Albay Rep. Joey Salceda isn’t only a political butterfly, he’s also a brazen flip-flopper on controversial economic issues.
An economics student of former President and now Senior Deputy Speaker Gloria Macapagal Arroyo, Salceda conceded that putting the money of the Government Service and Insurance System (GSIS) and Social Security System (SSS) into the Maharlika Wealth Fund (MWF) was a bad idea, just days after claiming members will benefit from it.
Salceda is the chairman of the House Ways and Means Committee which approved the tax provisions of House Bill 6398 creating the MWF. The bill’s initial draft stated that the fund will be seeded in part by a P125-billion investment by GSIS and a P50-billion infusion from SSS.
In a speech before members of Action for Economic Reforms on December 6, Salceda said the cash flow of GSIS and SSS would take a hit both in the long-term (during the gestation period of projects like dams and grids) and short-term (if invested in foreign financial instruments) if they sink their money into the MWF.
Salceda said GSIS and SSS can only hope to earn up to two percent return if MWF invests in short-term foreign funds.
In addition, he said the proposed MWF’s investments in dams and grids could result in up to 50 percent yield, but the long wait could affect the liquidity or ability of GSIS and SSS to meet their members’ claims.
“I believe that the SSS and GSIS have more limited gains from being invested in the fund compared to the potential gains for state banks with funds they could leverage to maximum advantage,” said Salceda.
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The Albay lawmaker made the remarks a day before the leadership of the House of Representatives bowed to intense public pressure and dropped GSIS and SSS as funding sources for the MWF.
Last week, Salceda sang a different tune as he brushed off public concern that the GSIS and SSS were taking on too much risk by investing in MWF.
The investments of the state-run pension funds, he said in a briefer sent to reporters, is “only less than 10 percent of their assets which could be placed into potentially higher-yield investments, such as foreign tech stocks sector or project financing.”
Allaying fears that investing in the MWF will shorten GSIS and SSS’ fund life, Salceda said: “Part of the strategy to extend solvency of pension funds is to generate better than their current average yield of 5.89 percent.”
Downplaying concerns that the two state-owned pension funds would pile on more debt from potential MWF losses, he added: “The shares of GSIS and SSS will be guaranteed by the government.”
Overall, Salceda said the MWF “will satisfy the requirements of liquidity, safety/security, and yield in order to ensure profitability.”
Salceda also went out of his way to dispute Bangko Sentral ng Pilipinas Governor Felipe Medalla’s claim the MIF would suffer the same fate as Malaysia’s 1MDB fund embezzlement scandal.
“I think there are enough safeguards against any 1MDB scenario for the Maharlika Investment Fund..It has several layers of accountability from the board of directors, the advisory board, the risk management unit and congressional. The President is the chairman of the board unlike in Malaysia, you know, na itinago nila sa ilalim,” said Salceda.