Former Senate President Franklin M. Drilon proposed a quick fix for the funding problem that could stymie the passage of the controversial Maharlika Wealth Fund: privatize the government’s gaming industry.
“The funding for the proposed sovereign wealth fund is a big issue at this stage. Where can we get funding without debates?” Drilon said.
The solution, he said, lies in the long overdue privatization of the Philippine Amusement and Gaming Corp. (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO).
“The problem of funding can be solved by privatizing our gaming industry. It will generate up to P300 billion that the government can use to fund its ambitious Maharlika Investment Fund,” said Drion in a statement on Saturday.
He pointed to the past statements in the Senate of former Finance Secretary Carlos Dominguez that the privatization of the gaming industry would yield P300 billion in fresh revenues annually.
“PAGCOR should do away with operating casinos and PCSO, we have no business running the lotto and small-town lotteries,” Drilon said.
He reiterated his long-standing position that the government should not be directly involved in lottery and casino operations and should limit itself to being a regulatory body that protects the interests of the betting public.
Drilon said when the government bids out to the private sector the operation of its gaming industry, there is no need for it to dip its fingers into the dividends generated by government-owned and -controlled corporations and government financial institutions such as the Bangko Sentral ng Pilipinas, Development Bank of the Philippines and Land Bank of the Philippines to fund the sovereign fund.
“We are shooting two birds in one stone by privatizing the gaming industry: to generate funds and eliminate the source of corruption,” he stressed.
Drilon said that the President has the authority to privatize the two gaming agencies under the GOCC Governance Act, which Drilon authored in 2011.
The former Senate President said the establishment of sovereign funds is not a new concept, citing that there are about 147 countries with sovereign wealth funds.
However, the funding for most of these already existing and functioning sovereign wealth funds would always come from sale of commodities and non-commodities and budget surplus.
With the Philippines’s ballooning budget deficit, pegged at P1.2 trillion for the period January to November 2022 alone, the sovereign wealth fund could not be funded by a budget surplus.
“None is funded out of borrowings,” he also noted.
The difference between a successful and failed sovereign wealth fund around the world lies in the country’s strict adherence to the rule of law, Drilon emphasized.
Singapore and Norway, both manage sovereign wealth funds, have a very good regime of following the law, he said.
Malaysia’s state-owned investment fund, 1MDB, on the other hand, was embroiled in corruption scandals due to the country’s weak rule of law, Drilon added.
Drilon also cited as a crucial factor in the success of a sovereign wealth fund the confidence of the people in the ability of those who will run the fund.
The former senator said he is certain that the measure will pass but also expressed high confidence that his former colleagues in the Senate, which he had served 24 years, will scrutinize the measure.
“I am certain that this bill will pass. I have confidence in a number of my colleagues that they will do their job in scrutinizing this,” Drilon said.