BBM set to sign Maharlika Fund law

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  • President Ferdinand “Bongbong” Marcos Jr. is set to sign into law the creation of the first sovereign

    wealth fund of the Philippines.

    Finance Secretary Benjamin Diokno, the Marcos administration’s chief economic manager, said the
    Maharlika Investment Fund (MIF) is expected to be operational before the end of the year.

    The Maharlika Fund bill was approved on May 31, 2023 by Congress.

    The House of Representatives adopted the Senate version during the bicameral conference committee
    meeting, and President Marcos, or popularly known as BBM, will sign it into law before he delivers his
    second State of the Nation Address on July 24.

    Once enacted into law, Diokno said, “We’re expected to prepare the IRR [implementing rules and
    regulations]. We’re expected to look for people to man the MIC [Maharlika Investment Corporation].”

    The MIC, a governmentowned company, will manage the sovereign wealth fund, MIFa pool of funds
    sourced from staterun financial institutions that will be invested in highimpact projects, real estate, as
    well as in financial instruments.

    “That’s the direction and I see this to be fully operational before the end of the year,” the Finance chief
    said.

    The MIF bill states that the Maharlika Fund would be created using: P50 billion from the Land Bank of
    the Philippines (LBP); P25 billion from the Development Bank of the Philippines (DBP); and P50 billion
    from the National Government.

    The contribution from the national government would come from the following sources: Bangko Sentral
    ng Pilipinas’ total declared dividends, National government’s share of the income of PAGCOR

    Properties, real and personal identified by the DOFPrivatization and Management Office, and other
    sources such as royalties and/or special assessments.

    Diokno said that the MIF would have an initial capitalization of P75 billion by the end of the year, which
    would come from Landbank and DBP.

    For her part, National Treasurer Rosalia de Leon said that while the MIC has an authorized capital stock
    of P500 billion, the initial paidup capital of P75 billion may already be invested in several ventures or in
    the capital markets.

    Diokno said that the MIF bill provides the necessary safeguards to maintain transparency, accountability,
    fund integrity, and robust risk management.

    Among the major amendments introduced to the bill was the absolute prohibition of the use of funds
    from the Government Service Insurance System (GSIS), the Social Security System (SSS), the Philippine
    Health Insurance (PhilHealth) Corporation, PagIBIG, the Overseas Workers Welfare Administration
    (OWWA), and the Philippines Veterans Affairs Office (PVAO) in the capitalization and investments in the
    Maharlika Fund.

    The Bureau of the Treasury and the Department of Budget and Management have said that the MIF will
    free up the government’s fiscal space as the burden of borrowing to fund infrastructure projects will be
    unloaded to the sovereign wealth fund.

    The MIF will be the Philippines’ firstever sovereign wealth fund that will optimize national funds by
    generating returns to support the BBM administration’s economic goals as set in the MediumTerm
    Fiscal Framework (MTFF), the 8point Socioeconomic Agenda, and the Philippine Development Plan
    (PDP) 20232028.

    The Fund will be invested in a wide range of assets, including foreign currencies, fixedincome
    instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate
    and highimpact infrastructure projects, and projects that contribute to the attainment of sustainable
    development.

    The establishment of the MIF will provide the government with a longterm source of income that will
    support generations to come. It will also ease the burden on the national budget by providing additional
    funding for other priority projects of the government.

    Unlike other GovernmentOwned or Controlled Corporations (GOCCs), the MIF will be able to maximize
    government assets through its investments in projects that generate bigger returns.

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