“WEALTH OF THE NATION:

THE PAST, PRESENT, AND

FUTURE OF SOVEREIGN
FUNDS IN THE PHILIPPINES”
GROUP II
BALLAD, FERNANDO JOSE N.
Banzalan, Trisha Nicole L.
Bugay, Mica Ellaine S.
Dimailig, Kyle Vincent D.
Sidayon, Kleint Ivy N.
GENERAL STATEMENT OF THE PROBLEM

This study intended to specify and analyze the positions of Sovereign

Wealth Funds on the feas ibility of i ts funding sources and the
effectiveness of its safeguards to contribute to the ongoing public
discussion and deliberations about the Maharlika bill.
According to the proposed legislation, the fund's mission and investment choices are influenced by successful
GFIs, central bank dividends, and other potential revenue sources. The currently studied option also requires
money from already established institutions like the Land Bank and the Development Bank. Future grants
will be funded in part by the Philippine Amusement and Gaming Corporation, royalties and special
assessments from natural resources in accordance with national regulations, proceeds from the privatization
of government assets, funds from the central bank (50 percent of dividends from the third year onward), and
borrowings by the MIF. The MIF will also use borrowed funds. Government-sponsored investment vehicles
(GFIs), private financial institutions, enterprises, and even other businesses are all welcome to make
contributions to the MIF
 To ensure that the safeguards are effective and that good governance practices
are being followed, the fund's administration would be subject to three levels of
auditing: one by an internal auditor, one by an external, internationally
renowned auditing firm, and one by the Commission on Audit (COA), which
will issue standards that align with international best practices and work with
the outside audit company.

After the law has gone into force, it will be monitored and assessed by a body
tasked with such duties. The heads of the House Committee on Banks and
Financial Intermediaries and the Senate Committee on Banks, Financial
Institutions, and Currencies will co-chair the Maharlika Investment Fund Joint
Congressional Oversight Committee (MIF-JCOC), which has ten members
total. These panels have authority over banking systems and currency.
Incentives and exemptions from certain rules will be made available to the MIC
in order to reduce bureaucratic costs while yet allowing the organization to
maintain its independence and function as efficiently as possible.
 France Castro, the House minority deputy leader, thinks the already low stipends are in threat since investment returns are
inherently risky. Although protected by the federal government, pension funds might nevertheless suffer losses if too much
risk is taken. Enrico Villanueva, a senior lecturer in economics at the University of the Philippines Los Baos, echoed this
warning, noting the government's checkered past with handling of public funds. Because of this, the previous president's
father, Ferdinand Marcos Sr., directed several national investment and development efforts between 1965 and 1986 that
ultimately failed. The majority of them included some form of monopoly privilege or subsidy. They needed massive
financial aid from the government and quickly earned a reputation for favoritism, corruption, and nepotism. This could
make the concentration of wealth in an SWF vulnerable to abuse, mismanagement, and eventually corruption due to the
weak institutions and governance in the Philippines. This would hold true even if no one had any purpose to act dishonestly.
1. IN LIGHT OF THE POSSIBLE IMPLEMENTATION OF
THE MAHARLIKA FUND, WHAT ARE SOME OF THE
REASONS THAT THE COCO LEVY FUND WAS NOT
The Philippines' coconutEFFICIENT IN ITS
industry was given a financial boost OPERATION?
in the 1970s owing to the Coco Levy Fund, which was set up at the time.
Taxes were levied on coconut farmers, and the government followed through on its commitment to reinvest the proceeds in ways that
would boost the industry and the farmers' capacity to make a living. But, the fund's poor management and involvement in controversies
prevented it from functioning as efficiently as it could have. Many of the following are examples of why this is the case:

MISAPPROPRIATI
I NS UFF ICI ENT
CORRUP TI ON ON OF FUNDS
AND P OOR S UPERVI SI ON
MANAGEMENT

AB SENC E OF LEGAL
TR ANSPAREN CY CONCERNS

The inefficiency of the Coco Levy Fund was contributed to by a number of issues, including those listed here. The proposed Maharlika Fund should address these issues and
ensure that the money raised is used for its intended purpose, with proper accountability and transparency.
2.WHAT DO YOU BELIEVE TO BE THE MOST SIGNIFICANT
ISSUE THAT COULD HAVE LED TO THE FAILURE OF
PRIOR OPERATIONS OF SOVEREIGN FUNDS IN TERMS OF

2.1
2.2 Re venue 2.3
CONCERNS
Control PREVENTATIVE
REGARDING
SAFEGUARDS
TRANSPAREN
CY
3. TO WH AT EX TENT M IG HT THE FA ILURE O F TH E P REV IOU S MEA SURE
PERTAINING TO SO VEREIGN F UN DS HAV E A N EFFECT O N TH E G ENERAL
PU BLIC, THE ECO NO MY, A ND TH E COU NTRY A S A WH OLE?

3.1 3.2 3.3

CO NSEQU ENCES FOR IN DIVIDU AL Conse que nc es for the

THE ECO NO MY C ON SEQ UENC ES Country
 4. CONSI DERI NG THE RESULTS OF THIS RESEARCH AND THE FAI LURE OF
THE LAST BILL TO CREATE A SOVEREIGN WEALTH FUND, WHAT CONCRETE
SUGGESTIONS CAN BE MADE TO IMPROVE THE POTENTI AL FOR SUCCESS FOR
THE MAHARLIKA I NVESTMENT FUND?

01 CLEAR AND TRANSPARENT GOVERNANCE

02 DIVERSIFICATION OF INVESTMENTS

03 PROFESSIONAL MANAGEMENT

04 LONG-TERM INVESTMENT HORIZON

05 STAKEHOLDER ENGAGEMENT

06 MONITORING AND ASSESSMENT

THAN
K
YOU!