Sovereign funds are the type of investments that are synonymous with judicious and strategic investment decisions. Utmost discernment is another. The yields of Singapore’s own Fund, for example, have been consistently on the above par grade. The key is prudence when necessary and aggressiveness when that is the precise requirement. The Philippines, for one reason or another, has yet to be a favored destination of sovereign funds.
That may change soon.
On sovereign funds, the least reported story on DU30’s Middle East trip was probably the most important one. It was the signing of an agreement (Investment Protection and Promotion Agreement) that – hold your breath – may lead to PH investments from the Qatar Sovereign Fund. An initial $1 billion investments is being eyed. Small, yes. But for all intents and purposes, a major breakthrough.
Why do I say major breakthrough?
Once we get a share of Qatar’s Sovereign Fund and the yields are proven satisfactory, what would prevent other state fund managers from doing the same? This is funding source that we have been trying to attract for generations without much success. Sovereign funds seem to skip the PH. Just imagine the global seal of good economic housekeeping that would come with a rush of sovereign funds into the country.
Some would say it was just an investment promotion agreement and the initial allocation would just be a billion dollars. I urge you to look at it this way – the kind of confidence that the PH would reap from state managers across the moneyed countries after Qatar shall have done its share of investing a slice of its sovereign fund here.
Sound macro-economic fundamentals? Check. Stable governance? Check. The guarantee of decent yields for investments? Check.
I am not a fan of Mr. Duterte. But I have this feeling that on the occasion that DU30 says “shoot,” the reciprocal verb from foreign audiences is “invest.” This is not the normal reaction But it is happening before our very eyes. And unravelling before us is a great paradox – Mr. Duterte as a magnet to foreign investments.
What is his attraction? His sockless feet? His verbal outbursts? His preternatural story-telling prowess that does not fail to titillate his fans?
What, indeed, is happening? Why is a president tangentially interested in investments issues and without a deliberate plan to attract investments attracting so much investments? The claim of his supporters that Mr. Duterte, without breaking a sweat, would do more for investment generation than any other president in our contemporary history is taking shape.
This would be slap on Mr. Aquino, who staked his leadership on his alleged economic savvy, who cozied up to the Davos Club, who incessantly courted foreign investments and whose governing mantra was “GDP, GDP.” Six years of supposed hard work by Mr. Aquino would be eclipsed by two semesters of “no sweat” work by DU30.
Here is part of an e-mail I got from a good friend, who would probably take a bullet for DU30 (just kidding).
“His visit to China generated $24 billion worth of business-to-business-contracts and public financing agreements. His trip to Japan produced investment commitments estimated at $11 billion, with a job generation component of about 250,000 good jobs. During his Holy Week sojourn into the Middle East – Saudi Arabia, Qatar and Bahrain – he brought home $1 billion worth of investments and deals.”
My friend’s gushing e mail aside, there are two developments that may prop up DU30’s investment generation bona fides. First is the “Silk Road Summit” that China will host next month and the other is Britain’s post-Brexit plan to talk trade with the DU30 administration.
The old Silk Road, the route that China used to trade with the West in ancient times, is being given a 21st century version and the main driver is – China. Its new name is “One Belt, One Road.” Via this so-called Obor Initiative, the old linkages would be built to revive the trade route. A $40 billion fund has been allocated for the Obor. The Summit would be China’s way of showing to the world that the East and the West support the initiative. Mr. Duterte will be with Mr. Xi and Mr. Putin in that upcoming summit. A total of 28 leaders will be there.
Will DU30, as a marquee name in that summit, get another chance to make a case for investment generation?
Supporters of DU30 are anticipating a fresh round of commitments to invest after the close of the Obor Initiative.
Britain will be scouring every part of the free and not-so-free world to lock up bilateral economic agreements post Brexit. PM Theresa May has networked with DU30. PM May and the Tories will try to prove that post Brexit Britain will be a better Britain so all sorts of bilateral agreements will be explored.
It seems that the marginalization of the Davos crowd and all the spirited talk about the reordering of the globalist trade order have enhanced the globalist-doubting DU30.