The Philippine Amusement and Gaming Corporation has gamely stepped in and volunteered to be part of the contributors to the Philippines’ sovereign wealth fund. This is also known as the Maharlika Wealth Fund.
Currently, the proposed Maharlika Wealth Fund has passed the committee level of the House of Representatives and is now in its second stage — very close to completion. The MWF would need a total of PHP275 billion (USD4.89 billion) for investment funding that will be sourced from various government departments.
For PAGCOR’s share, they are required to contribute 10% of their gaming proceeds to the fund annually. Among the government departments that have been assigned target details are the Government Service Insurance System (GSIS) pegged at PHP125 billion/$2.22 billion, the Social Security System and Land Bank of the Philippines at PHP50 billion/$890 million each and the Development Bank of the Philippines at PHP25 billion/$445 million, with the National Treasury also assigned its own target at PHP25 billion. There are still proposals to source contributions from the national government as well.
This is all with the intention to “improve investment opportunities, promote productivity-enhancing investments and ensure that the Phillippines becomes an investment destination,” stated by the authors House Speaker Martin Romualdez and presidential son Sandro Marcos.
Insights on Sovereign Wealth Funds from neighbouring countries
Nearby countries have had an early start in establishing their own Sovereign Wealth Funds but with much struggle and uncertain results. As such, the MWF is approached with great apprehension from sectors that belong to both the public and private sectors.
One of Malaysia’s sovereign wealth funds, the IMDB, was looted by its ex-premier Najib Razak by USD5 billion for it was a single signature setup. He carried out his plan with the help of Goldman Sachs. Fortunately, after an investigation involving 10 countries, the money was recovered and Malaysia’s sovereign wealth fund still stands at USD37 billion.
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Indonesia launched their sovereign wealth fund in February 2021 as seed capital with a mere USD5.4 billion. Just after a year, this has now grown to USD 24.5 billion as foreign investors took interest in the country’s infrastructure projects.
In Singapore, their GIC and the Abu Dhabi Investment Authority have invested more than $20-B to fund airports, seaports also in the water and logistics sectors, and the digital infrastructure industry that includes fibre optics and data centres.
Apprehensions regarding the Maharlika Wealth Fund
The concerns are mostly stemming from the usage of state pension funds and money from government financial institutions for investment purposes. The risk is great with how possible corruption, fund misuse and lack of safeguards can lead to unexpected losses.
Lawmakers and members of the country’s Economic Team have stepped in and emphasized the benefits of institutionalizing the proposed Maharlika Wealth Fund. This team is led by Benjamin Diokno and he has assured that this is a step forward to achieving the Marcos administration’s Agenda for Prosperity.
GSIS President and General Manager, Jose Wick Veloso also believe that with the MWF, a number of key industries will greatly benefit especially areas of employment, taxation and economic activities.
The key factor for MWF to work on security measures to ensure accountability and transparency. There would be a three-layer mechanism for checks and balances. This includes internal audit, external audit, and finally, examination and audit by the Commission on Audit. Additionally, there will be an executive department reportorial requirement which will be implemented together with congressional oversight.
The MWF is definitely an interesting area where the country can really thrive. Just taking a peek into Singapore’s success at it can be a turning point for the country to greatly accelerate progress. But I do understand the apprehension when the funds are all encompassingly going to affect the pension fund or further funding for charities and other causes. If we encounter a Malaysian path into how our own MWF will be, imagine the repercussions that the country will face.
What about you? Would it be much better to have the funds sourced from government entities like PAGCOR instead? Let us know your comments down below, we would love to hear from you, thanks!