Senator Win Gatchalian said that the privatization of key government assets is a more logical source of the Maharlika Investment Fund (MIF) as this would shield key financial institutions from potential risks and unforeseen challenges.
“Privatization seems to be less controversial and more logical because the assets being sold now can be enjoyed by future generations by investing in infrastructure and other things. We must put that on the table for the body to study,” Gatchalian said at a recent public hearing conducted by the Senate Committee on Banks on the proposed measure creating the MIF.
Gatchalian’s comments follow yet another remark, this time made by Bankers Association of the Philippines President Antonio Moncupa, Jr. that generating MIF capital from fund sources that contribute to government coffers could become problematic. Moncupa said tapping government financial institutions like the Land Bank of the Philippines, the Development Bank of the Philippines, and even the Bangko Sentral ng Pilipinas could either result in a wider budget deficit or reduced social services that could hamper the country’s future economic growth.
Gatchalian took note that the top three assets that the government is looking to privatize could yield up to P130 billion in capital for the MIF. These assets are the government’s mining rights estimated at P100 billion, a land parcel at the Food Terminal Inc. (FTI) in Taguig worth around P22 billion, and the government’s Mile Long property in Makati estimated at P8 billion.
“Proceeds from the sale of these assets would be P130 billion, which is more than enough. That’s double the amount of the initial capital,” Gatchalian said, upon learning that the target horizon for the three government assets set to be privatized is three years.
“If privatization is the mode, then there will be a sense of urgency. The 3-year horizon can be shortened. So, if there’s a compelling reason, for example if it will be pumped into the Maharlika Fund then there’s a compelling reason to expedite the privatization,” Gatchalian pointed out.
“Privatization is actually a model used in some of the sovereign wealth funds — proceeds from oil and gas, proceeds from resources, and from privatization,” Gatchalian said.
He added that annual proceeds from the privatization of government assets could become a regular source of additional capital for the MIF. The government generated proceeds of P657 million in 2016; P832 million in 2017; P15.656 billion in 2018; P881 million in 2019; P474 million in 2020 and P320 million in 2021.