Trying to Understand MWF
The study of economics was something I get lost in when I was in high school. I would get nauseous in terms like premium and principal and net and gross. So, join me in trying to comprehend the nation’s latest point of contention.
MWF does not just stand for days in a week or the schedule of your meeting with your friends. In the current news, it would stand for Maharlika Wealth Fund.
This Maharlika Wealth Fund “intends to draw money from state-owned pension funds and banks for investments, which will be used as a P250-billion sovereign wealth fund (SWF) meant to raise government revenues” (https://philstarlife.com). I just quoted that. I’m still confused. Okay, that’s something new. If it were not for that, I would have thought SWF was referring to Single White Female, a 1992 erotic psychological thriller film. “A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country’s surplus reserves. SWFs provide a benefit for a country’s economy and its citizens (https://www.investopedia.com).” (Wait up. The Philippines has surplus reserves? We could have used that for Covid-19 response or for calamity response.). So, they say, other countries have employed similar funds. Supposedly, they have been successful. Supposedly again, this bill “aims to “improve investment opportunities, promote productivity-enhancing investments, and ensure that the Philippines becomes an investment destination,”. At least, that’s according to Speaker Martin Romualdez (https://philstarlife.com). Okay, so far, what I have gotten is that this Maharlika fund would get money from government’s surplus funds and invest them on projects which apparently would promote economic development.
As former President Gloria Arroyo who coincidentally is the Senior Deputy Speaker, puts it, MWF would be invested “anyway, in order, ideally, to maximize returns and generate funds that contribute to or supplement the financial resources at the disposal of the government for programs and projects that benefit the Filipino people,” She further adds that “the fund will have an established mechanism for future contributions,”, and “,it will ““benefit from a centralized, specialized, and accountable management” (https://mb.com.ph).
Once again, I just quoted that. I’m still getting lost in the economics jargon.)
Arnulfo “Wick” Veloso, President and General Manager of GSIS from which funds are planned to be taken, said that (the Maharlika is a long-term investment; and its purpose is not only to have an investment but to aid in national development.” (https://www.gmanetwork.com). “MWF funds will be invested in a wide range of outlets including foreign currencies, metals, fixed-income instruments, domestic and foreign corporate bonds, listed or unlisted equities, mutual and exchange-traded funds, commercial estate and infrastructure projects.” (https://business.inquirer.net).
Maybe it’s my ineptitude in economics, but I’m giving this a chance to appeal to me, but all I get is abstractions. Okay, they say this will be good for national development; it is a long-term. I presume that investments would be made on something, which would be purportedly very helpful to Filipinos. But what is it exactly? How and on what do they plan to invest? Is it not a not so good time for big investments?
Among the prominent points of criticism is the intent of utilizing GSIS and SSS contributions on investments that could be hit or miss or a more probable miss. That probability raises concerns if retirees may not get their pension because Maharlika may have bumped a bad investment. Private citizens, economists, academics, bankers, and government officials (people who certainly know a lot more in economics than I do) have decry the (MWF) due to lack of fiscal space, high debt levels, and possible mishandling of fund. (That last one just set of an echoing ringing siren in my ears.) Bangko Sentral ng Pilipinas Governor, Felipe M. Medalla has expressed worries that transferring a large amount of dollars of the BSP could weaken the bank’s ability to respond to international volatility. Economic policy experts have expressed alarm on the provision that the President would head the board and the MWF and its corporation would be exempt from taxes, from regulatory restrictions on the GFIs, and from provisions of the government’s procurement law”. It has been further pointed that These make the MWF “most vulnerable to abetting recklessness, politicization, corruption, rent-seeking, and cronyism,”(https://www.bworldonline.com). Isn’t on board for national development? Come on. Of course, we all want to make life on this scattered islands a little bit better. But can you treat me on some specifics on how MWF is going to do that? Wyes, you want to invest, but what do you want to invest on? That’s tantamount on kid wanting to go to college and not knowing what to major on. That makes a parent wonder if he just wants to go to college to attend org parties.
“A faithful man will abound with blessings, but he who makes haste to be rich will not go unpunished.” Proverbs 28:20