By Ruth Abbey Gita-Carlos and Jose Cielito Reganit
MANILA – President Ferdinand R. Marcos Jr. on Tuesday signed into law a bill establishing the Maharlika Investment Fund (MIF), the Philippines’ first-ever sovereign wealth fund.
Marcos signed Republic Act (RA) 11954 in a ceremony at the Kalayaan Hall of Malacañan Palace in Manila.
In a keynote speech, Marcos said the MIF is designed to drive economic development in the country.
“The MIF is a bold step towards our country’s meaningful economic transformation. Just as we are recovering from the adverse effects of the pandemic, we are now ready to enter a new age of sustainable progress, robust stability and broad-based empowerment,” Marcos said.
“We now have an available fund that will provide us the seed money for investments and to attract other foreign investments and for us to be able to participate in those operations, in those investments without additional borrowings,” he added.
Following the signing of RA 11954, Marcos said his administration would “go out to the world and do the changes that are necessary for the Philippines to become an investment-friendly nation.”
“The fund will fail if we do not make money on the fund. It’s that simple… That is why we put up a Maharlika Fund so as to be able to give us the capacity and the ability to join in those investments, be part of that,” he said.
He reiterated that he would make sure that the MIF would be “well-run” by professionals.
He added that the country has the “best” economic managers both in government and the private sector to ensure the proper management of the MIF.
“Let us make sure that the decisions that are being made for the fund are not political decisions, that they are financial decisions because that is what the fund is,” Marcos said.
The MIF is established to optimize national funds by generating returns to support the Marcos administration’s economic goals laid out in the Medium-Term Fiscal Framework, the 8-point Socioeconomic Agenda, and the Philippine Development Plan 2023-2028.
In a separate statement, Budget Secretary Amenah Pangandaman said the Department of Budget and Management (DBM) will continue to provide support and technical assistance in the formulation of the implementing rules and regulations of RA 11954.
“The creation of this development fund is very good news because this means we now have an opportunity to expand our fiscal space for the government’s priority programs,” Pangandaman said. “Of course, we fully support this as it will help expand our fiscal space. So we at the DBM remain committed to helping ensure that this development fund will be a success and implemented with utmost integrity.”
Under RA 11954 , the MIF will be used to invest in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate and high-impact infrastructure projects that contribute to the attainment of sustainable development.
The establishment of the MIF will provide the government with a long-term source of income, as well as ease the burden on the national budget by providing additional funding for other priority projects of the government.
Speaker Martin Romualdez, who was among the officials who witnessed the signing, said the MIF will be an additional vehicle for financing big-ticket infrastructure projects without incurring more foreign debt or having to impose new taxes.
“As an additional vehicle for financing, the MIF is expected to widen the fiscal space in the near- to medium-term as it reduces heavy reliance on local funds and development assistance as the main financing mechanisms for infrastructure projects,” Romualdez said in a statement.
“It is envisioned to enable the government to execute and sustain high-impact and long-term economic development programs and projects without imposing new or higher taxes,” he added.
He said using the MIF as an alternative infrastructure funding source would likewise mean allocating more funds in the annual national budget for other vital social services like education and health.
He added that the MIF is not only beneficial but necessary at this point, describing it as an “ideal vehicle” that is well-positioned to bring in investments.
International investors have already expressed interest in investing in the Fund, such as the Japan Bank for International Cooperation and several US companies, Romualdez said.
“Certainly, there will be more interest once the MIF is officially launched. These investments mean more development projects in various parts of the country, more jobs and livelihood for the Filipinos, and a better future for generations to come,” Romualdez said.
Unlike other government-owned or -controlled corporations (GOCCs), the MIF will be able to maximize government assets through its investments in projects that generate bigger returns.
The law will establish the Maharlika Investment Corp. (MIC), which will act as the “sole vehicle for the purpose of mobilizing and utilizing the MIF for investments in transactions in order to generate optimal returns on investments (ROIs).”
The MIC is expected to have at least PHP75 billion in paid-up capital this year, with PHP50 billion sourced from the Land Bank of the Philippines and PHP25 billion from the Development Bank of the Philippines.
The law prohibits government agencies and GOCCs that provide for social security and public health insurance to contribute to and invest in the Fund.
These include the Social Security System, Government Service Insurance System, Philippine Health Insurance Corporation, Home Development Mutual Fund, Overseas Workers Welfare Administration, and Philippine Veterans Affairs Office pension fund.
The law mandates the Commission on Audit to conduct a special audit of the MIC’s books and accounts every five years.
All MIF and MIC documents will also be open, available, and accessible to the public, as may be allowed by law, in both English and Filipino. (PNA)