A MAHARLIKA Investment Corp. (MIC) director said it takes a long-term view of investing in strategic Philippine projects and does not expect to be affected by the corruption scandal engulng public works projects.
Stephen Anthony T. CuUnjieng, MIC independent director, said the sovereign wealth fund does not behave like the typical stock market investor, who can pull out when sentiment turns negative.
Speaking on the program Money Talks with Cathy Yang on One News on Monday, Mr. CuUnjieng said:
“Basically, we’re not in-and-out investors like the stock market… In fact, people could even say, if you’re taking a long-term view, this is a positive opportunity for a long-term player like Maharlika.”
MIC holds a 20% stake in Synergy Grid & Development Phils., Inc., giving it a “foothold” in the National Grid Corp. of the Philippines.
The sovereign wealth fund also signed an agreement with Saudi Arabian energy company ACWA Power to develop renewable energy projects for off-grid locations.
The corruption scandal in public works projects has had far-reaching consequences, affecting not only flood-control contractors, government engineers overseeing the projects, and even legislators who allegedly directed the projects to be funded.
The review of projects suspected of being tainted by corrupt dealings is threatening to stall public spending, a key driver of the economy’s opportunities.
Mr. CuUnjieng noted that a more pressing concern is in the services of the business process outsourcing industry, whose investors can easily exit the country.
He said the economy’s dependence on services and remittances apart from consumption make it possible to “ignore the market” though he described the structure of the economy as “a three- or four-legged stool that lacks a leg, which is manufacturing.”
He acknowledged the potential for a slowdown in government infrastructure disbursements as the investigations into flood-control projects gather momentum.
Mr. CuUnjieng said state-run banks such as Land Bank of the Philippines and the Development Bank of the Philippines are unlikely to face bank runs — a rush to pull out deposits by panicked account holders concerned that the banks could fail.
“Most of their deposits and clients are…related to the National Government, LGUs (local government units) and government agencies. They’re not going to be prone to a bank run. I would think I’m relatively sanguine on the liability side of deposits,” he said.
Bangko Sentral ng Pilipinas Governor Eli M. Remolona has said there have been no signs of bank runs despite the freeze ordered on more than 700 accounts and assets linked to public works fraud.
“The real problem, I think, which we’ve seen in previous investigations, is the breadth of the anti-disclosure, the secrecy law and banking systems. You really don’t have anything that restrictive in other countries,” Mr. CuUnjieng said. — Aubrey Rose A. Inosante