Lawmakers from the House of Representatives who authored the proposed P275-billion Maharlika Wealth Fund have changed tune—they have decided to remove the Social Security System (SSS) and the Government Service Insurance System (GSIS) as funding sources in the bill.
This came after the bill attracted criticisms, specifically from SSS and GSIS pensioners who said they were not consulted.
Marikina Rep. Stella Quimbo, one of the bill’s authors, said on Wednesday, Dec. 7, 2022 that they decided to amend the legislation following a meeting with economic managers earlier that day.
The lawmaker said the sovereign wealth fund will use the profits of the Bangko Sentral ng Pilipinas (BSP).
Quimbo did not divulge the full details of the lawmakers’ meeting with the economic managers. The bill’s authors, perhaps, were told about the 1961 Supreme Court (SC) jurisprudence, which states that the funds contributed to the insurance system “created by law are not public funds, but funds belonging to the members which are merely held in trust by the Government.”
Former BSP governor Jose Cuisia Jr. mentioned the SC jurisprudence in a Dec. 5 live-stream interview with journalist Christian Esguerra. Cuisia said some governments, specifically the rich ones, set up a sovereign wealth fund because they have huge excess funds from the sales of their products. The investment’s fruits, he said, are for the future generations to use.
The former BSP head mentioned Singapore as one of the countries that have set up a sovereign wealth fund because the Southeast Asian city-state has excess export revenues.
Singapore, Cuisia said, exports more products than it imports. However, the city-state recently experienced a huge loss (in billions of dollars) in its sovereign wealth fund.
A sovereign or social wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country’s surplus reserves (Investopedia).
Cuisia said how can the Philippines put up a sovereign wealth fund when it does not have excess revenues. The country even has borrowed money from foreign creditors and it has incurred a huge debt that still has to be paid.
Pursuing the Maharlika Wealth Fund is indeed a risky move. Quimbo and other lawmakers who author the bill must think twice.