Government financial bodies back bill creating sovereign wealth fund

MANILA, Philippines — Four of the country’s top-performing government financial institutions (GFIs) yesterday backed the passage of a House bill seeking the creation of the Maharlika Wealth Fund (MWF).

At a hearing of the House committee on banks and financial intermediaries on House Bill (HB) 6398, the Government Service Insurance System (GSIS), Social Security System (SSS), Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) all committed to invest seed money necessary to start up the sovereign wealth fund.

“We are very supportive of this bill and we have committed P125 billion to be able to jumpstart the incorporation and help set in motion the principles of the sovereign wealth fund,” said GSIS president and general manager Jose Veloso.

This was echoed by DBP president Emmanuel Herbosa, SSS president and CEO Michael Regino and Land Bank of the Philippines president and CEO Cecilia Borromeo, who unanimously backed the creation of the MWF.

Authored by Speaker Martin Romualdez, HB 6398 seeks the establishment of the MWF, which shall be patterned after the sovereign wealth fund or SWF of other countries to “maximize the profitability of investible government assets for the benefit of all Filipinos.”

Under the bill, the four GFIs – which shall be known as the founding GFIs – are mandated to invest equity with a combined total of P250 billion to start up the fund.

GSIS will provide an initial investment of P125 billion, P50 billion for both SSS and LBP and P25 billion from the DBP.

Romualdez said earlier that the creation of MWF would provide an “opportunity to ensure their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled to investments that will provide the most value not only to the participating GFIs but also to the country.”

He noted that having the MWF will help achieve the objectives of President Marcos’ “Agenda for Prosperity” and the eight-point socioeconomic roadmap.

The Speaker cited Singapore and Indonesia as countries that have successfully used their sovereign wealth funds.

He added that Singapore’s SWFs provide the financial means for the city-state “to manage its foreign reserves, defend itself and protect its sovereignty without compromising its domestic program and augment its land-limited economic space with global investments.”

In Indonesia, he said it has attracted foreign investors to jointly capitalize its SWF to bring in much-needed investments in various sectors.

“As the Philippines secures its place not only as the Rising Star of Asia but as a real economic leader in the Asia Pacific, the creation of the MWF becomes imperative,” Romualdez added.