FINANCE Secretary Benjamin Diokno said Tuesday that the newly-enacted Maharlika Investment Fund will serve as a vehicle for the economy’s further expansion in the years to come.
President Ferdinand Marcos Jr. signed into law on July 18, 2023 Republic Act No. 11954, otherwise known as the Maharlika Investment Fund (MIF) Act of 2023, establishing the Philippines’ first sovereign wealth fund aimed at boosting the country’s economic growth.
The fund is designed to catalyze economic development and accelerate the country’s growth by optimizing the use of government financial assets and promoting their intergenerational management.
The bill underwent a rigorous deliberation process in the Congress and was approved on May 31, 2023. The timely passage of the Philippines’ first sovereign wealth fund demonstrates the PBBM administration’s commitment to pursue its goals for economic growth.
“Congress passed a game-changing measure––the Philippines’ first-ever sovereign investment fund––that could accelerate infrastructure development in the country, create a lot of high quality jobs, attract more foreign investors, and propel the country towards higher growth,” Diokno said in a statement.
He said the establishment of the MIF will complement the government’s existing mechanisms to finance priority projects in pursuit of the government’s goals outlined in the Medium-Term Fiscal Framework (MTFF), 8-Point Socioeconomic Agenda, and the Philippine Development Plan (PDP) 2023-2028.
As an additional source of funding, the MIF is expected to widen fiscal space, ease the burden on local funds, and reduce reliance on official development assistance in funding big-ticket projects such as those specified in the recently approved Infrastructure Flagship Project list.
Within the MIF will be sub-funds classified according to objectives––one with a long-term horizon focused on investing in profitable infrastructure, and another sub-fund with a short- to medium-term horizon focused on investing in capital market assets such as fixed income securities and stocks.
The Maharlika Investment Corporation will be created to serve as the investment body responsible for the overall governance and management of the Fund and is expected to be fully operational by end-2024.
It will identify financially and commercially viable infrastructure projects to invest in and will formulate investment strategies covering emerging megatrends such as environment, social and governance (ESG), digitalization, and healthcare.
The MIC will be governed by a Board of Directors with nine members chaired by the Secretary of Finance. Other members include the chief executive officer of the MIC; the president and CEO of the Land Bank of the Philippines; the president and CEO of the Development Bank of the Philippines; two regular directors; and three independent directors from the private sector.
Within the MIC is an advisory body composed of the Secretary of the Department of Budget and Management, Secretary of the National Economic and Development Authority, and the Bureau of the Treasury that will assist the board of directors in the formulation of the general policies related to investment and risk management.
Other safeguards include the creation of a Risk Management Committee and an Audit Committee; engagement of Internal and External Auditors; a Joint Congressional Oversight Committee; and examination by the Commission on Audit.
The drafting of the MIF Act’s implementing rules and regulations is currently underway and will be finalized by September 2023.
Budget Secretary Amenah Pangandaman, for her part, said the DBM will continue to provide support and technical assistance in the formulation of the implementing rules and regulations and during the implementation of the said Act.
“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,” Pangandaman said.
In a previous joint statement, the economic team underscored how the MIF will allow the government to execute and sustain high-impact and long-term economic development programs and projects by widening the country’s limited fiscal space without imposing new taxes or being too reliant on foreign and domestic loans.
The economic team further believes that the MIF will sustain the country’s recent economic gains and accelerate socio-economic transformation by improving the country’s fiscal resilience.
Senate Bill 2020 was passed on May 31, 2023, while House Bill No. 6608 was passed on December 15, 2022.