Senator Mark Villar, Chairperson of the Committees on Banks, Financial Institutions and Currencies, sponsored on March 20, 2023 Committee Report No. 58, recommending the approval of Senate Bill No. 2020 or the proposed Maharlika Investment Fund (MIF) Act in plenary session.
“As the Philippines’ first-ever sovereign wealth fund, it is designed to catalyze economic development by mobilizing government financial assets that are otherwise limited in use by current legal frameworks,” said Senator Villar in his sponsorship speech.
The MIF will support the Marcos Jr. administration’s economic goals set in the Medium-Term Fiscal Framework (MTFF), the 8-point Socioeconomic Agenda, and the Philippine Development Plan (PDP) 2023-2028 by providing the needed financial support to implement big ticket infrastructure and employment-generating projects.
Senator Villar argued that the MIF will quicken the implementation of NEDA-approved infrastructure projects related to green and blue projects, countryside development, and other employment-generating projects.
On March 9, the National Economic and Development Authority (NEDA) Board, chaired by President Ferdinand Marcos, Jr., approved the new Infrastructure Flagship Project (IFP) list, which contains 194 high-impact infrastructure projects.
These include projects in public road networks, tollways, green energy, water, agro-industrial ventures, and telecommunications that offer high returns on investments and have a great socioeconomic impact on the economy.
“Having our own sovereign wealth fund will grant us access to the world’s sovereign wealth fund community, which is abundant in opportunities for co-financing and knowledge transfer,” he added.
The initial capitalization of the Maharlika Investment Corporation (MIC) will come from the investible funds of the Land Bank of the Philippines, the Development Bank of the Philippines, and National Government (NG) contributions such as dividend remittances of the Bangko Sentral ng Pilipinas (BSP), the NG’s share of PAGCOR’s income, and proceeds from privatization and the transfer of assets.
Other sources such as royalties and special assessments may also be tapped.
The MIF will adhere to the Santiago Principles, which pertain to the generally accepted principles and practices to ensure the effective operations of sovereign wealth funds globally, and will be governed by the relevant investment and risk management guidelines.
The MIC will be governed by a Board of Directors with 9 members:
● Chairperson – Secretary of Finance
● Vice Chairperson – CEO of the MIC
● President and CEO of LANDBANK
● President and CEO of DBP
● Two (2) regular directors
● Three (3) independent directors from the private sector
Under the bill, the economic team, represented by the Department of Budget and Management Secretary, NEDA Secretary, and the Treasurer of the Philippines, will serve as members of the Advisory Board. The Board will work closely with the Fund’s administrators to ensure compliance with proper financial reporting and auditing standards.
The Board will also ensure that investment decisions are aligned with fiscal and monetary policies.
The committee report has removed the exemptions and privileges contained in the originally filed bill. The transactions and assets of the MIC and MIF shall be subject to local and national taxes.
Finally, the MIF will be governed by the Government Procurement Reform Act and its rules, and shall be subject to the provisions of the GOCC Governance Act of 2011.
“Ultimately, the Philippines will benefit from a well-structured, robust, and effective sovereign wealth fund. The Maharlika Investment Fund has the potential to attract foreign investments, boost national savings, and advance economic growth for Filipinos across generations. And with that, I would like to solicit your full support for the passage of this bill,” Senator Villar said in closing.