January 31, 2023

Juan Kabayan

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GOCCs to finance wealth fund rollout 

THE proposed Maharlika Wealth Fund (MWF) has been “re-engineered” to limit the funding needed to start it up to dividends from government-owned and -controlled corporations (GOCCs) Albay Rep. Joey Salceda revealed the revision during a television interview on Friday.Salceda said it was the new version that President Ferdinand “Bongbong” Marcos Jr. presented at the World Economic Forum in Davos, Switzerland, earlier this week.He said that right after Christmas, he and three others were commissioned “to rewrite, essentially re-engineer” the country’s version of a sovereign wealth fund.”Basically, it is now just securitization of the dividends, no more asset infusion from DBP (Development Bank of the Philippines) and GSIS (Government Service Insurance System),” he said.Salceda said about P44.3 billion in annual GOCC dividends will be “securitized” for 20 years.Applying certain discount rates, the amount could reach P765.96 billion, he said.The government will then sell shares of stocks in the fund to big investment banks at an initial public offering (IPO).”Upon IPO, it is no longer a GOCC, it will be essentially another listed company in the Philippine Stock Market,” Salceda said.He said the recommendation is that the government own less than 50 percent, “so it will be private basically,” although the President will have the final say.”There is very strong demand, actually. Morgan Stanley is interested. There are so many actually big investment banks who are interested” in the MWF, he said.The new version has done away with contentious sources of funds like the Bangko Sentral ng Pilipinas (BSP), Salceda said.He acknowledged that he does not see the Senate passing the original version. “The old will not be approved, but now it is well-thought-out. We submitted it and the President apparently has a go on it. We want this to succeed, and this is the one actually sold by the President in Davos,” he said.The Maharlika Wealth Fund was put up mainly to help finance big-ticket government projects like major dams, Salceda said. “For so many years, we have had no dams, for 32 years. The last one was in San Roque. We need water for our energy, irrigation,” Salceda said.The projects “will be more private-led, but definitely it would have basically government guidance,” he said.According to Salceda, the new version is patterned after Indonesia’s sovereign wealth fund.”It is just a matter of details. He may pick for example to follow the Indonesian model. In the Indonesian model, the cash infusion was only $1 billion. If we wish to inject it, it is up to us, the simpler the better,” he said.Another congressman, Surigao del Norte’s Robert Ace Barbers, on Friday backed Finance Secretary Benjamin Diokno’s plan to tap mining revenues to kick-start the wealth fund.Barbers was the first lawmaker to advise former president Rodrigo Duterte’s administration to reopen and modernize mining and strengthen the tourism industry to help the economy recover after it was battered by the coronavirus pandemic.The government borrowed trillions of pesos to purchase medicines and vaccines during the pandemic.”I have said it many times before: our mining industry can save us and our country. In 10 years, Europe plans to have 50 percent of its vehicles run on full electricity. The raw materials needed for electric car batteries are here in our country. Allowing the mining industry to proceed at full scale will give us the edge that we badly need,” he said.Only mining companies with proven track records in responsible mining practices will be given permits to operate. The country ranks fourth in terms of mineral wealth. It is believed that the combined gold, copper, nickel, and other mineral deposits are worth billions of dollars, more than enough to pay off the country’s entire debt.”Surigao del Norte is not only the mining capital of the country; it is fast becoming a primary tourism destination. So I would propose that we also tap the huge earnings from the tourism industry,” Barbers said.

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