by Leonard Andrei S. Cabalona
Last week, congressmen Martin Romualdez and Sandro Marcos proposed House Bill 6398, which will create a P250-billion Maharlika sovereign wealth fund sourced from four government financial institutions: Social Security System (SSS), Government Service Insurance System (GSIS), Land Bank of the Philippines, and Development Bank of the Philippines.
Curiously, the fund was proposed in a debt-ridden economy that's still regaining strength after a pandemic and the global recession it brought. The masses are still suffering from the 8% inflation rate recorded in November, and the Bangko Sentral ng Pilipinas (BSP) is projecting higher numbers as 2022 comes to a close.
Basically, one establishes a wealth fund intended for investment when there is too much money for a government to spend. Qatar used its billion-dollar surplus in oil and gas profits to diversify its economy, buying real estate properties in Europe and stocks of several European companies, including a prestigious football club.
While its usage in hosting the 2022 FIFA World Cup is currently in question (and the human rights violations that come with it), Qatar’s usage of its wealth fund shows how investing it wisely can impact a country owning it.
But as of the moment, the Philippines has no industry like Qatar’s to sustain an investment fund. The bill instructs mentioned financial institutions to contribute a portion of their fund to it.
This is where the problem comes in, since this fund will come from taxes and include hard-earned money people save for their future. It is a gamble for them to invest their money blindly on stocks and properties they will never know.
It is good to hear that House lawmakers recently considered removing pension institutions SSS and GSIS on the revised Maharika wealth fund bill. Should they have not done that, including them in the new investment fund will worsen existing issues on their funds’ actuarial life.
Whenever sectors such as senior citizens demand pension hikes, SSS always complain about their fund’s lifespan becoming shorter, and why not? As what an economist obtained from their financial statements, SSS has a deficit of P6.9 trillion in 2021, while GSIS has P560 billion.
Since the wealth fund is a new concept in the Philippines, putting safeguards in it should be prioritized. Without it, the country might end up like Malaysia, where its former prime minister was sentenced with corruption charges after funneling portions of their investment fund into his bank accounts.
Like any other investment, the profits gained by an invested sovereign wealth fund will not immediately gain profit. Putting ordinary Filipinos' hard-earned money at stake does not make any sense, because if that investment didn't earn, it might send a message that the masses worked and invested on nothing.
If one wants to gain profit by selling cow's milk, a healthier cow is more likely to be milked than a sickly one.
Tags: Maharlika wealth fund, Investment, Sovereign wealth fund, Sandro Marcos, Martin Romualdez, SSS, GSIS, Wealth fund
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