By bannering our economy as the “Rising Star of Asia” to justify the urgency of passing the Maharlika Investment Fund (MIF) bill, Ferdinand Marcos Jr. displayed his profound understanding of macroeconomics, specifically his empathy and appreciation of the current Filipino condition. Never mind the contradictory evidence and never mind the facts. Among ASEAN we remain cursed with the lowest per capita gross domestic product. We also have the highest inflation rate among ASEAN. Foreign Direct Investments (FDI), an indicator of “rising star” status, fell by over 30.9% in the time Marcos took hold of the government.

So, why do our leaders insist on perpetuating a lie?

One reason is that our economic managers hope the MIF would attract portfolio investors where bonds, treasury bills, equities, or other hybrid instruments and derivatives fail. Unfortunately, the underlying substance, the objective and the specific usages of the MIF, remain nebulous and still wallow in a sea of disinformation.

To this day, months after the principal pusher of the Maharlika Sovereign Fund peddled it to an international audience in Davos when the proposal was then still incubating among congressmen, not one of whom seemed to know what it was they were ramming through the congressional mill, to the time it mutated to become the MIF recently passed in the dead of night, the hastily assembled Frankenstein creature lives replete with lies and misinformation.

On several levels, and among its own proponents, deliberate confusion and disinformation seems to be the ploy playing out.

Budget Secretary Benjamin Diokno noted that there seemed to be an inordinate amount of distrust when lettered economists from the University of the Philippines School of Economics joined similar faculties from the Ateneo de Manila, and even when the Management Association of the Philippines expressed their discomfort with the MIF. To his misfortune, trust is integral to investments, more so at this time of paid media political operators than at any other.

Critics justifiably feel the MIF bill was railroaded. Their disgust is understandable. To their misfortune, they resorted to reason whereas the MIF’s proponents applied incessant PR campaigns, hyperbolic praise, and the tyranny of numbers. For equity’s sake, allow us to view the MIF whether from a paid peddler’s perspective and its proponents or through the minds of the public.

Our task is simple. We simply want to show how disinformation has so afflicted our way of thinking that we have become slaves to an unceasing flow of falsehood that we can no longer discern critical differences, and have thus surrendered in exasperation, content to move on.

MIF critics say that since our national debt is nearly P14 trillion, then that shows that we have no surpluses and thus cannot fund the MIF. After all, any surplus must first flow to creditors.

Let us correct that. National government expenditures typically exceed revenues and one way to finance the deficit is through local or foreign debt. The size of the debt does not determine whether there is a surplus or not. The important aspect is the increase in debt after government services its outstanding payables. What matters is if such increase is larger than the deficit.

As to creditor subordination, foreign debt service takes priority. But since 68.5% of our debt stock is domestically sourced, those invested in domestic bonds may have more to fear any MIF malversation.

Others are concerned that since 50% of the net earnings of government-owned and -controlled corporations (GOCC) are remitted to the national government, then these surpluses might fund the MIF.

Let us clarify that. Excess revenues come from tax and non-tax revenues and most of the latter are fees and not GOCC earnings.

Finally, there is a prevailing apprehension that the MIF might fund failed or inadequately funded crony undertakings. That is not misinformation. That is genuine mistrust. It is valid and it segues this discourse from misinformed critics towards misinformation emanating from the MIF proponents themselves.

Initially the MIF was peddled as the Maharlika Sovereign Fund. Since the public started comparing it to other sovereign funds using benchmarks such as success and failure rates, sources of surpluses, independence from political influences, and more important, its vulnerability to corruption, the proponents quickly changed the name to disengage from comparable cataclysmic failures in sturdier, less-volatile economies far better managed than ours.

But far from a simple name-change, we would soon realize the MIF was sourced, not from surpluses as sovereign funds are, but from re-channeled existing non-idle and committed capital of critical government financial institutions like the Bangko Sentral ng Pilipinas, the Development Bank of the Philippines, and the Land Bank of the Philippines.

In response to public outcry, its proponents assured pension funds would not be ravaged by the MIF. Unfortunately, its own proponents contradict each other on this assurance. While the official verbiage assures pensions cannot capitalize the MIF, there are no assurances that prohibit pensions from purchasing MIF bonds or derivatives. Capital is, after all, a mixture of equity and debt.

For that portion of the public smarting from the theft of their suffrage rights over a year ago, the influence of lies and disinformation remains a stigma. The credibility and integrity aspects of the MIF is paramount and its use as a tool of corruption is a constant concern.

It does not help that one proponent claims that he has a list of nearly a hundred yet-to-be-identified MIF-funded projects, all of which are under one of the most notoriously corrupt agencies of government.

The assurance that the MIF will be insulated from politics and corruption is misinformation itself. The MIF was spawned and sponsored by powerful political dynasties in both houses of Congress. The proposed fund managers are political appointees owing their allegiance – and indeed their huge salary standardization-exempt fortunes – to a single political authority.

When the MIF is finally signed into law, we pray that the signatory himself has not been misinformed. But then again, it is us who may be misinformed. – Rappler.com

Dean de la Paz is a former investment banker and managing director of a New Jersey-based power company operating in the Philippines. He is the chairman of the board of a renewable energy company and is a retired Business Policy, Finance, and Mathematics professor. He collects Godzilla figures and antique tin robots.