What Happens Now that Maharlika Investment Fund Is a Law?
Signed into law this July 18.
(SPOT.ph) President Ferdinand “Bongbong” Marcos Jr. has officially signed the controversial Maharlika Investment Fund (MIF) into law on Tuesday, July 18, less than a week before his second State of the Nation Address (SONA).
The Maharlika fund, a name associated with his late father's presidency and mythmaking, will create the first sovereign investment fund that will allow the national government to invest in a wide range of assets—including foreign currencies, fixed-income instruments, corporate bonds, joint ventures, mergers and acquisitions, real estate, and infrastructure projects.
During the ceremony at the Malacañang Palace, Marcos said the Philippines is ready to enter "a new age of sustainable progress and robust stability" with the signing of this bill.
“For the first time in the history of the Philippines, we now have a sovereign wealth fund designed to drive economic development,” Marcos said. “Through the fund, we will leverage a small fraction of the considerable but underutilized investible funds... and stimulate the economy without the disadvantage of additional fiscal and debt burden.”
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What is the Maharlika Investment Fund?
In simpler terms, the MIF will allow the national government to access state money for investment ventures of choice without needing to take on foreign debt. After confessing that the sovereign wealth fund was his idea, Marcos stamped the bill as urgent. It was passed in Congress in December 2022 and in the Senate in May 2023.
The original version of the bill—HB No. 6398 filed by Imelda Marcos' nephew Martin Romualdez and Marcos' son Sandro, among others—received backlash from critics for including P125 billion funds from Government Service Insurance System (GSIS), P50 billion from Social Security System (SSS), and P25 billion from the national budget for the MIF. The House version was approved, 279-6, less than two weeks after the bill was filed.
Senate Bill No. 2020 addressed this, prohibiting government corporations that provide for social security and public health insurance to contribute to the MIF. These include, but are not limited to: GSIS, SSS, Philippine Health Insurance Corporation (PhilHealth), Home Development Mutual Fund (Pag-IBIG Fund), Overseas Workers Welfare Administration (OWWA), and Philippine Veterans Affairs Office (PVAO) pension fund.
Instead, they will source funds from state-run financial institutions, of which GSIS and SSS are still part of.
This final version received 19 affirmative votes, one negative vote from Senator Risa Hontiveros, and one abstention from Senator Nancy Binay.
The signing of the MIF Act will also establish the creation of the Maharlika Investments Corporation (MIC), which is expected to have a starting paid capital of P75 billion from Land Bank of the Philippines and Development Bank of the Philippines (DBP). The MIC will act as “the sole vehicle for the purpose of mobilizing and utilizing the MIF for investments in transactions to generate optimal returns on investments.”
During the signing ceremony, Marcos also mentioned he is not in favor of having the President or the Finance Chief to chair the MIC because the process of decision-making “will be colored by political considerations.”
“The fund goes beyond numbers or mere economic jargon. At its core, the MIF carries the dreams and aspirations of the Filipino people,” Marcos said.
What will this mean for the Philippines?
Prior to the signing of this bill, several economists have come forward to reject the MIF, claiming that it isn’t the right time for the Philippines to open up a sovereign wealth fund when national debt is currently at P13.7 trillion. An online petition by a De La Salle University professor David Michael San Juan received over 86,000 signatures to urge against the MIF.
Limiting funds from Land Bank and DBP would “drastically limit the funds [that] could lend to MSMEs (the backbone of our economy, in terms of job creation) and ordinary citizens,” San Juan wrote in his online petition.
This was a concern also shared by Hontiveros, who wrote in a press release: "The Philippines already has a high level of debt to finance government programs and no new sources of funds have come into consideration since the MIF discussions started. Instead of paying our debts, we are putting up an SWF, the effect of which is, the Philippines is borrowing more money for the SWF."
"Why weaken Land Bank and DBP by de-capitalizing them in favor of the MIF? I see no additional service by the MIF that DBP and Land Bank cannot render.”
Meanwhile, government officials have maintained that there are enough safeguards to protect the MIF.
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