President Ferdinand R. Marcos, Jr. on Thursday said he would immediately sign into law the Congress-approved bill creating the Philippines’ first sovereign wealth fund as soon as he receives it, noting that good management is key to its success.
This, despite concerns raised by several lawmakers on irregularities surrounding the Maharlika Investment Fund (MIF) bill, which was revised through a discussion by the Senate majority bloc on a popular messaging app.
“I will sign it as soon as I get it,” he told reporters on the sidelines of an event celebrating the 85th anniversary of the Securities and Exchange Commission.
Mr. Marcos said most of the amendments to the final version were related to the security of pension funds, which lawmakers had wanted to tap for the Maharlika fund.
Public opposition to the bill mainly stemmed from the lawmakers’ initial proposal to require the Government Service Insurance System (GSIS) and Social Security System (SSS) to contribute to the wealth fund’s P125-billion seed money.
The bill’s Senate version, which the House of Representatives later adopted, prohibits agencies managing the social security and public health insurance of government employees, private sector workers and employees, and other sectors and subsectors from contributing to the capitalization of the Maharlika fund — whether mandatory or voluntary.
“Am I happy? Well, that is the version that the House and the Senate has passed, and we will certainly look into all of the changes that have been made,” Mr. Marcos said. “And I think most of the changes that were proposed and that were eventually adopted really had to do with the safety and the security of people’s pension funds.”
Earlier this month, Finance Secretary Benjamin E. Diokno and National Treasurer Rosalia V. de Leon clarified that while SSS and GSIS are prohibited from investing in the Maharlika Investment Corp. (MIC), which would have the control over the wealth fund, they can still invest in its projects.
That statement has angered current and former lawmakers, including former Senate President Franklin M. Drilon, who said that “what the Congress directly prohibits cannot be done indirectly.”
Mr. Drilon said the government should respect the boundaries and legislative intent established by Congress regarding the prohibition, warning that the board of directors of these government-owned and -controlled corporations (GOCCs) can be held liable if they invest in the Maharlika fund or in any of its activities.
The former Justice secretary also said that the funds held in trust by the government through the GOCCs that handle pension funds are different in nature from the dividends generated by state-owned banks that serve 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,” Mr. Drilon said. “These funds held in trust are not dividends. They are funds from private contributions.”
The MIF bill, which was certified as urgent by Mr. Marcos, requires the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) to contribute PHP 50 billion and PHP 25 billion, respectively, to the fund. The National Government must also contribute PHP 50 billion.
Funds from the Philippine Amusement and Gaming Corp. and proceeds from privatization and transfer of government funds may also be used.
Mr. Marcos, meanwhile, said that one of his first suggestions to the House during its deliberations was “to remove the President as part of the board, to remove the central bank as its chairman, to remove the Department of Finance because it has to operate as an independent fund, well managed professionally.”
However, the bill compels the Bangko Sentral ng Pilipinas to contribute 100% of its dividends to the fund in the first two years. Its contribution drops to 50% after that; the remaining half will be deposited in a special account for its capital buildup funds.
Still, Mr. Marcos said his administration will ensure that the fund’s holder, the MIC, will remain “independent from the government.”
“You know, perhaps, we are looking in the wrong direction. The key to the success of any fund, a hedge fund, pension fund, sovereign fund, investment fund is the management,” he noted.
Bad management, the President said, was among the major reasons behind the failure of various investment funds.
“But the secret to its success is who do we put in management. What is their experience? What is their reputation? What is their success rate? And we have quite a few good money managers, financial managers that we can call upon,” Mr. Marcos said.
To ensure the fund “doesn’t get into trouble,” he noted that it should be professionally managed and should have “clear independence from the day-to-day government function.”
“Those decisions are not made by political decisions in government; the decisions made for the fund are made by finance professionals.”
Meanwhile, several lawmakers said the approved MIF bill cannot be amended outside of Congress’ plenary sessions
“The enrolled bill being sent to the President is not the version properly and formally approved by Congress. There’s a provision there that was altered without plenary authority,” Senate Minority Leader Aquilino D. Pimentel III said in a statement.
“Last time we checked, the Constitution does not allow legislation by Viber,” House Deputy Minority Leader and ACT Teachers’ Party-list Rep. France L. Castro, Assistant Minority Leader and Gabriela Party-list Rep. Arlene D. Brosas, and Kabataan Party-list Rep. Raoul Danniel A. Manuel said in a joint statement.
“This makes a mockery of the constitutional requirement of transparency when the legislature deliberates on and approves laws,” they added.
Senate President Juan Miguel F. Zubiri defended the decision to amend the enrolled measure earlier this week.
“I believe the corrections were thoroughly discussed by the majority bloc in our Viber group including the letter of correction sent by Senator Mark Villar,” he said in a Viber message to reporters on Wednesday.
The bill was amended to merge the prescriptive period of crimes and offenses to 10 years, since the approved version had included two different periods.
Michael Henry Ll. Yusingco, a lawyer and policy analyst, said changes beyond spelling cannot be done simply through text messages and should be discussed during plenary session.
“The Constitution is clear that after the last reading, no amendments shall be allowed,” Mr. Yusingco said via Facebook Messenger chat. “If the changes in this situation are not mere spelling corrections, then the changes made in the bill are unlawful.”
He added that grammatical changes are also considered amendments as even changing the position of commas can alter the meaning of a provision.
“The Constitution did not envision a Senate majority Viber group acting as another legislative chamber to make substantial amendments to the President’s priority legislative measures,” Terry L. Ridon, a lawyer and former lawmaker, said via Messenger chat.
Mr. Ridon noted that in a bill’s final stages, amendments, including correction of provisions, can only be undertaken by the Senate on third reading, or by both the House and the Senate through a Bicameral Conference Committee.
“The correction relating to the 10-year prescription of offenses is not an insubstantial change in the text of the bill,” he said.
Arjan P. Aguirre, who teaches political science at the Ateneo de Manila University, said that the bill,” without question,” was hastily passed just to make sure that it will be mentioned during Mr. Marcos’ State of the Nation Address (SONA) next month.
“No wonder other political stakeholders nowadays are using these procedural shortcomings to criticize the passage Maharlika bill,” said Mr. Aguirre, who expects various forces to ask the Supreme Court to intervene to determine whether lawmakers have violated the Constitution in passing the bill. — Kyle Aristophere T. Atienza with input from Beatriz Marie D. Cruz