The establishment of the Philippines’ first-ever sovereign wealth fund is a timely and necessary measure to unlock the country’s growth potential in a period where rising interest rates weigh down global economic prospects, and pandemic-induced widening debt levels limit the capacity of governments to conduct fiscal stimulus. Its creation will stimulate the economy without the disadvantage of additional fiscal and debt burden, by leveraging on a small fraction of the considerable but underutilized investable funds of the country’s government financial institutions (GFIs) towards ventures that provide ripe opportunities for local and foreign capital to directly participate in. The MIF serves as an essential complement to recently passed economic liberalization legislations by providing credible and attractive platform for large global funds and other sovereign wealth funds to enter the Philippines.

Having the MIF opens the corridor for the Philippines to access the world’s sovereign wealth fund community and gain equity exposure to megatrends and cutting-edge technologies such as revolutionary vaccines or fintech, that are otherwise beyond the reach of government research and development if left to its own limited fiscal means.

The creation of the MIF supports, complements, and is consistent with the administration’s economic goals set in the Medium-Term Fiscal Framework, the 8-point Socioeconomic Agenda, and the Philippine Development Plan 2023-2028 as it will widen the country’s fiscal space and ease pressures in financing public infrastructure projects.

Specifically, its establishment aims to stimulate the country’s economic growth and social development by optimizing the use of government financial assets, promoting their intergenerational management, and advancing developmental objectives. The specific mandate or objective for the MIF may be categorized into two (2):

i. Development or strategic objective to promote sustainable economic development by making strategic and profitable investments in key sectors to preserve and enhance the long-term value of MIF. The developmental or strategic sub-fund which will be created in keeping with this objective will focus on profitable infrastructure which may be undertaken through public-private partnerships and co-investments with global financial institutions and multilateral partners, opening another corridor for foreign direct investments. No doubt, MIF will become an instrument for the acceleration of the implementation of the 194 NEDA-approved infrastructure projects. The MIF can be used for big-ticket infrastructure such as green and blue projects, countryside development, other employment-generating projects, and other emerging megatrends (e.g. environment, social, and governance (ESG), digitalization, and healthcare). Specifically included are public road networks, tollways, railways, green energy, water, agro-industrial ventures, and telecommunications. These critical areas offer better rates of return and greater socioeconomic impact.

ii. Commercial objective to obtain the optimal absolute return and achievable financial gains on its investments, and to satisfy the requirements of liquidity, safety, security, and yield in order to ensure profitability. The sub-fund created for this purpose may be invested in capital market assets like fixed-income securities and stocks.


i. Creates the Maharlika Investment Corporation (Section 4); Provides for adequate and appropriate funding sources (Section 6)

The Maharlika Investment Corporation (MIC) is created to act as the sole vehicle for mobilizing and utilizing the MIF. It shall have an authorized capital stock of 500 billion pesos (approximately 8.9 billion dollars), the 375 billion pesos of which shall have corresponding common shares available for subscription by the National Government, its agencies or instrumentalities, Government-Owned and Controlled Corporations (GOCCs), or GFIs. The remaining 125 billion pesos in capital shall have corresponding preferred shares available for subscription by the National Government, its agencies or instrumentalities, GOCCs or GFIs, and reputable private financial institutions and corporations. Of the 375 billion pesos capital with corresponding common shares, 125 billion pesos  (or about 2.2 billion dollars),  shall be initially subscribed from the investible funds of the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP), as well as the contributions of the National Government which include dividend remittances of the Bangko Sentral ng Pilipinas (BSP), the National Government’s share in PAGCOR’s  and other government-owned gaming operators’  and/or regulators’ income, privatization proceeds and transfer of assets, and other sources such as royalties and special assessments.

The MIF is designed to catalyze economic development by mobilizing government financial assets that are otherwise limited in use by current legal frameworks. Investment in the MIF is an investment diversification opportunity and a means to maximize returns for the two (2) founding GFIs. LBP’s investment to the MIC only accounts for around 3.7% of its investible funds; while DBP’s investment is equivalent to around 3% of its investible funds. These GFIs are very likely to earn more than what they are earning now considering that they are currently investing in conservative investments like government securities. These investments are reasonable and will not crowd-out other lending obligations that these GFIs need to fulfill under their respective mandates. In fact, the expected return of MIF which is estimated to be around 8.6% on average, is much higher than their cost of capital and the return in their current investment placements.

ii. Requires the MIC to implement sound and credible investment strategies consistent with the objectives of the MIF, taking into account the expectation for returns and risk tolerance and financial and commercial viability and sustainability.

The investment strategies will be subject to periodic review and stringent performance benchmarks – from portfolio to asset class through individual investment level.

iii. Imposes the adoption of sound and credible risk management strategies that will ensure that MIF is prudently managed.

The MIC is mandated to: adopt a long-term view through identification of projects that generate sustainable returns over the long term; mitigate risks through timely and adequate identification and management thereof; ensure balance sheet resilience; and invest in emerging megatrends (e.g., digitalization, ESG, and healthcare).

iv. Specifically enumerates allowable investments consistent with the mandates of the Fund (Article IV): cash, foreign currencies, metals, and other tradable commodities; fixed income instruments issued by sovereigns, quasi-sovereigns, and supranationals; domestic and foreign corporate bonds; listed or unlisted equities, whether common, preferred, or hybrids; Islamic investments, such as Sukuk bonds;  joint ventures or co-investments, mergers and acquisitions; mutual and exchange-traded funds invested in underlying assets; real estate and infrastructure projects; programs and projects on health, education, research and innovation, and other such investments that contribute to sustainable development; loans and guarantees to, or participation into joint ventures or consortiums with Filipino and foreign investors; and other investments with sustainable and developmental impact, as may be approved by the Board.

v. Requires and provides for a robust governance structure and effective operational systems (Article V).

The MIC will be:

a. Governed by a Board of Directors, composed of 9 members: Secretary of Finance as Chairperson, CEO of the MIC, President and CEO of the LBP, President and CEO of the DBP, two (2) Regular Directors, and three (3) Independent Directors from the private sector.

b. Guided by an Advisory Body composed of the Secretaries of the Department of Budget and Management (DBM) and National Economic and Development Authority (NEDA), and the Treasurer of the Philippines, on investment and risk management.

c. Assisted by a Risk Management Committee to ensure that the MIC is taking appropriate measures to achieve a prudent balance between risk and reward in both ongoing and new business activities.

vi. Required to adhere to the Santiago Principles and other internationally accepted standards of transparency and accountability.

vii. Mandated to adopt relevant and stringent financial reporting and audit systems to ensure transparency and accountability (Article VII).

The law imposes that financial reporting shall be in accordance with relevant International Financial Reporting Standards and principles, and that MIC shall be subject to strict examination and audit by numerous bodies – Audit Committee, Internal Auditor and External Auditor, and the Commission on Audit (COA). A Joint Congressional Oversight Committee is likewise created to evaluate the implementation of the law.

viii. Identifies offenses and provides steep penalties for violation thereof (Article IX).

The law provides for heavy fines ranging from 1 to 15 million pesos, and imprisonment term from 6 to 20 years for various offenses, such as willfully holding office while in possession of any disqualification, knowingly certifying the corporation’s financial statements despite its gross incompleteness or inaccuracy, willingly allowing oneself to be used for fraud, failure to sanction, report, or file appropriate action for graft and corrupt practices, among others.

Click here to read Republic Act No. 11954 otherwise known as the Maharlika Investment Fund Act of 2023

Click here to read the Implementing Rules and Regulations of the Maharlika Investment Fund Act of 2023


© Maharlika Fund 2023