Sovereign wealth fund | Inquirer Opinion

Sovereign wealth fund

09:17 AM December 06, 2022

Our neighbor, Indonesia launched their sovereign wealth fund in February 2021 with a seed capital of just $5.4-B. Now after a year, it has ballooned to $24.5 after foreign investors took interest in their efforts to build toll roads. Just last month, Singapore’s GIC and the Abu Dhabi Investment Authority has invested more than $20-B to fund airports, seaports also in water and logistics sectors, and digital infrastructure industry that includes fiber optics and data centers.

In their launch last year, inaugural president director Ridha Wirkusumah of the Indonesia Investment Authority, or INA revealed , that this was their initial strategy to attract investors into funding their national development projects. And for a better investment climate, their government will first ensure good governance of the fund by working alongside the supervisory board and accounting firms. President Joko Widodo then set Wirkusumah’s target at $100-B.

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Today, our country’s version, the proposed Maharlika Wealth Fund, comes under close scrutiny since news broke that House Speaker Martin Romualdez and presidential son Sandro Marcos are pushing a measure creating the sovereign wealth fund.

In itself, a sovereign wealth fund (SWF) is not a bad idea. If handled well, it may actually help a country grow its investable funds. For many governments, individuals and corporations, investing is one of the best strategies for wealth creation.

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But what’s with all the ruckus over the Maharlika Fund? There are concerns about use of State pension funds and money from government financial institutions for investment purposes. Possible corruption, fund misuse and alleged lack of safeguards are the most common misconceptions that prompted even big business groups to oppose the measure.

Yes, one of Malaysia‘s sovereign wealth fund, the IMDB was looted by its ex-premier Najib Razak by $5-B mainly because, it was a single signature set-up. And he succeeded in cahoots with corrupt personalities in Goldman Sachs. Razak was then investigated in more than 10 countries and then convicted in his own country. Today, much of the money have been recovered and Malaysia’s sovereign wealth fund still stands at $37-B.

But to allay public fears here, lawmakers and the country’s Economic Team underscored the benefits of institutionalizing the proposed Maharlika Wealth Fund (MWF). Led by Finance Secretary Benjamin Diokno, the country’s economic managers assured Filipinos that the funds will help the Marcos administration achieve its Agenda for Prosperity.

For his part, Government Service Insurance System (GSIS) President and GM Jose Wick Veloso also believes that a number of key industries in the country can move forward upon investment in high capital expenditures. The MWF, he said, would help improve employment, taxation, and economic activities.

For the MWF to work, there must be enough safeguards in place to ensure accountability and transparency in managing the fund. That’s why government economic managers vowed to abide by the Santiago Principles of the International Working Group of Sovereign Wealth Funds by establishing 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.

Doubters and skeptics who don’t think a sovereign wealth fund can work can look at the experience of Singapore. GIC Private Limited is a sovereign wealth fund that manages the island-state’s foreign reserves.

It was established by the Government of Singapore in 1981 as the Government of Singapore Investment Corporation and its mission is to preserve and enhance the international purchasing power of the reserves with the aim of achieving good long-term returns above global inflation over the investment time horizon. The US-headquartered Sovereign Wealth Fund Institute (SWFI) had estimated the fund’s assets at $690 billion as of June 2022 and it continues to invest in different entities across the globe.

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Since our country’s economic managers want to assure the public that the MWF would be properly managed with enough safeguards against corruption, why don’t they include the possibility of tying up with Singapore’s GIC to help manage and invest the fund? After all, our neighbors in Singapore are already experts in this field while the Philippines could need some handholding in the fund’s early stage.

Now let us ask ourselves, why is Singapore’s GIC investing in Indonesia’s toll roads and their other national projects and not here in the Philippines?

GOVT SHOULD STRICTLY WATCH GRAB-MOVEIT MOTORCYCLE TAXI OPERATIONS

GRAB’s takeover of MOVEIT’s business operations is frowned by several consumer transport civic groups such as National Public Transport Coalition and Lawyers for Commuters Safety and Protection. This opens the perilous possibility of Grab PH’s dominance in the motorcycle taxi market that may lead to significant lessening of competition and affect not only passengers’ pockets but also the jobs of transportation workers.

I’ve learned that this backdoor acquisition was not approved by the Motorcycle Taxi Technical Working Group (TWG), lead agency for the government and civic-led pilot program for the motorcycle taxi market. It has only accredited Filipino companies Angkas, JoyRide, and Move It that’s supposed to be an aid for developing legislation that can better govern the industry.

While Move Its market share remains low compared to other competitors, Grab PH can turn the tables with its existing reach. A more concerning matter is that until now, it has yet to submit its latest compliance report on its commitments in respect of fare transparency and pricing behavior.

For the record, Grab PH once dominated the transport network vehicle services (TNVS) industry when it acquired Uber in 2018. Many suffered from unjust fare prices which prompted the Philippine Competition Commission (PCC) to issue penalties. It was the PCC who confirmed that Grab PH has overcharged and without proper regulation, history can repeat itself.

As of March 2022, Grab PH still needs to release PhP19.3 million refunds to eligible passengers for violating its commitments. Together with concerned groups, Marikina’s 2nd District Rep. Stella Quimbo in a congressional hearing asked regulators to be on their toes so passengers wouldn’t experience unfair treatment again.

As far as I am concerned, I have many issues specifically on GRAB’s delivery businesses. But like everyone else, no single business or entity, should be above the law or able to manipulate our regulations. Government, specifically the PCC, is supposed to be protectors of consumers’ interest. They must do their job as watchdogs of private businesses with “awarded public opportunities”, who oftentimes in the get go, begin to harm the general public’s interest.

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