Monitoring the sovereign fund

Monitoring the sovereign fund

WITH the designation of Rafael Consing, Jr., as President and CEO of Maharlike Investment Fund, it is expected that the country’s first ever sovereign fund will be mobilized in earnest.

The initial focus of this huge investment fund will be in four industries: agricultural, energy, information and communications technology and tourism.

Consing said priority will be given on 197 flagship projects given go signal by the National Economic and Development Authority headed by Arsenio Balisacan.

Specifically, Consing said he is interested in the economic viability of airport undertakings such as the New Manila International Airport being built in Bulacan by San Miguel Corporation.

Other investment priorities are the Ninoy Aquino International Airport which is scheduled to be privatized as well as the Laoag and Laguindingan airports.

Such big-ticket projects may entail huge construction costs and longer periods of completion.

Economic managers are in agreement as to the projects’ viability and profitability. The returns on the huge investments have all been calculated.

Some sectors are still sceptical of these ambitious projects saying there is no solid assurance of the safety of the huge funds sourced from two government-owned banks: Land Bank of the Philippines and Development Bank of the Philippines.

I heard that these two financial institutions are now standing on shaky ground because of the huge drawdown of funds which could be of good use for lending to potential borrowers- the small and medium-sized borrowers.

The risks involved must have been meticulously evaluated and calibrated in the face of disturbing news that similar sovereign fund allotments like that of Malaysia have faced problems.

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In sum, this is the first time ever the government has ever ventured on sovereign fund management. It is up to the financial managers to handle this fund judiciously and wisely.

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