Philippine economic managers back bill creating sovereign fund

December 9, 2022 - 4:28 PM
1000 cash
This undated file photo shows one hundred peso bills. (The STAR/Walter Bollozos/File Photo)

Philippine economic officials have thrown their support behind the creation of a sovereign wealth fund backed by President Ferdinand Marcos Jr amid opposition from some groups due to concerns over the risk of corruption and transparency.

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The economic managers “strongly support” the proposed sovereign wealth fund to generate additional income for the government, Finance Secretary Benjamin Diokno told a media briefing, as he called for the speedy passage of the bill creating the fund.

“Direct benefits of the (fund) include increased investments in and funding of big ticket infrastructure projects, high return on green and blue projects, and countryside development including agriculture,” Diokno said, reading a joint statement.

The bill, whose principal authors in the House of Representatives include Marcos’ son and cousin, has drawn strong opposition from business groups and ordinary citizens after it originally proposed sourcing part of the initially planned $4.9 billion seed money from state-run pension funds.

Authors of the bill have agreed to remove that contentious provision, and instead proposed utilizing the profits of the Philippine central bank to bankroll the fund.

The Bangko Sentral ng Pilipinas, whose governor Felipe Medalla earlier voiced caution over the fund’s creation, told a congressional hearing on Friday it “supports the objectives” of the fund and was open to contributing to it through the dividends it regularly remits to the government.

READ: BSP governor voices caution over plans to create P275 billion sovereign fund

Other changes introduced to the bill during Friday’s hearing include the removal of the Philippine president as chairman of the board that will oversee the fund was well as the exclusion of the government budget as a funding source.

The senate has yet to file a counterpart measure, which is required to pass the legislation, along with the president’s approval.

The plans come as neighbors like Malaysia and Singapore and more recently Indonesia have established sovereign wealth funds, with mixed results. In Malaysia, a multi-billion dollar graft scandal engulfed the 1Malaysia Development Berhad (1MDB) fund.

($1 = 55.29 Philippine pesos)

—Reporting by Neil Jerome Morales and Karen LemaEditing by Ed Davies