The unnumbered MWF measure discussed on Friday differed significantly from HB No.

6398 in that it no
longer contained a fixed amount as the initial investment for the proposed sovereign wealth fund. This is
mostly owing to the proposed set-up of newfound contributor BSP, which was agreed by the solons.

BSP Deputy Governor Francisco Dakila Jr. claims that, at least for the first year, the proposed MWF will
receive 100% of the Philippine central bank's declared dividends. Dakila was a resource person during
the two-hour hearing.

Lawyer Leila Rivera, another BSP resource, said that the BSP declares dividends "in the amount of 50% of
out our income." Quimbo asked the BSP regarding their estimated income for 2022. Rivera said the
expected figure is “P60 to 70 billion”.

So, Rivera explained, "our dividends that can be distributed [for 2022] will be between P30 and P35
billion." Obviously, there will be a fluctuation in the BSP’s income–and by extension its dividends–every
year.

For context, the BSP is meant to replace the combined P175-billion contribution to the MWF that was
supposed to come from the GSIS and SSS as per the original bill.

In total, HB No.6398 was supposed to raise a seed money of P275 billion for the sovereign wealth fund,
with the Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), and the
National Treasurer contributing P50 billion, P25 billion, and P25 billion, respectively.

Under the revised Section 9 of the unnumbered bill, the LBP and DBP will still be tapped for the
respective sums of money. However, the National Treasurer will no longer be sourced for funds.

The House leadership allegedly removed GSIS and SSS as a funding source for the MWF due to public
pressure.

After the first year of the MWF, Dakila also suggested a 50-50 sharing arrangement between the BSP
and the national government, which is intended to raise money for expensive government projects.

Explaining the intentions of Maharlika, Romualdez said the fund would provide a "opportunity to ensure
their respective funds’ optimal asset allocation as well as ensure that resources are efficiently channeled
to investments that will provide the most value not only to the participating GFIs (government financial
institutions) but also to the country."
If adopted, the bill would order state pension funds Government Service Insurance System and the
Social Security System, as well as state-owned lenders Land Bank of the Philippines and the
Development Bank of the Philippines to give an initial investment of P200 billion to Maharlika.

Romualdez said Maharlika could also be used to manage the country’s foreign reserves and
bring in job-generating direct investments, citing the success stories of Singapore's GIC and the
Indonesia Investment Authority.
Although the decision had been well received in other nations, there were also cautionary tales
about the misappropriation of similar cash. At the same time, analysts stressed the importance
of creating such funds at the right time and in the right economic conditions.

A country with spare cash and resources can create a sovereign wealth fund. Simply put, such
funds can serve as an instrument for a state to invest and raise revenues, while also attracting
firm investments.