President Ferdinand Marcos Jr. on Thursday said the Maharlika Investment Fund (MIF) will be operational before the year ends despite his recent order to suspend its implementation.
“The concept of the Maharlika Fund as a sovereign fund or an investment fund — the concept remains a good one and we are still committed to having it operational before the end of the year,” the President said in a speech before departing for a summit in Riyadh, Saudi Arabia.
“I was a bit alarmed by the news reports early this morning that I read in the newspapers that we have put the Maharlika Fund on hold. Quite the contrary,” the President said.
“The organization of the Maharlika Fund proceeds at a pace. And what I have done though is that we have found more improvements that we can make specifically to the organizational structure of the Maharlika Fund,” he added.
The President said people should not misinterpret the suspension of MIF and pass judgment on its “rightness or wrongness.”
He said he had consulted with various economic managers and personalities that would be involved in the sovereign wealth fund.
“This has been in consultation not only with our economic managers but also with the people, the personalities who will actually be involved in the fund. And that’s why their inputs have been very important and that is why we are now going to utilize them to make it a better organization,” Mr. Marcos said.
The President is on his way to participate in the ASEAN-GCC Summit in Riyadh, Saudi Arabia.
“One of the important aspects of this trip will be for us to introduce the Maharlika Investment Fund to the rest of the world and certainly more specifically to the Middle Eastern countries,” the President said.
Meanwhile, Senator Francis Escudero said the MIF Act can no longer be scrapped since it is already a law.
However, the President has a choice on the laws that will be implemented and funded.
Escudero said there are five trillion pesos worth of laws that have not been implemented due to lack of funds.
“So if he was not really convinced on this (MIF), it’s just simple–he should not fund it,” he said.
He added that there is nothing wrong about studying and scrutinizing the sovereign wealth fund.
He also advised the Land Bank and Development Bank of the Philippines (DBP) to take back the funds for the MIF which they put in the National Treasury.
In the first place, Escudero said, the banks should not have given out the money as the Maharlika Investment Corp. had not yet chosen its chief executive and board members. There were also no implementing rules and regulations (IRR) at the time.
Escudro said the MIF Act lacked direction.
“As I said, where will they invest?” he asked.
An economist on Thursday said the Land Bank and DBP seeking regulatory relief from the central bank was one reason the Palace suspended its IRR.
“That’s one of the triggers for the review of the IRR,” said Rizal Commercial Banking Corp. chief economist Michael Ricafort.
“It might be prudent to review [it], amid [the] mandate on economic development… and the effect on the capital adequacy ratio of the government banks that contributed to the fund,” Ricafort said.
Ricafort said the review could be a balancing act on sound banking regulation. Most importantly, Ricafort said the review might be needed for fine-tuning “since it [MIF] was rushed.”
Ricafort added that “openness to change is a good thing.”
For his part, Security Bank Corp. economist Robert Dan Roces said as with any financial institution, risks don’t disappear even if regulatory relief is granted.
“They may simply be deferred or mitigated [the problem] to some extent, thus the need to take proactive steps to rebuild its capital base and ensure long-term stability,” Roces told Manila Standard.
He said the DBP and Land Bank probably sought some time to rebuild their capital adequacy ratio while servicing the MIF.
Bangko Sentral ng Pilipinas Governor Eli Remolona said last week that the two state-run banks remained compliant in terms of capitalization even after they remitted their contribution to the MIF.
“In principle, we can provide forbearance…,” Remolona said, as he confirmed that the two state-owned bnaks sought regulatory relief.
Budget Secretary Amenah Pangandaman said Thursday that the MIC advisory body subscribes to the wisdom of the President in suspending the IRR of the MIF.
“This is not just an economic strategy for us but a historic first sovereign investment fund. The economic team will work closely with the President to prudently review all provisions line by line and make sure that all things are in order,” Pangandaman said in a Viber message.
“We will also take this opportunity to engage in more multi-stakeholder groundwork in preparation for the launch of the MIF,” she said.
An Oct. 12 memorandum signed by Executive Secretary Lucas Bersamin directed the Bureau of Treasury (BTr), in coordination with LandBank and DBP, to suspend the implementation of the IRR of RA 11954 or the MIF Act of 2023 pending further study thereof.
The advisory body of the fund—composed of the heads of the Budget Department, the National Economic and Development Authority and the Bureau of the Treasury—has already transmitted the final list of MIC nominees to the Office of the President.
MIC has a nine-member board of directors which consists of the secretary of Finance as the chairperson in an ex-officio capacity; president and CEO of MIC; president and CEO of the Land Bank of the Philippines; president and CEO of the Development Bank of the Philippines; two regular directors, appointed by the President for a term of three years; and three independent directors from the private sector, appointed by the President for a term of one year.
Also on Thursday, the vice chairman of the House appropriations committee, Aklan Rep. Teodorico Haresco Jr., said the President must have “good reasons” to make sure there are safeguards built into the MIF.
He said that “that is the stewardship role expected of him.”