It may be unfair to gauge the performance of the country’s sovereign wealth fund this early. Barely two and half years since its started operations in July 2023, the Maharlika Wealth Fund (MWF) will understandably show no jaw-dropping returns yet on investments.
Its investment direction at this stage will be the more relevant topic of discussion. This strategy should be measured against its objective of “national development,” and not by investment returns alone.
There have been initial investments made by Maharlika Investment Corp. (MIC), which runs the Philippines’ first sovereign wealth fund.
The fund’s initial investments generally cover infrastructure, energy, mining, climate, social infrastructure such as healthcare, digital infrastructure and agriculture.
MIC plans to invest its initial P125-billion fund this year in energy, logistics, agriculture and mining ventures, focusing on assets that address structural bottlenecks in the economy and expand export capacity.
MIC president and chief executive Rafael Consing Jr. said the institution would invest to clear up chokepoints that are impeding economic growth.
“By marrying ‘intelligent capital’ with national imperatives, MIC will contribute to a more diversified and resilient Philippine economy,” says Consing.
MIC, thus, is investing to upgrade and modernize electricity infrastructures in rural areas and target agricultural enterprises with strong export potential and large workforce.
Investing in promising agri-businesses is a key priority for the fund.
“Our goal is to back companies ready to scale—providing the resources to improve efficiency and increase export volume, which in turn secures and generates vital employment,” says Consing.
The fund is diversifying its portfolio through mining investments, focusing on responsible extraction and domestic processing.
MIC also recently bought a stake in Asian Terminals Inc. to expand its exposure to logistics infrastructure and is lining up investments in the next six months.
MIC vice president for investments Kheed Ng said the agency had a “robust” pipeline of deals that the public could expect to see soon.
“In the next six months you can expect some deals to come through that the public will be quite happy with,” Ng said, adding these investments are expected to support nation-building.
MIC chief legal officer Paul Salanga says any investment should contribute to national development. “It’s quite important that there is a national development impact. It’s not just a matter of returns,” he said.
MIC is also taking a strategic role in electricity transmission. It is finalizing its acquisition of a 20-percent stake in National Grid Corporation of the Philippines (NGCP).
MIC earlier signed an agreement with Synergy Grid and Development Philippines Inc. (SGP) to acquire the 20 percent stake in NGCP.
Under the deal, MIC will purchase preferred shares in SGP, which holds a significant 40.2-percent effective ownership in NGCP, the operator of the country’s power grid.
It is a critical step for the government to regain control over the nation’s vital power infrastructure.
NGCP has had full control over the management and operation of the nationwide transmission system since 2009 under a 25-year concession granted by Congress.
Investing in the electricity distribution sector, especially in rural areas, is one way of raising the income in the countryside.
MIC in December last year teamed up with the National Electrification Administration (NEA), the provincial government of Palawan and the Palawan Electric Cooperative (Paleco) to modernize power distribution infrastructure and address perennial brownouts in the island province.
MIC’s role involves assessing Paleco’s current power infrastructure to determine cost-efficient improvement strategies. MIC may then invest in modernization projects based on the study’s results.
“We cannot maintain a first-world reputation on third-world power infrastructure,” says Salanga.
The deal is a significant step toward stabilizing the energy supply in Palawan, a key tourist destination. A more reliable electricity supply will improve public services and fuel sustainable economic growth in the province.
MIC last year also entered a similar deal with NEA to improve the electricity infrastructure in Oriental Mindoro and Occidental Mindoro provinces.
The wealth fund manager, in addition, signed an agreement with Clark International Airport Corp. (CIAC) to explore investments in Clark National Food Hub and other projects.
The Maharlika Wealth fund may not yet be in the league of the world’s largest sovereign wealth funds, like the Norway Government Pension Fund Global, which is valued at $2.04 trillion, or China Investment Corp. with $1.33 trillion and the Abu Dhabi Investment Authority with $1.12 trillion.
But the Philippine wealth fund is taking baby steps in trying to reach its national development goals.
E-mail: rayenano@yahoo.com or extrastory2000@gmail.com
