Suspension of Maharlika implementation a 'very good development,' says Pimentel

Senate Minority Leader Aquilino "Koko" Pimentel III on Wednesday described as a "very good development" the suspension of the implementation of the Maharlika Investment Fund (MIF).

In a text message, Pimentel, who has challenged the legality of the law that creates the MIF before the Supreme Court, maintained that the MIF was "defective."

"Very good development. The law has a lot of defects. The concept has not been fully studied from the very start. Hence we should not wonder why apparently the law is not ready for implementation," Pimentel said.

"Good that the Marcos administration appears to listen to reason."

Senate Majority Leader Joel Villanueva said he supports the decision of the president to ensure that the objectives of the MIF “are achieved and that all proper safeguards are in place, with due regard to the fiduciary responsibility imposed by the law on the managers of the Fund.”

“If the President feels that the Implementing Rules and Regulations needs to be further studied, then we submit to his wisdom,” Villanueva said in a Viber message.

Meanwhile, Senator Cynthia Villar said the administration might want to “put in everything” before it continues with the  operationalization of the MIF.

Senator Sherwin Gatchalian, for his part, tagged the president’s decision as a “prudent move” as he noted the need to study the stability of the Development Bank of the Philippines (DBP) and the Landbank of the Philippines (LBP) after the two state banks deposited their share for the MIF.

Senator Francis Escudero also welcomed the latest development as there might be loopholes in the law that can be addressed by the IRR.

Escudero also raised concerns on the shares to the MIF deposited by DBP and LBP,

“Marahil bawiin na muna ng Landbank o DBP yung nilagay nila sa National Treasury kasi kumikita ba ng interes? Dapat sinantabi muna nila within their funds ‘yung dapat na ibigay,” he said.

An October 12 memorandum issued by Executive Secretary Lucas Bersamin, by authority of President Ferdinand "Bongbong" Marcos Jr., ordered the suspension of the execution of the implementing rules and regulations (IRR) of the MIF law "pending further study."

The memorandum was addressed to Bureau of Treasury officer-in-charge Sharon Almanza, Land Bank of the Philippines president and CEO Lynette Ortiz, and Development Bank of the Philippines president and CEO Michael de Jesus.

No benefits

But for House Deputy Minority Leader France Castro, the suspension shows that the Maharlika measure does not stand on solid ground and should be scrapped.

“It shows that the measure was rushed and flawed in so many levels. It would be better if President Marcos, Jr. just scrapped the whole Maharlika law. As Bayan Muna executive vice-president Carlos Isagani Zarate said last week, the Marcos administration placed the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP)’ respective capitals in grave danger after the  twin state-run depositary banks were required to finance the creation of the Maharlika Investment Fund (MIF),” Castro said in a statement.

"Ito talaga ang hirap sa minadaling batas ng Maharlika fund kaya hindi gaanong naaral at mukhang lalo lang maglulugmok sa kahirapan dahil pera ng bayan ang nakataya at maging ang pinaghirapang ipon ng mga kliyente ng Landbank at DBP. Malinaw na mas maraming problemang idudulot ang Maharlika fund at walang garantiya ang benepisyo,” she added.

(This is what we get for rushing the passage and enactment of a law which has not been thoroughly studied. It seems that poverty will worsen because public funds and the hard earned money of the state-run banks are at stake here. It is clear that the law brings problems and does not guarantee benefits.)

Senator Risa Hontiveros  and veteran lawmaker Edcel Lagman of Albay agreed with Castro that Maharlika is beyond salvation.

“The decision to suspend the implementation of the Maharlika Investment Fund (MIF) Act is welcome news. I hope that the suspension of the rollout of the Maharlika Fund Investment means that the President is starting to heed our warnings. It it is beyond repair  - because the law was rushed, and the Philippines is simply not ready at this moment to support a wealth fund,” Hontiveros said.

She then argued that it is now clear that Finance Secretary Benjamin Diokno misled the Senate when he said that the LBP and DBP had excess funds which were idle and could be used for the MIF.

“At best, he simply did not have the competence to understand the repercussions of messing with the finances of Land Bank and DBP when he is a former BSP governor. The government should never be reckless with the people's hard-earned money,” the senator pointed out.

“The MIF, among its many flaws, is now poised to reduce the LBP and DBP's capacity to provide loans for farmers, fisherfolk and agri-entrepreneurs by more than P700 billion or ten times the capital that will be taken from them. As it turns out, the Bangko Sentral’s position is that DBP and LandBank will need to be recapitalized. Where are we going to get it? That would be another debt," she added.

Lagman, on the other hand, said the suspension of Maharlika law proves the old adage of “haste makes waste.”

“The MIF Act was enacted with inordinate alacrity without adequate and searching studies from the President's economic advisers and congressional allies. Since the MIF Act bled dry the LandBank of the Philippines and Development Bank of the Philippines of their capital assets for infusion to the MIF, the two government banks suffere  depletion of their resources so much so that they had to plead for exemption from the reserve requirements of the Bangko Sentral ng Pilipinas,” he said.

“No foreign investor has come to the rescue of the MIF,” Lagman added.

Marcos signed into law Republic Act No. 11954 or the Maharlika Investment Fund Act of 2023 in July, with the aim to tap state assets for investment ventures to generate additional public funds.

The law creates the Maharlika Investment Corp. (MIC), a government-owned company that will manage the MIF — a pool of funds sourced from state-run financial institutions that will be invested in high-impact projects, real estate, as well as in financial instruments.

Pimentel, along with Bayan Muna chairman Neri Colmenares and former Bayan Muna Representatives Isagani Zarate and Ferdinand Gaite, in September asked the Supreme Court to declare the MIF Law as unconstitutional.

In their 56-page petition for certiorari and prohibition, the petitioners argued that the MIF Law is unconstitutional due to violation of economic viability, violation of Bangko Sentral ng Pilipinas Independence, and violation of the three-reading rule in the legislative process. —Llanesca Panti/KBK, GMA Integrated News