Finance Secretary Benjamin Diokno encouraged business leaders in Saudi Arabia to consider the investment opportunities in the Maharlika Investment Fund (MIF) and Islamic finance in the Philippines.
Diokno said in a roundtable meeting on Oct. 19, 2023 at the St. Regis Hotel in Riyadh that the Marcos administration set its sights on establishing institutions for long-term investments.
He said MIF is in line with the administration’s 8-Point Socioeconomic Agenda for poverty reduction and Philippine Development Plan (PDP) 2023 to 2028 for deep economic and social transformation.
He said the Fund was designed to catalyze economic development and accelerate the country’s growth by optimizing the use of government financial assets and promoting their intergenerational management.
“To achieve this, Maharlika aims to attract capital from both domestic and global equity investors, including large funds here in the Middle East seeking to diversify its portfolio in fast-growing emerging markets like the Philippines,” Diokno said.
Investments in the fund will be used to fast-track the implementation of the Philippines’ some 197 high-impact infrastructure flagship projects (IFPs) worth around $153 billion, he said.
“The fund also presents exciting opportunities for green and blue investments, ESG-linked fixed-income instruments, and cutting-edge technologies with the advent of artificial intelligence and cloud computing,” he said.
Diokno also expressed optimism on working with other sovereign wealth funds to learn best practices from.
Governing the fund is the Maharlika Investment Corp. (MIC) which has an authorized capital stock of around $8.9 billion––$ 6.6 billion are common shares for subscription of the national government and its instrumentalities, while the remaining $2.2 billion are preferred shares open for subscription of the national government and reputable private financial institutions and corporations.
Private and state-owned financial institutions can make direct investments in the MIF’s sub-funds which offer specific investment strategies.
Diokno assured investors of the fund’s safeguards which were founded on the Santiago Principles that promote transparency, good governance, accountability and prudent investment practices.
Other mandatory safeguards are an internal and external auditor, a Joint Congressional Oversight Committee and the examination by the Commission on Audit (COA).
“We look forward to your partnership and investment as we proceed with the full operationalization of the fund by the end of 2023,” he said.
President Marcos said Thursday the MIF would be operational before the end of the year after a memorandum signed by Executive Secretary Lucas Bersamin earlier suspended the implementation of its IRR for further study.
Diokno also urged investors to tap into the diverse investment opportunities in the Philippines’ Islamic finance sector, saying it would drive economic growth and prosperity for all Filipinos.
The Bangko Sentral ng Pilipinas (BSP) adopted a single regulatory framework for both Islamic and conventional banks, enabling them to thrive on a level playing field.
The Bureau of Internal Revenue (BIR) and Insurance Commission (IC) also made efforts to support the development of Islamic finance by issuing policies on tax neutrality and takaful (Islamic insurance).
There were 217 unbanked cities and municipalities located in Mindanao as of March 31, 2023. This presents an opportunity for investors to tap into the Muslim market while closing the financial inclusion gap, Diokno said.
Islamic banking in the country operates under the guidance of the Shari’ah Supervisory Board (SSB) which issues Shari’ah opinions on Islamic banking transactions and Shari’ah products, as well as financial institutions and other stakeholders as requested by the BSP.
The roundtable event was organized by the Ministry of Investment of Saudi Arabia and the Philippine Department of Trade and Industry (DTI). It was the first in the series of activities to be attended by the President at the Association of Southeast Asian Nations (ASEAN) – Gulf Cooperation Council (GCC) Summit from October 19 to 21, 2023.
The ASEAN-GCC Summit aims to advance mutual interest in areas such as energy security, food stability, and economic cooperation, among others. Saudi Arabia, Oman, Qatar, Bahrain, Kuwait and the United Arab Emirates (UAE) are GCC nations that have established ties since 1990.