Marcos signs Maharlika Investment Fund, will not lead it

PRESIDENT FERDINAND Marcos Jr. has signed the controversial Maharlika Investment Fund (MIF) Act of 2023 in Malacañan Palace, thus putting up the Philippines’ first-ever sovereign wealth fund that will support the Administration’s economic goals.

“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.

With the recent signing of Republic Act (RA) No. 11954 into law, the country will have the capacity and capability to invest in all of these extremely important projects such as agriculture, infrastructure, digitalization as well as strengthening the value chain.

Government financing institutions will now pool together non-debt financial resources as to not crowd out other lending obligations that they need to fulfil under their respective mandates. Moreover, the fund has the potential to funnel in external financing, reducing the government’s burden to finance infrastructure through borrowings, taxes.

“The establishment of a sovereign wealth fund will widen the government’s fiscal space and ease pressure in financing public infrastructure projects,” Marcos said. “Through the fund, we will accelerate the implementation of the 194 National Economic and Development Authority Board-approved, NEDA-approved, flagship infrastructure projects.”

But the real challenge, Marcos said, is maintaining the integrity of the fund and translating its gains into tangible changes for the benefit of all. He assured the public that the fund will be managed by highly competent personnel with a good track record and outstanding integrity.

“We remain steadfast in our commitment to transparency, accountability, and good governance in this massive and purposeful undertaking. I assure you that the resources entrusted to the fund are taken care of with utmost prudence and integrity,” he said.

Following the MIF Act signing, the Administration is set to prepare the implementing rules and regulations for the creation of the Maharlika Investments Corp. (MIC), which will be the sole vehicle for mobilizing and utilizing the MIF for investments.

The MIC is expected to have at least P75 billion in paid-up capital this year, with P50 billion sourced from the Land Bank of the Philippines and P25 billion from the Development Bank of the Philippines. The Fund will be invested 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, and projects related to sustainable development.

No way

Marcos also said that he turned down proposals to be part of the MIF, saying that it must be run by competent and independent financial managers to insulate it from political interference. He said he was watching the hearings and debates in Congress about how the fund is supposed to function, with some suggesting for him to be put at the helm of the fund.

“And immediately I removed… I said I’m not in favor of having in the original iteration, the President was the chairman of the (MIF). Sabi ko, ‘no, you remove us. Then, there was the Secretary of Finance, no. Because inevitably, if you put me or the Secretary of Finance in the decision-making loop, those decisions will be colored by political considerations and that must not be the case,” he said.

Under RA 11954 or the Act Establishing the MIF, the Secretary of Finance is merely the ex officio chairperson and will not run the Fund. It will be governed by the nine-member MIC chaired by an Independent Director.

According to Marcos, the only way for the fund to succeed is to free it from political interference, as the government looks at potential investments and fund operation in a cold-calculating manner. He expressed confidence that the government can find all the competent people that can handle the fund properly, as long as it is well-organized structurally.

“Structurally, we removed the political decisions from the fund and those political decisions are left with the bureaucracy, the political bureaucracy, and the fund is left to be a fund and operating on a sound and proactive financial basis,” he pointed out. “The point being, as long as we manage it properly and I contend that we have some of the best economic managers both in government and in the private sector that we can count on to run this fund properly.”

Finance Secretary Benjamin Diokno said Marcos was stating his preference that he or his Finance chief should not head the sovereign investment fund.

“Even at the early stage of the formulation of the sovereign investment fund, the President was clear: he didn’t want to politicize the Fund. He rejected the proposal to make him the Chairman of the Board of Directors of the Fund,” Diokno said.

Other senators and economists are opposed to the MIF saying this ran contrary to the principles of fiscal prudence, pension fund solvency, good governance and transparency. (Mindanao Examiner)