WITH his signing of Republic Act 11954 or the Maharlika Investment Fund (MIF) Act on Tuesday, President Ferdinand R. Marcos Jr. said the government can now generate additional revenue, while accelerating economic growth through increased investments from the creation of the country’s first sovereign fund.
Besides citing its safeguards against abuse, he also vowed to spare it from politics.
The signing ceremony of RA 11954 was held at the Kalayaan Hall in Malacañang amid criticisms from
some groups that it will expose government funds to possible misappropriation.
In his speech during the event, the President said the MIF will allow the government to leverage its “underutilized fund” to stimulate the economy without the disadvantage of incurring fiscal and debt burden.
“The MIF is a bold step towards our country’s meaningful transformation just as we are recovering from the adverse effect of the pandemic. We are now ready to enter a new age of sustainable progress, robust stability and broad-based empowerment,” Marcos said.
The MIF will allow the government to invest its surplus revenues in financial and real assets to its priority sectors, namely, agriculture, energy, digitalization, and climate change mitigation.
It will have a P75-billion paid-up capital this year, to be sourced from state-run Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP).
Marcos said the fund will help the government reach its target of attaining gross domestic product (GDP) growth of 6 to 8 percent by helping in the financing of the government’s 194 flagship infrastructure projects with an estimated cost of P8 trillion.
“The establishment of a sovereign wealth fund will widen the government’s fiscal space and ease pressure in financing public infrastructure projects,” Marcos said.
The government also projects 8.6-percent average annual returns from the MIF.
“We now have a fund which will itself make money and that will increase its capacity and capability to invest in all of these extremely important projects,” Marcos said.
Marcos assured the MIF will be well-managed and free from “political decisions.”
“We removed the political decisions from the fund and those political decisions are left with the political bureaucracy, and the fund is left to be a fund and operating on a sound and proactive financial basis,” Marcos said.
In an ambush interview when he graced the launch of the food stamps program later, the President stressed, “no political considerations should be part of it,” and all decisions made by the Fund officers will be based solely on “what’s good for the Fund.”
The fund will be managed by the 9-man board of the Maharlika Investment Corporation (MIC).
The members of the board include the Secretary of Finance, the president and CEO of LBP, president and CEO of DBP, two regular directors, and three independent directors from the private sector.
Finance Secretary Benjamin E. Diokno said he will only serve as an ex-officio member of the MIC board and will “not run” the MIF.
“The Independent Chairperson of the 9-member Maharlika Investment Corporation, a non-politician, will manage the Fund,” said Diokno, whose potential role in the Fund was earlier criticized by some economists who warned of a conflict of interest.
Diokno also noted there are multiple safeguards in RA 11954 to protect the MIF from misuse.
The MIF, he said, will also undergo multiple audits from internal and external auditors, the Commission and Audit and an oversight committee from Congress to ensure its proper and transparent utilization.
“So it will really have tight accountability requirements,” Diokno told reporters after the signing ceremony of RA 11954.
The new law, he said, likewise bans government agencies and government-owned or -controlled corporations (GOCC), which provide social security and public health insurance such as the Social Security System (SSS) and the Government Service Insurance System (GSIS), and Overseas Workers Welfare Administration (OWWA), from investing in the MIF.
The provision aims to address the opposition by some groups to allowing state-run pension funds to invest in the MIF.
RA 11954 also imposes heavy fines ranging from P1 million to P15 million and imprisonment term from 6 to 20 years for those engaged in graft and corrupt practices in the management of the MIF.
Diokno said they expect to come out with the implementing rules and regulations (IRR) for RA 11954 before the end of September.
“So it will be operational before the end of the year,” Diokno said.
Marcos said he looks forward to the rollout of the MIF to boost the country’s economic competitiveness, which will translate to improved living standards for Filipinos.
“The real challenge is to maintain the integrity of the fund, translate its gains into tangible changes for the benefit of all,” Marcos said.
Image credits: Rolando Mailo/NIB-PNA