Auditing the Maharlika Wealth Fund

At this point, all critiques have been centered on merely a lateral nature of the Maharlika Wealth Fund (MWF), focusing more on how it is an enemy of the Social Security System (SSS) and the Government Service Insurance System (GSIS) beneficiaries, alone. Although the SSS and GSIS funds were spared from being part of the MWF, placing a lot of us in utmost complacency, under no circumstance should we fully let our guard down.

For one thing, the threat is still there.

Ever since the exclusion of the SSS and GSIS funds, beneficiaries have undeniably quieted down, which of course resulted in a decline in terms of online traction vis a vis the MWF. It can be surmised that the trigger period for the MWF issue merely lasted for roughly two weeks, from the proposal date last November 28, 2022, by Representatives Ferdinand Martin Romualdez, Manuel Jose Dalipe, Ferdinand Alexander Marcos, Stella Luz Quimbo, Yedda Marie Romualdez, and Jude Acidre.

Given that the issue was introduced by the media as an SSS and GSIS-centric issue, instead of having the potential for en masse impact, places the public in the palm of the MWF sponsors because passivity is what they need at this point. And with that, the public has been masterfully pacified and the MWF still progresses its way to passage, sneaking an incredibly important context that managed to pass through the public consciousness.

Delayed risks

Even though it was guaranteed that the SSS and GSIS contributions would not be touched nor squandered in any way by the MWF, it is still important to take into mind that the nature of the MWF grounds its entire premise on utilizing private property. Although the remaining contributors (Landbank of the Philippines, Development Bank of the Philippines, Bangko Sentral ng Pilipinas, and the Philippine Amusement and Gaming Corp.) are mostly state-owned, the funds from these entities are still acquired through privately-owned and sector-owned funds albeit being government-owned lenders.

For instance, the funds from the LBP (including the United Coconut Planters Bank) are primarily owned by farmers, most notably by those who have benefited from the government-awarded coco-levy funds between 1973 and 1982 – periods in which the Marcos dictatorship took place. To further, the primary motive of LBP and the DBP is solely to promote the growth of local businesses and MSMEs in general – a far cry from how the fund would be utilized under the tenets of the MWF.

The BSP and PAGCOR, on the other hand, have no definite constitutional nor administrative mandates to fund the MWF, and at this point, it is hard to ignore that the MWF would initially be headed by President Ferdinand “Bongbong” Marcos Jr., as he bears the administrative brand of bearing influence over the formulation of the proposal regardless if he is not leading it on paper.

Even if Finance Secretary Benjamin Diokno were to assume chief hood of the 15-man MWF Committee – including three other independent chiefs – the Marcos-branded designs of the MWF would not easily wear off. This can be proved by asking whether the BSP and PAGCOR are really essential to fund the MWF, or does the current MWF paradigm still aims to follow a sham independent design in which the president – the sole designator of Diokno as Finance Secretary among the many handpicked cabinet officials of the current executive board – would still be prevalent?

Given that BSP and PAGCOR officials are handpicked, they undeniably bear the intentions of President Marcos in terms of overseeing the developments of the MWF. Their inclusion as MWF contributors is a testament that they are operating under the president’s will.

The fact that the decision to include SSS and GSIS dividend contributions hinges on the decisiveness of their governing chairs (i.e. Michael Regino and CJ Bersamin, respectively), this still opens the possibility that SSS and GSIS funds will still be used to fund the MWF.

Take note. Regino was sworn into office as SSS chief by former President Rodrigo Duterte last March 11, 2022. Bersamin was appointed by PBBM as GSIS chief last September 27, 2022.

Is the Maharlika Wealth Fund truly a rehashed proposal?

Building on the premise of Salud, the MWF has been crafted in such a way that it could provide answers to doubt with basic and irrefutable points.

For starters, former president Gloria Macapagal Arroyo (now Senior Deputy Speaker and Pampanga 2nd District Representative) introduced three interesting points to defend the MWF:

  • The MWF is “nothing new” as it has already been practiced by Singapore (quod est, Tesamek Holdings in 1974 and the Government of Singapore Investment Corporation since 1981);
  • The MWF is a rehashed version bearing the same tenets of former Senator Bam Aquino’s initial proposal in 2016; and
  • In case the MWF fails, the chief (in the context of her statement, PBBM) will be held responsible.

Addressing the comparison with Singapore, the notion is absurd given that the comparison is from the highest end to the lowest end. Contrary to how PBBM introduced the Philippines as a rising economy, the country bears no possible resemblance to Singapore, nor could it even hope to be compared to Singapore in the first place. Currently blundered with continuously rising inflation and poverty rates unhindered, the country’s context couldn’t be farther from being described as akin to Singapore, nor could it even be considered as possessing surplus wealth – the basic tenet of any social wealth fund.

For all wealth funds to be developed, a nation must first have its export rates exceed its imports in accordance with the Santiago Principles as set by the International Working Group of Sovereign Wealth Funds. Given that the Philippines is reliant on the foreign market for the majority of its industries, there is no proof that the country has surplus wealth in the first place. And the idea that private ownership could be considered as a means to generate surplus wealth is appalling, given that we are essentially treating private property as a dispensable commodity by the government if we choose to follow that narrative.

Addressing the comparison with Bam Aquino’s 2016 proposal, the difference lies in the source of funds. For starters, Aquino’s proposal relied on the General Appropriations Act to consist of the major contributions of his 2016 proposed Wealth Fund. At this point of the discussion, the MWF intends to use privately-owned funds with other dubious government lending transactions. And despite that, both Arroyo and current Ilocos Norte Representative Sandro Marcos distributes the narrative that the basis for the MWF is the same as Aquino’s.

One thing that is worth paying attention to is why they had to cite an Aquino to support their narrative, despite very obvious political contrasts? Although a predominantly Marcos-branded proposal, even Senator Imee Marcos was portrayed in the media as reluctant towards the passage of the MWF bill.

The political branding that the MWF possesses spells out that the proposal is a matured, colorless law. This may be viewed as an attempt to remove the dominant Marcos stench, despite the fact that Diokno’s placement as one of the chiefs of the MWF Committee is done to “insulate (Maharlika) from politics.”

Lastly, of course, is the point of accountability.

It does not matter if PBBM will still be the head of the MWF Committee, or Diokno, or any other Marcosian crony. Given the country’s culture of impunity, accountability can only be a fantasy. This is further magnified by the fact that the MWF’s nature is to be totally impregnable and immune to anti-corruption laws.

Not to mention, PBBM, nor the idea that the MWF is Marcos-branded, would not be the best character and example to ensure the public that there would indeed be any hint of effort towards accountability.

In short, accountability, in case things go south, cannot be guaranteed. Using former Rep. Neri Colmenares’ words, the MWF would indeed be “a monster that cannot be controlled.”

An urgent necessity?

The proposal of the MWF took the public by surprise, as the government relentlessly distributed statements about the bill’s urgency. At this point, we haven’t really questioned the purpose of the MWF, nor did we take a moment to ask “why.”

By its black-and-white mandate, the MWF’s sole purpose is to engage in high-risk, high-yielding investments. To be honest, using the notion “high-risk, high-return” is a little too opinionated and subjective to be expressed in this way. Instead, let’s try to focus on what it actually says to the letter.

As the Department of Budget and Management posits, the Maharlika Wealth fund is “…a sovereign wealth fund which will be used by the government to invest in a wide range of outlets such as foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and infrastructure projects, among others.”

As per the announcements of PBBM via his speech last September 7, 2022 at the Philippine Economic Briefing held at Singapore, PBBM elaborated on the country’s “robust economic expansion” for the next few years of his administration, bearing the following points:

  • Establish competitive business environments to promote higher-yielding investments
  • Implement an 8-point economic agenda for broad-based job creation, expansion of digital infrastructure, and promotion of research and development; reducing poverty and upgrading the country to an upper-middle-class economy
  • Medium-term fiscal framework to widen fiscal space and allow continued investments in public infrastructure and human capital development
  • Expand high investments in public infrastructure through Public-Private Partnerships (transportation development, fast-tracking the railway systems development, modernizing airports and seaports, and enhancing road infrastructure
  • Focus on agriculture and ensure food security
  • Invigorate the tourism sector through massive investments

The major theme of PBBM’s speech would be to encourage more investments in the country – referring to the high-yield, high-risk factor which defines the MWF in its totality. A good direction to track down the projects that are the most probable recipients of the MWF benefits would be to assess the current pending and existing projects that fit two specific descriptions: foreign-incurred, and PPP-enabled.

Given that the majority of the investments being referred to consist mostly of infrastructural projects, it is hard to ignore the existence of projects sponsored by the Chinese government. To this day, there are still 20 pending projects to be confirmed for funding, with a separate 17 infrastructural projects moving forward with the confirmation of their development. Along with that, Valmonte reported that PBBM would only seek Official Development Assistance Programs and PPPs to help fund the pending 20 projects.

It is interesting to note that the utilization of ODAs and PPPs follows the same blueprint that leads to one of the most feared economic paradigms a third-world country could possibly imagine:

This is the Chinese debt trap.

Cheong posits that the usual tactic of the Chinese government is to make use of foreign-led PPPs and ODAs as a means to rephrase the notion that a country is incurring debt. To further, the usual standard of the International Bank for Reconstruction and Development (IBRD) for ODA (in this case, debt) interests would only be set to a 2.8% annual interest, while Chinese-sponsored ODAs are set at a range of 3.3% to 5% in most Southeast Asian nations. Admittedly, Cheong does not see this as a way for the Chinese debt trap to fully take place. But upon reviewing the findings of Sparks, most countries with existing Chinese-debt-incurred projects do not necessarily rely on any government funds akin to that of the Philippines’ GAA sourcing counterpart. Rather, in order for Chinese debt-financed loans to fully take place, cash, liquidity assets, and commodity exports need to be cited as collateral to move forward with the negotiations.

For instance, the China-Laos Railway Project (worth US$3.63 billion last 2017) made use of the revenue from a bauxite mine and three potash mines. The Myanmar-China Gas Pipeline Project (worth US$724 million) utilized future revenues coming from the gas pipeline, should it become operational in the future.

This only leads the discussion to one simple question: what is the purpose of the MWF?

The MWF will serve as collateral to be invested in Chinese debt-financed projects.

In this case, it is worth noting that debt is the “investment” being referred to – an investment that is definitely a high-risk one.

The Principle of the Maharlika Wealth Fund

The principle of the MWF is deception.

It is easier and more convenient for the administration to sell a simplistic narrative to justify the necessity of the MWF instead of going through the specificities that would bear more critical questions. The administration’s media strategy is, in its own right, masterfully crafted in such a way that it could only lead the public to focus on the term “economic progression” as the administration flaunts its intentions to upgrade the country to an upper-middle-class economy – similar to how effective the word “Unity” is to sell the Marcos brand and be placed into the presidential seat.

Given the course of the bill’s progression, not to mention the allied offices of the court that would be in charge of the scrutiny, the MWF will definitely be passed into a legal mandate.

Admittedly, the capacity of today’s public to truly take the time to scrutinize the components of the proposed MWF bill is highly questionable since the portrayal of it in the media is only limited to a sectoral-economic standpoint to which it is only a social issue that is exclusive to SSS and GSIS contributors – not the entire populace, at large. With this, perhaps the quality of the reportage as well as the journalistic critiques is to blame.

The proposition of San Juan, which only intends to guarantee that all revenues from the to-be-invested MWF corollaries be returned directly to the beneficiaries instead of relying on a middle-management Government Finance Institution (GFI), would not be enough, since it needs to be realized that what he is asking for is fueled by naivete. Given the immunity of the MWF to anti-corruption, it is more likely for the funds to be maneuvered and corrupted than to be redistributed under San Juan’s terms.

The fact that the MWF’s nature is to be totally immune to Anti-Corruption laws speaks volumes of how things would most probably go in case things go south with the debt-incurred investments. It is downright disturbing to think that this administration has successfully sold Chinese-incurred debt by rephrasing it as a “high-risk investment.”

With this, it is a must to rely on the court of public opinion, now more than ever. This paper urges its readers to provide the public, not just with a collection of hard evidence, but also the interpretative sense of all possible notions that unveils the MWF for the monstrosity it truly is.

The natural enemy of the MWF is dissent. Therefore, the herculean task set upon us is to heighten the quality of the premise of dissent. This is not just a matter of protecting private property, although it is a major part of it. The issue of the MWF sears through a potential ground for dissenting against corruption, against the utilization and the commoditization of public and private funds, and against the connivance of all branches of the government to lay out the groundwork for the entry of a life-threatening Chinese Imperialist rule.

About the Author

John Thimoty Romero is a licensed professional teacher, a graduate of Philippine Normal University – Manila last 2017 as Bachelor of Secondary Education – Major in English. Upon his graduation, he received the Gawad Graciano Lopez – Jaena Co-Curricular Award for Campus Journalism.

He is the founder of Conquer Mag, a website dedicated to supporting independent authors, poets, and other content creators.


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