Marcos relatives, allies in Congress back-pedal on controversial sovereign fund bill

Philippine activists claimed “victory” on Thursday after congressional allies of President Ferdinand Marcos Jr. said they would amend a controversial bill that had proposed to use workers’ pension money for creating a national sovereign wealth fund.

Marcos’ cousin, House Speaker Ferdinand Martin Romualdez, and Marcos’ son, Ferdinand Alexander “Sandro” Marcos, and other allies are backing the bill that calls for investing 275 billion Philippine pesos (U.S. $4.9 billion) as start-up money for the so-called Maharlika Wealth Fund.

The bill has drawn widespread criticism because of a provision stipulating that about $3 billion of this seed money would come from two state-owned pension funds, the Government Service Insurance System (GSIS) and the Social Security System (SSS). But on Wednesday night, the bill’s proponents announced they would amend the bill to withdraw the provision.

Akbayan, a political party that has representation in Congress and is among the bill’s critics, called the climbdown by the bill’s backers a big win for working-class Filipinos.

“The people have scored a critical victory against the Marcoses,” Akbayan said in a statement. “This is an important first victory for the Filipino working class against the Marcos administration, and a resounding rebuke of a measure that would have endangered the future of millions.”

The party called on Filipinos to be vigilant and protect the pensions funds, warning that the bill’s proponents may be buying time to reintroduce what it said were “vile provisions in some other form.”

In a hastily called news conference late Wednesday, Rep. Stella Quimbo, who is among lawmakers pushing the bill, said that its authors and the House Committee on Appropriations would meet on Friday to overhaul it.

After House leaders met with state economic managers, they decided that a new version of the bill would no longer include state pension funds as sources of money.  

“Based on our assessment of the proposed changes put forward by the economic team, we are amending the bill to change the fund sources, removing GSIS and SSS as fund contributors and instead utilize profits of the Bangko Sentral ng Pilipinas,” Quimbo said, referring to the central bank.

The “fear of the public had been validated,” she told reporters, citing widespread public opposition to the proposed fund.  

“Excess capital of the government should be invested properly in projects with high returns,” Quimbo said.

The GSIS and SSS pension funds were two institutions suffering from liquidity problems because of past bad investments, economists as well as the government had warned earlier.

Before the climbdown was announced, the bill ignited widespread indignation from various sectors. The critics included state economists.

One former central bank governor who raised concerns about the Maharlika Wealth Fund cited Malaysia’s 1MDB debacle as an example. A financial scandal around that Malaysian sovereign wealth fund led to ex-Prime Minister Najib Razak being sent to prison earlier this year on charges of corruption and abuse of power.

The word “Maharlika” is closely associated with Ferdinand E. Marcos, the current president’s late father who led the Philippines as a dictator for two decades, during which there were widespread human rights abuses and corruption.

The word means “nobility” and the older Marcos’ often had portrayed himself as such. He once claimed that he was awarded many medals during World War II for leading an anti-Japanese guerrilla unit. But historians have dismissed the tale of his war records.

“Thank you, because it appears the proponents of this Maharlika Fund have come to their senses,” opposition Sen. Risa Hontiveros, who is among the bill’s critics, said in a statement Thursday.

“Again, as with any proposal, this requires deliberation and consensus between and among members of both Congress.”

She noted there were simply not enough state funds, much less state-administered pensions funds to finance the project, describing it as a “trial balloon” for the Marcos family to gauge sentiment.

“As this retraction shows, we don’t need and can’t afford a sovereign wealth fund,” Hontiveros said.

Senate Minority Leader Aquilino Pimentel III also criticized the “rushed bill” as “not well thought out.”

“An idea which keeps on changing because it hasn’t been thought out well and was rushed, will always have a more difficult time in the Senate," Pimentel told reporters on Thursday.

Luis Liwanag and Froilan Gallardo contributed reporting from Manila.