Sovereign Wealth Fund (SWF) Policy Options for Philippine Off-shore Energy Resources

Abstract

This study aims to stimulate discussion of the country’s policy framework for managing existing and potential energy resources. It argues that a well-designed Sovereign Wealth Fund (SWF) can positively transform the country’s management of proceeds from energy resources as well as bolster Philippine sovereignty over those resources. Towards this goal, we set three specific tasks: (1) to provide a survey of the literature on SWF, with a focus on instructive examples from the region; (2) to derive policy standards and other lessons from selected case studies of SWFs in the region, particularly Singapore, East Timor and Indonesia and (3) using these lessons, to discuss policy options for a Philippine SWF. Existing discussion of SWF in the Philippines tends to start with a privileged set of putative universal or international norms for the design of SWFs, namely, the so-called Santiago Principles promoted under the aegis of a working group of the International Monetary Fund. Instead of presuming global consensus, the study unpacks the historical and political backgrounds of SWFs of the three case studies. The study formulated the insights derived from the case studies in terms of policy standards, political conditions, and consequences. The paper then applied these insights to the question of designing a Philippine SWF. It approached this question by reimagining the Malampaya Fund as a SWF, thus laying down policy options that avoided resource plunder and promoted better outcomes in terms of transparency, governance, and benefit to Filipinos. Finally, it provided a discussion of the potential contribution of SWF to Philippine sovereignty, with a specific commentary on the management of the yet-to-be developed resources of the Philippine Rise.