Speaker Ferdinand Martin G. Romualdez on Monday said the Philippine Stock Exchange (PSE) will soon play a bigger role in the country’s development through earnings from stocks that would be used for projects to spur business activities, create more jobs, and implement needed social programs.
The Speaker issued this prediction in his keynote speech during the inauguration of the PSE Event Hall and Ayala Corporation’s follow-on offering listing ceremony at the PSE Tower in Bonifacio Global City, Taguig City.
Congratulating the people behind the PSE for another milestone in its history, Romualdez expressed the belief of the House in the capital market and the indispensable role it plays in the country’s economic recovery and development.
“The corporation that will be created to manage the Maharlika Investment Fund will invariably look to the PSE in its search for blue chip investment opportunities, from which handsome dividends may be generated – dividends which shall be channeled to fund the government’s strategic social programs towards the achievement of the nation’s larger development goals,” he said, referring to the sovereign wealth fund that the government seeks to establish.
The House approved the Maharlika Investment Fund bill in December last year.
The Senate is expected to pass its own version of the measure before the sine die adjournment of Congress this week after President Ferdinand R. Marcos, Jr. certified the measure as urgent.
“There is a compelling need for a sustainable national investment fund as a new growth catalyst to accelerate the implementation of strategic and high-impact large infrastructure projects that will stimulate economic activity and development,” President Marcos said in his message to the Senate, certifying the Maharlika Investment Fund as urgent.
Romualdez said the firm belief of the House in the capital market is also the reason the very first bill filed in the House under the 19th Congress is a measure aimed at providing enterprises the assistance they need to recover from the effects of the pandemic.
Romualdez said the push to amend the restrictive provisions of the 1987 Constitution is also part of the efforts the House is exerting to raise further the contribution of the private sector to national development.
He said the inauguration of the PSE Events Hall is a testament to the agility and resilience of the exchange to adapt quickly to see and seize opportunities in our ever-changing state of affairs, citing its move to online trading to adapt to the challenges posed by the coronavirus pandemic.
PSE President and CEO Ramon Monzon thanked Romualdez for his support to promote the country’s capital market, as he cited the need for new products and active regulations to improve liquidity.
“Speaker Romualdez, who is a very market-savvy individual, has generously offered to sponsor whatever legislation needed to help bring our market back on its growth trajectory,” Monzon said, adding that the PSE is working with the Office of the Speaker for this purpose.
In the Senate, the President’s sister, Senator Imee Marcos, expressed reservations about the Maharlika fund, saying there was no windfall in government revenues to create the wealth fund. “I don’t feel any windfall right now,” she said in Filipino. “All I can feel is debt.”
She said she was “nervous” to allow the MIF bill to be passed in its present form.
But Senate Minority Leader Aquilino Pimentel III said the MIF bill was “unsalvageable and beyond repair.”
“After thorough analysis and careful review of Senate Bill No. 2020, I have come to the conclusion that the overall risk is too great that it outweighs whatever the potential benefits of the measure are, if there is any at all,” Pimentel said.
“These are difficult economic times. We need to avoid making hasty decisions that could have long-term consequences,” he added.
Pimentel said creating an investment fund – with a price tag of P500 billion – would require the government to divert resources away from more immediate priorities such as addressing poverty, hunger, education gaps, joblessness, healthcare deficiencies, and the country’s ballooning debt.
Pimentel pointed out how other similar fund mechanisms, such as sovereign wealth funds (SWFs), were established and funded through budget surplus, trade surplus, and income from in-demand commodities such as oil.
In the case of MIF, the country’s own version of a sovereign wealth fund, Pimentel said there is no new source of funds as the Philippines has neither surplus in trade nor budget.
The country’s trade in goods deficit is around $40 million to $60 billion a year, he noted.
At the same time, according to the Senate Economic Planning Office, the government has been in a perennial budget deficit.
Senator Francis Escudero said the bill’s purpose, direction, and funding source were “still vague and nebulous.”
“It is not clear even for those pushing for the bill, much less in the bill itself… Haste… (as the saying goes) makes waste. This should serve as a warning to those pushing for it because it might just be struck down and end up in the dumpsters if they proceed with it in a haphazard and nonchalant manner,” he said.
Senator Risa Hontiveros expressed fears the most recent version of the Maharlika Fund will still have access to the hard-earned pension funds from the Government Service Insurance System (GSIS) and the Social Security System (SSS).
She pointed to the line in the bill that says “other GFIs and GOCCs may invest into the Maharlika Investment Fund, subject to their respective investment and risk management strategies, and approval of their respective boards.”
“I would really rather not have this section at all. I would still request our colleagues in the majority to worry about this and to help remove this provision altogether at the proper time,” the senator said.