Keep watchful eye on Maharlika fund
The price of freedom is eternal vigilance,” Thomas Jefferson was once supposed to have said.
What it means is that there is an ever-present human tendency toward eroding and encroaching on basic rights like the people’s ability to determine their future—a tendency that must be guarded against constantly by a citizenry willing to speak up and, if necessary, take action against it.
In the Philippine context, this was demonstrated clearly in recent months in the fierce public debate that accompanied the announcement of the Marcos administration of the Maharlika Investment Fund which is meant to serve as a conduit for the country’s wealth and turn them into productive economic endeavors.
The goal was to mobilize funds and channel them into projects that would yield above-market returns on these resources while using its financial muscle to move forward undertakings that would otherwise be difficult to execute by the public or private sectors acting individually.
The idea is good on paper. But no sooner had the preliminary details been announced that the public erupted into an outcry, pointing to what looked like ill-thought-out parts of the plan by its proponents.
Initially touted as a sovereign wealth fund modeled after similar investment vehicles of other wealthy nations, critics pointed out that the Philippines had no surplus wealth generated from an abundance of natural resources like petroleum or minerals (as other nations with sovereign wealth funds do). Neither does the country have an excess of cash courtesy of a robust flow of financial resources the way Singapore does.
In response, Maharlika’s proponents unveiled a list of government agencies and state-owned financial firms that would all chip in a few billion pesos here and there for its seed funding.
The public railed against it once more, pointing to the fact that two key funders—the Government Service Insurance System and the Social Security System—had no business putting billions upon billions of their pensioners’ retirement money into risky undertakings.
Then it was the turn of economists and technocrats to oppose the proposal to include the dollar reserves of the central bank as part of the Maharlika fund’s pool of financial resources. And for good reason. The dollars held by the Bangko Sentral ng Pilipinas (BSP) are meant to serve as a buffer to stabilize the value of the peso during times of economic distress.
So ill-conceived was this plan that then BSP Governor Felipe Medalla felt compelled to speak out against it and, in the process, lost his chance at being reappointed to the prestigious (and highest paying) job in government a few months later.
But the public outcry did yield results, with Maharlika’s proponents responding to the backlash by gradually improving the bill in Congress, to address the concerns of a growing number of Filipinos. The two pension funds were removed as funding sources, as were the central bank’s dollar reserves, to the relief of many concerned citizens.
Several layers of protection were also added in terms of the qualifications that the top officials who will run the fund must have—with an emphasis on the selection of professional managers—while the composition of Maharlika’s board of directors was made such that every institution that would contribute resources to it will be represented.
Finally, an earlier proposal to have the President chair the fund was discarded in favor of one where the secretary of finance would sit as the head of the board’s table—a move ostensibly meant to shield the fund from political investment decisions that the current or future president may be tempted to make.
The result of all this is a Maharlika fund that is as close as realistically and theoretically possible to a perfect financial organization.
In theory, the public’s money is as safe as it possibly can be, if the provisions of the law and its implementing rules and regulations are anything to go by.
But that is in theory and this is the Philippines, where the best laws, policies, and regulations often come to grief once they are released into the real world. As such, it is important for Filipinos to remain vigilant and keep a watchful eye on how billions of pesos in public funds will be invested.
Our vigilance has paid off in the early stages, but this is no time to let our guard down. Instead, we must be encouraged by the progress that a vocal citizenry made and be prepared to make ourselves heard again, if necessary.
For the price of freedom—freedom from the shackles of policymakers’ poor economic—is our eternal vigilance.