MIF good money

“The layers of auditing are MIF’s strongest shield against irregularities.

The Maharlika Investment Fund is not expected to earn an annualized return of 10 percent as its critics have demanded.

Even the most successful sovereign wealth funds do not have such high yearly income.

An 8.6 percent yield as estimated by House members would already be a high target but University of the Philippines economists said the MIF must reap at least 10 percent to compensate for the foregone opportunities that resulted from diverting public funds for social welfare spending.

Economic managers explained that the amount invested in MIF is a mere fraction of the funds that the government institutions own.

LandBank has P1.3 trillion in investible funds compared to the P50 billion injected into MIF. That’s just roughly three percent of the total LandBank funds.

DBP has P850 billion of investible funds and will only utilize P25 billion for MIF.

After going through refinement at the Senate, the bicameral approval of the final version ensures that the bill will come nearer to the “perfect” version that President Ferdinand “Bongbong” Marcos Jr. wanted.

Thus, the MIF safety nets against the funds’ misuse are guaranteed to be there. The layers of auditing are MIF’s strongest shield against irregularities.

It will have internal and external auditors aside from the annual Commission on Audit checks.

An essential part of the fund is the capital that is expected to grow as the interest of investors picks up.

The amount of capitalization determines the size of projects that the MIF can invest in. Sovereign wealth funds that are considered successful based on various metrics such as size, investment returns, and strategic objectives include the Government Pension Fund of Norway, also known as the Norwegian Oil Fund.

This is the world’s largest sovereign wealth fund with assets under management of over $1.3 trillion.

It was established in 1990 to invest the government’s revenue from oil and gas production.

The fund has achieved impressive returns over the years, with an annualized return of 6.1 percent since its inception.

The Abu Dhabi Investment Authority is another example of a successful fund in the world, with estimated assets under management of around $700 billion. It was founded in 1976 to invest in the oil revenues of the Emirate of Abu Dhabi.

Nearer in the region is the China Investment Corporation with assets under management of over $1 trillion. It was established in 2007 to manage a portion of China’s foreign exchange reserves and to diversify its investments. The fund has achieved impressive returns over the years, with an annualized return of 6.6 percent since its inception.

Other successful wealth pools include the Kuwait Investment Authority, the Qatar Investment Authority, and the Singaporean sovereign wealth funds GIC and Temasek.

Even the argument that the Philippines does not have surplus income is not a valid argument against the MIF.

Countries with no current account surplus such as Indonesia, India, and Vietnam, have established their so-called sovereign wealth funds to strengthen and support their priority development projects.

The government of Indonesia has contributed $2 billion to set up Indonesia Investment Authority and it also transferred assets worth $3 billion.

Even as Indonesia operates on a deficit, the government also provided $2 billion as capitalization for INA.

Copying the Indonesia model, the Philippines hopes to use the MIF to beef up revenues.

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Credit belongs to : tribune.net.ph