House panel approves Maharlika Fund bill changes; president won't be board chair

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Metro Manila (CNN Philippines, December 12) — A House of Representatives panel on Monday approved amendments to the controversial bill pushing for the creation of a sovereign wealth fund.

Among the changes approved by the House Committee on Banks and Financial Intermediaries to House Bill No. 6398 is the return of Maharlika Wealth Fund to its original name, Maharlika Investment Fund, the panel's chairman Rep. Irwing Tieng said.

The committee members agreed during a closed-door executive session to revise some provisions of the bill to ensure there are safeguards in the handling of funds and jail time for those who will violate its stipulations, the solon said.

A penalty clause says any director or officer who willfully violates the investment policies and guidelines set by the board of directors resulting in a loss for the corporation can be punished by imprisonment of up to five years or fined up to ₱2 million, or both, at the discretion of the court.

It is also prohibited for the proposed Maharlika Investment Corporation to manage any company or business it invests in.

The panel approved the provision to appoint the finance secretary — instead of the country's president — as the chairman of the Board of Directors of the Maharlika Investment Corporation.

The corporation will have an advisory body which would consist of the secretaries of budget and socioeconomic planning, as well as the national treasurer.

House Bill No. 6608 was filed and referred to the House Committee on Rules on Monday.

Several lawmakers earlier expressed worry that the fund would be politicized if the previous provision designating the president as the head of its board is followed.

There will also now be four instead of two independent board of directors from the private sector who will make up the 15-member board.

Tieng added that the committee also approved the new version of the bill which removes major pension funds and the national budget as seed capital.

The sovereign wealth fund's initial investment will now come from the Land Bank of the Philippines (₱50 billion), Development Bank of the Philippines (₱25 billion), and Bangko Sentral ng Pilipinas (100% of dividends).

"Ang SSS (Social Security System), GSIS (Government Service Insurance System) , tinanggal natin. Ang GAA (General Appropriations Act) tinanggal," Tieng said.

[Translation: The SSS, GSIS, and GAA were removed.]

The BSP earlier estimated it can remit up to ₱35 billion to the investment fund if passed into law by 2023.

The lawmakers also agreed to allocate 20% of the net profit of the Maharlika Investment Fund for social welfare services.

The lower chamber is expected to pass on second reading this week the bill authored by Speaker Martin Romualdez, presidential son Ilocos Norte Rep. Sandro Marcos, and four other lawmakers. Congress' last session will be on Wednesday before lawmakers take a month-long break for the holidays.

The proposed sovereign wealth fund attracted controversy, with various groups protesting the inclusion of the SSS and GSIS as founding government financial institutions.

The Philippine Chamber of Commerce and Industry and other business groups have also recommended that the proposal be put on hold, adding the plan may affect the country’s credit standing.