President Ferdinand R. Marcos, Jr.
signed into law Republic
Act No. 11954, otherwise
known as the Maharlika
Investment Fund (MIF)
Act of 2023, establishing
the Philippines’ first sovereign wealth fund aimed
at boosting the country’s
economic growth, on July
18, 2023 at the Malacañan
Palace in Manila.
The Fund is designed to catalyze economic development and
accelerate the country’s
growth by optimizing the
use of government financial assets and promoting their intergenerational
management.
The bill underwent a rigorous deliberation process in the Congress and was approved
on May 31, 2023. The
timely passage of the
Philippines’ first sovereign
wealth fund demonstrates
the PBBM administration’s
commitment to pursue
its goals for economic
growth.
“ C o n g r e s s
passed a game-changing
measure––the Philippines’
first-ever sovereign investment fund––that could accelerate infrastructure development in the country,
create a lot of high quality
jobs, attract more foreign
investors, and propel the
country towards higher
growth,” Finance Secretary Benjamin E. Diokno
said.
The establishment of the MIF will complement the government’s
existing mechanisms to
finance priority projects
in pursuit of the government’s goals outlined in
the Medium-Term Fiscal Framework (MTFF),
8-Point Socioeconomic
Agenda, and the Philippine Development Plan
(PDP) 2023-2028. As an
additional source of funding, the MIF is expected to
widen fiscal space, ease
the burden on local funds,
and reduce reliance on
official development assistance in funding big-ticket
projects such as those
specified in the recently
approved Infrastructure
Flagship Project (IFP) list.
Within the MIF
will be sub-funds classified
according to objectives––
one with a long-term horizon focused on investing
in profitable infrastructure,
and another sub-fund with
a short- to medium-term
horizon focused on investing in capital market assets such as fixed income
securities and stocks.
The Maharlika
Investment Corporation
(MIC) will be created to
serve as the investment
body responsible for the
overall governance and
management of the Fund
and is expected to be fully
operational by end-2024.
It will identify
financially and commercially viable infrastructure
projects to invest in and
will formulate investment
strategies covering emerging megatrends such as
environment, social and
governance (ESG), digitalization, and healthcare.
The MIC will be
governed by a Board of
Directors with nine (9)
members chaired by the
Secretary of Finance.
Other members include
the Chief Executive Officer (CEO) of the MIC; the
President and CEO of the
Land Bank of the Philippines; the President and
CEO of the Development
Bank of the Philippines
(DBP); two (2) Regular Directors; and three (3) Independent Directors from the
private sector.
Within the MIC
is an Advisory Body composed of the Secretary of
the Department of Budget
and Management (DBM),
Secretary of the National
Economic and Development Authority (NEDA),
and the Bureau of the
Treasury (BTr) that will assist the Board of Directors
in the formulation of the
general policies related to
investment and risk management.
Other safeguards
include the creation of a
Risk Management Committee and an Audit Committee; engagement of
Internal and External Auditors; a Joint Congressional
Oversight Committee; and
examination by the Commission on Audit (COA).
The drafting of
the MIF Act’s implementing rules and regulations
(IRR) is currently underway and will be
