Maharlika’s Tensyonados

Once retired, pensionados look forward to a life of ease and wait for their monthly pension to enjoy the benefits from their lifetime investments. The annuity is a regular payment made during a person’s retirement from an investment fund to which that person or their employer has contributed during their working life. In the Philippines, the lifetime contribution goes to the Social Security System (SSS) for employees in private establishments and the Government Service Insurance System (GSIS) for public employees.

Last week, 70-year-old Manoy Rimando of Ligao, Albay, was in disbelief and dismay. He learned from fellow pensionados that their pension would be part of the P125 billion GSIS to be pumped into the proposed P275-billion Maharlika Wealth Fund (MWF) as start-up capital to fund more big-ticket, capital-intensive national development projects of the Marcos, Jr. administration. Why, oh why, will they use our GSIS pension fund, he asked aloud.

“I could not even get my pension on time to keep with my lifetime medications, and they plan to do this to our money?” “This is making us tensyonado,” Rimando echoed the sentiments of other pensionados in their barangay. “I am distraught and stressed,” he added. He said he would call on the Mayor to express his disappointment. It’s our lifetime savings, he quipped.

If Manoy Rimando’s worries are accurate, the 40.49 million members of the SSS and 2.53 million members of the GSIS are all justifiably hyped, “tensyonado” (stressed). What if, like in past administrations, investments fail, and we go down the drain without any fallback?

President’s relatives file bill

Last November 28, relatives of the President filed House Bill 6398, creating a Sovereign Wealth Fund or the Maharlika Investment Fund. They were the President’s first cousin, Speaker Ferdinand Martin Romualdez, his wife, a Party List Representative, Yedda Romualdez, and the presidential son himself, Senior Deputy Majority Leader Sandro Marcos, who came in full regale. The bill passed without much deliberation and opposition from a friendly House of Representatives, dominated by political dynasties and administration allies.

Within the week after the bill’s filing, the MWF became the talk of the town. The effect was immediate: uncertainty, anxiety, and worry. Is this true? What the heck? What are we in power for? These were among the quick reactions.

Wasn’t it only in the last elections that issues of the unpaid 203B Marcos real estate taxes, the hidden ill-gotten wealth, came to the limelight? Yet, Marcos, Jr. won.

I called up a few of my college and high school batchmates, who are now happily retired, to gather some of their thoughts on the latest net news. Many of them are SSS pensionados who use their private mutual provident funds for their perks, but most have reserved them for their daily maintenance of medications. Some can only shrug with an “I told you so” reaction. Nevertheless, they all agree to give the administration a chance to prove its worth. But they commit to opposing a law that seeks to impose on the SSS and GSIS to engage in such high-risk investment ventures. This far, senators, lower house opposition members, business, church, and legal groups of various political persuasions have joined the fray to oppose the bill.

Among my batchmates, Amy, a vocal consumer rights advocate, posted her angry reaction, “The retirement funds belong to us, the members, with our contributions from our ‘blood, sweat and tears’ of work. Aren’t the GSIS and SSS simply acting as our fund administrators?” Amy asked me as if I had the power to stop the bill. Why should it use our funds without consultation and representation in decision-making?

The Sovereign or Maharlika Wealth Fund

The Maharlika Wealth Fund is patterned after the Sovereign Wealth Fund of other Asian countries like Singapore, Hong Kong, South Korea, China, Indonesia, and Taiwan. However, these countries used their surplus funds and foreign reserves to put up their Sovereign Wealth Fund (SWF). The SWF aims to help economic development, strengthen the national budget and boost people’s savings. But the Philippines does not have excess funds, only debts and more debts. So, it is drawing its initial money for the Maharlika Wealth Fund from government pension funds such as the GSIS and the SSS, government banks or so-called Government Financial Institutions (GFIs), GOCCs, or Government-Owned and Controlled Corporations like the PAGCOR.

Pitfalls

If passed into law, the government will create the Maharlika Investments Corporation (MIC) to manage the funds. The President is the Chairman of the 15-person Board of Directors. The vice-chair will be from the GFI with the most significant share. In short, the government is now one big business enterprise, a giant conglomerate alongside a controlled bureaucracy. It will invest in cash, foreign currencies, tradable commodities, fixed-income instruments such as government and corporate bonds, listed and unlisted equities such as stocks, joint ventures, mutual funds, and commercial real estate and infrastructure. The pitfalls are too glaring to overlook.

The bill declares the MWF exempted from regulatory restrictions such as the Procurement Act, OGCC review of MWF transactions, etc. MWF is exempted from freedom of information scrutiny, and records can only be accessed upon board approval. Doesn’t this open up the fund to massive corruption? Salaries of the Board and staff will have their compensation guidelines and exempted from Republic Act No. 6758 or the Salary Standardization Act, as well as succeeding laws on salary standardization.

The case of the losses of the Malaysian Sovereign Wealth Fund 1Malaysia Development Berhad (1MDB) due to corruption is well-known. The proposed Philippine MWF has all the ingredients of the failed SWF in Malaysia. Tensyonado talaga! Heaven forbids!