
Finance Secretary Ben Diokno allays such fears by stating that Maharlika will be managed by competent private sector managers. Oh, come on, that is not enough to reassure our people.
And finally, why now?
We are saddled by a humongous 13.54 billion debt at a time when our budget deficit is also more than a trillion, industry is pummeled by high energy costs and supply chain problems, and agriculture by tripled fertilizer costs, higher inputs, and climate change effects. Etcetera, etcetera, etcetera.
Of course, taking a long view, one can invoke that advice attributed to Rothschild, that “the time to invest is when blood is spilling on the streets.”
There may be a bloody war in Ukraine, an economic war between the US and China so this may be the time to take bold risks with public money.
Except that private money can take huge risks and gamble even; government should not.
If such is the intent of its proponents, why not invest a small percentage of the Bangko Sentral-held foreign exchange reserves, which is around 94.1 billion US dollars?
That is supposed to support our trading requirements and defend the peso, if need be, apart from being one of the “healthy” factors that give us good ratings from Moody’s and S and P?
Five percent of 94.1 billion dollars is about equal to what Maharlika wants to get from our pension funds and other GFI’s. Deducting that from the BSP’s account should not affect our monetary health as much.
Still and all, the major issue which even the virtually “dead” opposition will surely invoke against Maharlika is trust in fund management and distrust in government, never mind the fact that Octa says now that the president and vice-president enjoy high trust and approval ratings.