Senator Koko Pimentel, in his May 30 turno en contra speech against Senate Bill No. 2020, which seeks to establish the Maharlika Investment Fund, provided several grounds for opposing the establishment of the fund.
Despite its passage by the Senate and the House of Representatives, he expressed hope that President Ferdinand Marcos Jr. would veto the measure.
One reason that stood out in his arguments was the fact that the Norway Sovereign Wealth Fund, the “gold standard” of Sovereign Wealth Funds, lost 1.64 trillion Norwegian Kroner (USD 164 billion, or PhP 9 trillion) in 2022 alone!
The Norway Sovereign Wealth Fund was the largest of its kind in the world and regarded as the best managed, but it is also suffering from the global economic crisis.
Pimentel explained that the current economic climate is challenging, citing the failure of no less than three U.S. banks having failed recently: First Republic Bank, Silicon Valley Bank, and Signature Bank. According to him, the contagion reached the banking safe-haven of Switzerland, causing the collapse of Credit Suisse in March 2023.
He pointed out that Credit Suisse has been involved in a number of controversies, scandals, and questionable decisions that have caused investors and depositors to lose confidence and ultimately resulted in substantial withdrawals of their deposits.
He added that the failure of the legendary Swiss bank Credit Suisse exemplifies the fact that no business is immune to financial difficulties, crisis, and failure in these difficult economic times.
“This is the reason why we should be very concerned that our banks, the LBP, DBP, and BSP, are involved in the creation and capitalization of this Maharlika Investment Fund. Let us be very afraid of this banking contagion especially if the MIF fails. We are therefore subjecting our banking system to an unnecessary systemic risk,” he warned.
Pimentel also expressed concern regarding the history of corruption in the Philippines, where large amounts of public funds will be managed by a small number of individuals.
The Senate Minority Leader’s concerns merit serious consideration.
