The Milken Institute finds that the country has 'many good reasons for launching a sovereign wealth fund,' but cautions that the Maharlika fund needs realistic funding sources and good governance.
The US-based think tank said that, instead, the government could raise start-up capital by privatizing some of its government-owned and -controlled corporations , such as the Philippine Amusement and Gaming Corporation.
“Any legislation for the new SWF should disclose how it will ‘ring fence,’ or protect, the funding, both to minimize the risk of political conflict of interest and to allow flexibility for the inclusion of new revenue resources,” the report cautioned.The report, released on Monday, January 30, found that sovereign wealth funds have helped developing economies reach national development milestones, and that the Philippines could similarly benefit – as long as structure and guidance are in place.
For this reason, the Milken Institute does not see having a strong commodity export as a requirement for a country to launch a sovereign wealth fund. Aside from obtaining realistic funding, the Milken Institute also advised the government to set a clear objective for the fund, which would stand independently from political agendas. The government must expressly declare whether the fund would be for monetary and fiscal stabilization, for diversification of revenue streams, or for the achievement of sustainable development goals.
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