Gov't urged to get "sovereign fund" investments from cash-rich Mideast

The Philippines should boldly lure "sovereign wealth fund" investments from cash-rich states in the Middle East, Sen. Loren Legarda said.

"The government should clearly send the appropriate signals that sovereign wealth fund investments from the Middle East are absolutely welcome here," said Legarda, Senate economic affairs committee chair.

The senator said the country desperately needs direct and productive investments to effectively address massive unemployment.

"If we look closely at our employment situation, despite our seven to eight percent annual economic growth rate, we still have the third-highest jobless rate in Asia, after Indonesia and India," Legarda lamented.

Based on the results of the latest Labor Force Survey, a total of 2,261,700 able-bodied Filipinos were totally jobless as of October 2007. This represents 6.3 percent of the country's 35.9-million labor force.

The survey also showed that of the 33,638,300 Filipinos that were considered "employed" as of October, 18.1 percent or 6,088,532 were actually "underemployed," or actively looking for extra work.

Legarda urged the government to specifically target Mideast investments in labor-intensive infrastructure and manufacturing projects.

"If we do this right, we can easily lure billions of dollars worth of fresh investments from sovereign wealth funds," she said.

Sovereign wealth funds represent the savings or financial assets of nations, and are managed by state-run entities for purposes of investment. In the Mideast, these funds have been buoyed by soaring crude oil prices.

Sovereign wealth funds from Kuwait, Qatar and the United Arab Emirates -- three of the world's largest oil producers -- have become a huge source of fresh capital for US financial institutions that have been hit hard by the subprime home loan crisis.

The US banking giant Citigroup Inc., for instance, recently obtained new capital from the state-run Abu Dhabi Investment Authority. Citigroup and Merrill Lynch & Co. also got cash infusions from state-run Kuwaiti Investment Authority.

Last week, Kuwait's Al-Qabas newspaper reported that a consortium of Kuwaiti firms led by Al-Abraj Holding Co. has inked a deal for huge projects in the Philippines, and for the establishment of a $10-billion investment portfolio to fund these projects.

The consortium is looking to put up Philippine air and sea ports, railways, oil storage facilities and a power plant.

In December, the Philippines' Board of Investments granted incentives to a $153-million (P6.3 billion) Makati City hotel complex project of Ayala Land Inc. and Kingdom Hotel Investments, which is controlled by Saudi Arabia's Prince Alwaleed, the world's 13th wealthiest person.