The first time I saw the acronym MWF, I thought it meant Monday, Wednesday, and Friday. I thought that was sort of a schedule of payment adopted by government to meet the deficit in its budget. I was wrong, of course. MWF stands for Maharlika Wealth Fund.
According to the President’s economic planners, the MWF is a sovereign wealth fund, which shall be used by the administration to capitalize a wide range of investments such as foreign currencies, domestic and corporate bonds and stocks, real estate and infrastructure projects and such other commercial endeavors that will entail profit.
It also seeks to boost the country’s economy by allowing the government to engage in mercantile activities thereby earning revenue on top of the taxes being collected.
Indeed, at first glance, the plan to establish the MWF is mouth-watering. For the administration to come up with a plan to increase the wealth of the Philippines is a notable gesture that, if implemented properly, will upgrade the country from a third world to, who knows, a first world station.
However, there are issues that must be addressed before the MWF becomes acceptable to us. Foremost is the trust issue. The amount of money that must be raised for the MWF is quite substantial totaling billions.
To raise this, the proponents are asking that it be financed from the funds of several government banks, the Social Security System and the Government Service Insurance System, among others. Thereafter, the disposition of the money shall be under the management and supervision of an entity called MWF Corporation.
I cannot help but wonder that kind of limitation there are to safeguard the fund from being dissipated? Remember, the Philippines is beset with so much graft and corruption that it is not far-fetched that a financial portfolio of such proportion will be spared this time. Not when it comes to money. Not when it comes to politics. Not when the temptation is too much to ignore. Look at what happened to Malaysia where it owns sovereign fund was squandered by its leaders nearly bringing down the entire economy of the nation. Economically, the Philippines is in a tight grip. It cannot afford to engage in this kind of risk. The odds are too much stacked against it. What may be perceived as a solution will turn out to be the problem.
Moreover, a sovereign fund such as what is being proposed in our country can only materialize if the government has surplus revenue from whence it can derive the money to finance it.
For instance, Norway, Japan, and other first world countries successfully created a sovereign wealth fund because their tax collection exceeded their expenses. The same cannot be said of the Philippines. For the past several years, the budget of the country shows a deficit, meaning the source of revenue is not enough to finance the projects of the government. This is the reason why we borrow funds. Hence, to put-up a sovereign fund under the current set up is not only risky but also impractical.
True, the gesture of the administration in putting up the Maharlika Trust Fund is laudable. Yet, even the source of its funding is suspect since it is actually being solicited from private funds. The SSS fund and the GSIS fund belong to the members thereof. It is also a trust fund and to make another trust fund out of it seems anomalous. Even the funds of the Land Bank of the Philippines and the Development Bank of the Philippines belong to its depositors.
Therefore, a Maharlika Trust Fund does not really involve public funds. Instead, what is being gambled are private funds. Last, private funds cannot be used for public purpose because to do so will amount to the taking of property without due process of law.
Maybe, the government needs to tweak the mechanics of the Maharlika Trust Fund and install safety measures to convince us that it is beyond corruption. Then, we may consent and even participate in its implementation.
But, for the meantime that it is an open-ended proposal, it might as well be scrapped.
