Philippines Sovereign Wealth Fund: Marcos Says Not Suspended but Being Optimized
The Maharlika Investment Fund is the Philippines’ first sovereign wealth fund and remains a top priority for President Ferdinand “Bongbong” Marcos Jr. Seeking to assuage concerns that the fund may be put on hold, Marcos clarified in a briefing Thursday that his government was making improvements to aspects such as its organizational structure. The president also said he would be seeking out participation from Middle East countries as he headed to the ASEAN-GCC Summit in Saudi Arabia.
President Ferdinand Marcos Jr has confirmed that the establishment of the Philippines’ inaugural sovereign wealth fund will proceed, indicating that the government is presently refining certain regulations to optimize its functionality.
“The concept of the Maharlika Fund as a sovereign fund remains a good one and we are still committed to having it operational before the end of the year,” Marcos said at a briefing on October 19 before leaving to attend the ASEAN-Gulf Cooperation Council (GCC) Summit in Saudi Arabia. Marcos also indicated his intention to introduce the Philippines’ sovereign wealth fund to countries in the Middle East.
The Philippine head of state had expressed alarm upon learning that the government has temporarily paused the implementation of the Maharlika Investment Fund, as reported across various media. Marcos clarified that the establishment of the sovereign wealth fund is still advancing as planned, with the government solely focused on making improvements to its organizational structure. Given cross-party concerns since the inception of the fund, it appears the government is treading cautiously, and may be working on safeguards to promote transparency and accountability.
Marcos made these remarks following the disclosure of an executive memorandum signed by his Executive Secretary Lucas Bersamin. The memorandum indicated that Marcos had temporarily suspended the enforcement of the legislation he had authorized in July, citing the need for further examination.
“Upon the directive of the President, the treasurer of the Philippines, in coordination with the LBP (Land Bank of the Philippines) and DBP (Development Bank of the Philippines), is hereby directed to suspend the implementation of the IRR of RA (Republic Act) No. 11954.”: Executive Secretary Lucas Bersamin’s memorandum dated October 12.
We should not misinterpret what we have done as somehow a judgment on the rightness or wrongness of the Maharlika Fund. On the contrary, we are just finding ways to make it as close to perfect and ideal as possible. – President Ferdinand Marcos Jr
Background: Passage of the Maharlika Investment Fund into Law
The Maharlika Investment Fund (MIF) is the Philippines’ first sovereign wealth fund and an important domestic initiative from President Ferdinand Marcos Jr.
Marcos aims to continue efforts of the previous government to encourage investment in infrastructure projects, which will require raising massive capital.
The MIF genesis began November 2022, when seven members of the Philippine House of Representatives, including Sandro Marcos, the son of Marcos Jr., and Speaker Martin Romualdez, proposed having such a fund. This was received with a fair deal of political backlash and even met with opposition from Senator Imee Marcos, the president’s sister. Major concerns centered around corruption risks and the country’s already substantial fiscal deficit. Detractors and skeptics instead suggested the fund would make sense if the government had a budget surplus.
Nevertheless, after undergoing various amendments, the bill advocating for the MIF passed in December 2022. It received approval from both the Senate and House on May 31, 2023. Following some final edits made via Viber, a popular messaging service in the Philippines, the bill was forwarded to the president for his signature. On July 18, Marcos formally signed the bill into law.
The Maharlika Investment Fund is expected to gather funds from state-owned banks and government-controlled corporations, which will then be invested in various assets, including currencies, bonds, stocks, and infrastructure projects.
Philippines’ need for capital: Aspiration to become an upper-middle-income economy
The comments around the sovereign wealth fund come as infrastructure projects continue to get a heavy push from the Marcos Jr presidency.
Earlier in October, Marcos greenlit programs and projects with an approximate value of P269.7 billion for tourism projects and to address healthcare system deficiencies, as reported by the National Economic and Development Authority (NEDA). These are part of the flagship P9-trillion-worth ‘Build Better More’ campaign. The Philippines is especially keen to generate more high-quality jobs, an outcome pursued under the infrastructure program. The approved projects include the P4.5 billion rehabilitation of the Bohol-Panglao International Airport on PPP-mode and a dialysis center of the Baguio General Hospital and Medical Center, per media reports.
The previous president, Rodrigo Duterte, had pledged to usher in the Philippines’ ‘golden age of infrastructure’ with his flagship ‘Build, Build, Build (BBB)‘ program, which had a budget of US$162 billion. Under this initiative, his administration raised infrastructure expenditure from a 3.9 percent of the GDP at the commencement of his term in 2016 to 5.3 percent by the conclusion of his tenure in 2022.
Besides infrastructure development, other key priorities for the Marcos administration include poverty alleviation and enabling the Philippines to reach upper-middle-income economy status.
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