The Philippines moved a step closer to establishing a sovereign wealth fund after the Senate approved the bill, a week after President Ferdinand Marcos Jr. declared it an urgent measure.

Nineteen lawmakers early on Wednesday voted in favor of setting up the Maharlika Investment Fund, according to a tweet from the Senate’s official account. One voted against the bill, one abstained and three were absent.

The measure will next be reconciled with the version earlier passed by the House of Representatives before Marcos signs it into law.

Marcos last week said there’s an “urgent need for a sustainable national investment fund” that should help finance large-scale infrastructure projects to spur economic activity. The House approved the bill, which aims to tap and securitize dividends from state-owned companies, in December.

Key provisions in the measure that underwent debates in the Senate include an authorized capital stock of 500 billion pesos ($8.9 billion) for Maharlika Investment Corporation which will manage the fund. An initial 125 billion pesos worth of common stocks would be subscribed by the government, with 50 billion pesos coming from Land Bank of the Philippines and 25 billion pesos from the Development Bank of the Philippines.

It also identifies central bank dividends, gaming agency income and proceeds from privatization of government assets as other sources of funding. But it states that “under no circumstances” will state pension funds Social Security System and Government Service Insurance System as well as the Home Development Mutual Fund “be requested or required to contribute” to the corporation.

Marcos said money from pension funds will not be used as seed fund. However, “if the pension fund decides the Maharlika Fund is a good investment, it’s up to them if they want to invest in it,” he told reporters at an event marking the 86th anniversary of state pension fund GSIS in Manila.

Opposition Senator Risa Hontiveros, who voted against the bill, said a sovereign wealth fund “will make sense sometime in the medium term, perhaps when we have the surpluses,” adding it would be better to inject capital into state-run companies so they can invest in areas shunned by the private sector like modernizing public transport.

(Adds comments from Marcos, senator in last two paragraphs.)

Author: Manolo Serapio Jr.