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Government formally withdraws ‘sovereign wealth fund’ bill

The government formally withdrew its controversial bill which proposed the transfer of 60 billion patacas from the government’s financial reserves for the setting-up of the Macau Special Administrative Region Investment and Development Fund.

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UPDATED: 22 Dec 2023, 5:44 am

The government on Thursday formally withdrew its controversial bill which proposed the transfer of 60 billion patacas from the government’s financial reserves for the setting-up of the Macau Special Administrative Region (MSAR) Investment and Development Fund.

The bill was to amend the government’s 2019 budget so that it could allocate the 60 billion patacas from its financial reserves and use the amount as the fund’s start-up capital.

The Government Spokesperson’s Office (GPV) made the announcement in a statement on Thursday, saying that the government on Thursday “formally” requested the Legislative Assembly (AL) to withdraw the bill, as the government believed that a public consultation on the proposed setting-up of the fund – the local version of a sovereign wealth fund – would be needed following “various views” raised by civil society.

In a letter to the legislature requesting the bill’s withdrawal, the government said that as members of the public “have raised various views” about the proposed transfer of money from its financial reserves for the establishment of a company tasked with managing the fund – Macau Investment and Development Fund Management Limited, the government believed that it would need to carry out a public consultation so as to provide residents with “further explanations” about the proposed setting-up of the fund and collect their opinions on the matter, according to the statement, which said that consequently the government has requested the legislature to withdraw the bill.

The Executive Council — the government’s top advisory body — announced in late July that the government planned to set up the MSAR Investment and Development Fund with a proposed capital of 60 billion patacas and that it would submit to the bill legislature amending its 2019 budget so that it could go ahead with the 60 billion pataca injection. The amendment bill proposed that the 60 billion patacas be taken from the “extraordinary” reserves of the government’s financial reserves for the establishment of Macau Investment and Development Fund Management Limited.

The Legislative Assembly unanimously voted in favour of the government’s request for the legislature to remove the debate of the bill’s outline from the agenda for a plenary session on August 7, after Chief Executive Fernando Chui Sai On announced during a press conference on August 5 that the government had requested the legislature to remove it from the agenda.

In the press conference on August 5, Chui said that as members of the public “have raised various views” about the bill which proposed the establishment of Macau Investment and Development Fund Management Limited with a capital of 60 billion patacas, the government believed that it would need to provide residents with “more explanations” about the proposed setting-up of the fund and launch a public consultation on the matter, before a discussion on the bill in the legislature could take place, with the aim of “allaying public concerns”.

Public consultation

Thursday’s statement noted that in order to collect residents’ opinions on the matter, the government had already requested the legislature last month to remove the debate of the bill from the agenda. The statement went on to say that “after carrying out preparatory tasks, the government has formally finalised its decision to launch a public consultation on the proposed establishment of Macau Investment and Development Fund Management Limited”.
Thursday’s statement, which reaffirmed the need to establish the company, said that the government “is willing to deal with the matter by referencing the opinions, based on civil society’s broad consensus, and with an open and realistic approach”. The statement said that the government aimed to enable residents to “clearly” understand its decision to set up the fund company via a public consultation process “with factual and professional information available”.

According to the Macau Post Daily, the statement said that “considering the continued accumulation of the government’s financial resources, civil society has been calling for the government to make good use of its financial reserves in a more systematic approach so as to increase the returns on the public financial resources”. The statement went on to say that consequently the government proposes the establishment of the fund company after referencing the experiences of neighbouring regions and opinions from international organisations, creating a “more consolidated” system for Macau’s future sustainable development.

Meanwhile, the Secretariat for Economy and Finance (GSEF) said in a statement Thursday that the Macau Monetary Authority (AMCM) – Macau’s quasi-central bank – will launch the public consultation on the proposed establishment of Macau Investment and Development Fund Management Limited.

According to the GSEF statement, the public consultation will cover the proposed introduction of the Santiago Principles – which is advocated by the International Monetary Fund (IMF) as the guidance principles for the operation of sovereign wealth funds – to the operation of the MSAR Investment and Development Fund.

According to the International Forum of Sovereign Wealth Funds (IFSWF), the Santiago Principles, formally known as Sovereign Wealth Funds: Generally Accepted Principles and Practices (GAPP), have been designed as a common global set of 24 voluntary guidelines that assign best practices for the operations of sovereign wealth funds (SWFs).

According to the GSEF statement, the public consultation will also cover topics such as the managerial structure of the fund company, the international recruitment of the company’s management team, and the company’s investment risk management.

UPDATED: 22 Dec 2023, 5:44 am

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