|
THE
Overseas Workers’ Welfare Administration (Owwa) has done
away with subpar operational practices and atrocious
policy stances that in the past led to losses in the
hundreds of millions of pesos a year, according to
industry sources.
The
first to go was the fund’s self-imposed five-year
placement cap that a four-man team of technocrats made
sure was thrown away for good.
The
placement cap prohibited the fund from investing its
money in financial instruments with maturities of over
five years, even though longer-dated ones may offer
returns far more attractive.
That
policy caused Owwa’s investment earnings from its
investment management account (IMA) to fall sharply in
recent years, according to sources who refused to
quantify it.
The
Owwa’s IMA is estimated at some P400 million at the
moment, the bulk of it in the form of bonds issued by
the Land Bank of the Philippines.
The IMA
is separate from its capital fund, of about P50 million,
and the so-called seafarers’ welfare fund that total
another P100 million.
Before
the technocratic team gave its recommendations, the IMA
placements had been falling for many years, resulting in
parallel declines in interest earnings.
These
losses, too, have not been quantified, although
estimates of a 1-percent drop in average rates reduce
the fund’s IMA earnings by about P9 million to P10
million a year, according to sources.
It was
learned that Owwa administrator Marianito Roque and his
board of trustees feared committing millions of pesos
worth of funds in a six- or 10-year issues in a market
that could prove illiquid.
Roque
was told the secondary market for Treasury bonds in the
bond exchange is currently very active, with daily
turnovers exceeding P10 billion and placements being
terminated and sold quickly at minimal cost.
To
further optimize earnings, the Owwa was encouraged to
shift paying Land Bank and the Development Bank of the
Philippines trustee fees based on IMA earnings rather
than on IMA market value.
The
value of Owwa’s investment management account was seen
to continue rising in the medium term, even though local
interest rates have been falling ever since —thus, the
near certainty that its investments earnings will fall.
A
proposal for Owwa to invest in privately-issued
promissory notes or PNs, those funds in excess of
reserve funds, was shot down.
Government rules mandate government-owned or controlled
corporations to invest their idle funds only in medium-
and long-term government securities, special short-term
GS and/or fixed-term depositors with the Bureau of the
Treasury. |
