House not rushing Maharlika fund bill, safeguards enough to prevent failure, solon says

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Metro Manila (CNN Philippines, December 13) — A co-author of the proposed measure creating the Maharlika Investment Fund (MIF) has assured that the House of Representatives is not rushing to pass the bill.

“No, we are not rushing this bill. In fact, the president has not certified this as urgent kasi kung cinertify n'ya (if he certified this) as urgent we can have it approved by Thursday,” Surigao del Sur Rep. Johnny Pimentel told CNN Philippines’ The Source on Tuesday.

Lawmakers target to approve House Bill 6608 on second reading on Thursday before going on a month-long break for the holidays from Dec. 17 to Jan. 22, 2023.

Pimentel said he expects the third reading for the proposed measure to happen by the end of January to early February, next year.

“Because of time constraint, we cannot have this approved on third reading… we just started discussion on this, deliberating on this on the floor in the plenary session," he explained.

"I believe there were about five interpolators already and this afternoon when we resume session the debate and discussion will continue until tomorrow," he added.

Despite some lawmakers expressing concern on the timing of the bill, its proponents continue to push for its passage to use the MIF in funding programs that will help the economy in its recovery.

In Southeast Asia, only the Philippines has no such fund, according to Pimentel.

So far, only one out of the 70 countries that established their own sovereign wealth fund has failed, which is Malaysia’s 1MDB.

Former Malaysian Prime Minister Najib Razak was found guilty on seven charges related to the 1MDB scandal, which saw billions of dollars of taxpayers' money funneled and embezzled out of Malaysia. 

“I certainly believe that this investment fund is good for the country,” Pimentel said. “There are now 70 countries who have this sovereign fund and 69 have been successful, one has failed which is the 1MDB."

"In our bill," he said, "I believe this will not happen because we had put up so many layers of safeguards.”

This includes Congress having an oversight function, which will be composed of five senators and five congressmen.

The Commission on Audit will also scrutinize the fund since it is sourced from public funds, he said.

An advisory board composed of the Department of Budget and Management, the National Economic and Development Authority, and the National Treasury will be formed to make sure that the Maharlika fund will be put to good use, Pimentel noted.

ACT Teachers Party-list Rep. France Castro, however, still questioned the independence of the board's composition.

"Independent directors will be chosen by the advisory body. Who will compose the advisory body?" Castro asked during Tuesday's House deliberations. "Hindi ba ito rin ay appointee ng executive? So paano natin masasabing independent itong board of directors?"

[Translation: Aren't they appointees of the executive as well? So how can we say that the board of directors will be independent?]

Proponents said board members will be chosen for their expertise in the field of finance, adding they are willing to amend the pinpointed provisions for choosing them.

Other proposals include heavier sanctions for violators of investment rules and guidelines - suggested by both Minority leader and Rep. Marcelino Libanan of 4PS and Kabataan Party-list Rep. Raoul Manuel.

Libanan said the penalty of up to five years in prison or a fine of up to ₱2 million is not "proportionate to possible billions of losses" that could be incurred due to violations.

On Monday, the House Committee on Banks and Financial Intermediaries approved amendments to the controversial bill to revise some of its provisions to ensure there are safeguards in the handling of funds and jail time for those who will violate its stipulations. 

So far, the identified sources for the fund are Land Bank of the Philippines (₱50 billion), Development Bank of the Philippines (₱25 billion), and Bangko Sentral ng Pilipinas (100% of dividends).

The Social Security System and the Government Service Insurance System were removed as sources of the fund after lawmakers received backlash from the public amid concerns on the pensions and benefits of the agencies' members.

Pimentel said other government institutions may still be tapped to increase the seed capital of the MIF.