THE law setting up the Maharlika Investment Fund (MIF) expressly bars government pension funds and the health insurance system from investing in the sovereign wealth fund’s projects, former Senate President Franklin M. Drilon said.
Mr. Drilon, who is also a former Justice Secretary, said in a statement that the law specifically bars investments by the Social Security System (SSS), the Government Service Insurance System (GSIS), the Philippine Health Insurance Corp. (PhilHealth), the Home Development Mutual Fund (Pag-IBIG), the Overseas Workers Welfare Administration (OWWA), and the Philippine Veteran Affairs Office (PVAO) Pension Fund.
“The intention is crystal clear. Funds held in trust by the government, through these GOCCs (government-owned and -controlled corporations), cannot be invested in the MIF,” he said. “The prohibition is absolute and leaves no room for ambiguity.”
Legislators had initially proposed in early versions of the Maharlika bill to mobilize capital from the GSIS and SSS as seed money for the MIF.
The Congress-approved version — completed in late May — bars government pension funds and health insurers from providing funding to the MIF.
Recently, Finance Secretary Benjamin E. Diokno and National Treasurer Rosalia de Leon clarified that while SSS and GSIS are prohibited from investing in the Maharlika Investment Corp., the entity controlling the MIF, but can still invest in its projects.
Mr. Drilon said that “what the Congress directly prohibits cannot be done indirectly… Let’s avoid making pronouncements that undermine this prohibition and sidestep the intent of Congress.”
Mr. Drilon said the government should respect the boundaries and legislative intent established by Congress regarding the prohibition, warning that the Boards of these GOCCs could be held liable if they invest in the MIF or in any of its activities.
According to the Congress-approved bill, agencies “providing for the social security and public health insurance of government employees, private sector workers and employees, and other sectors and subsectors, such as but not limited to the SSS, GSIS, PhilHealth, Pag-IBIG Fund, OWWA, and PVAO Pension Fund shall be absolutely prohibited, whether mandatory or voluntary, to contribute to the capitalization of the Maharlika fund.”
Mr. Drilon said that the funds held in trust by the government through the GOCCs that handle pension funds are different in nature from dividends generated by the state-owned banks, which eventually served as major sources of capitalization for the wealth fund.
“It is important to note that the funds held in trust by the government, through these GOCCs, are not of the same nature as the funds of the Bangko Sentral ng Pilipinas and other state-run banks,” he said. “These funds held in trust are not dividends. They are funds from private contributions.”
The MIF bill was approved by senators on May 31 and immediately adopted by the House of Representatives.
It requires the Land Bank of the Philippines and the Development Bank of the Philippines to contribute P50 billion and P25 billion, respectively, to the fund. The National Government must also contribute P50 billion.
Funds from the Philippine Amusement and Gaming Corp. and proceeds from privatization and transfer of government funds may also be used.
The bill also requires the central bank to surrender 100% of its dividends to the fund in its first two years. Its contribution drops to 50% after that period, with the remainder to be deposited in a special account for the bank’s capital buildup.
Lawyer and public investment analyst Terry L. Ridon urged GOCCs that handle pension funds to “enact policy guidelines and standards relating to project participation in the MIF,” citing the still undetermined risk of investing in future MIF endeavors.
“In project-based participation, the pension funds can make their own determination on how to manage risk when undertaking a project,” he said via Facebook Messenger. “In fact, the funds can choose to not participate in MIF projects at all.”
Senator Mark A. Villar, one of the bill’s proponents, last week said that the implementing rules and regulations for the bill will provide clarity on which entities can participate in the Maharlika fund’s projects.
“There is a possibility that the SSS, GSIS, and the others will be part of an investor syndicate together with the Maharlika investment entity,” policy analyst and lawyer Michael Henry Ll. Yusingco said via Messenger.
“This means of course that the project involved is one permitted by all their charters,” he said. “What kind of project this would be will have to be determined and evaluated on its own merits and whether allowed by the charters of the investing financial institution.” — Kyle Aristophere T. Atienza