To fully understand the first sovereign wealth fund in the Philippines, let us take a closer look at the law that created it. Here are the summarized provisions and salient features of Republic Act No. 11954 or the Maharlika Investment Fund Act of 2023, signed by President Ferdinand R. Marcos Jr. on July 18, 2023. 

What is the Maharlika Investment Fund? 

Maharlika Investment Fund or MIF, just like any other investment funds around the world, refers to a pool of money or funds invested to a particular asset, item, company, or project with the goal of generating income or appreciation.

It  will be managed by the “Maharlika Investment Corporation.”

Maharlika Investment Corporation (MIC) is a corporate investment body that manages the MIF. It is a 9-member Board of Directors (BOD) which consists of the following:

1. Secretary of Finance – as the Chairperson in an ex-officio capacity
2. President and CEO of MIC
3. President and CEO of the Landbank of the Philippines 
4. President and CEO of the Development Bank of the Philippines 
5. Two (2) regular Directors, appointed by the President for a term of three (3) years
6. and Three (3) independent Directors from the private sector, appointed by the President for a term of one (1) year

Let us note that all members of the BOD shall secure a fidelity bond of P10 million before the start of their term. Then at the end of their term, regular and independent Directors shall be barred from employment for at least one (1) year.

Aside from the Board of Directors, an Advisory Board will also be created to provide guidance, counsel, and advice to the BOD. It will be composed of the following members:

1. Secretary of the Department of Budget and Management (DBM)
2. Secretary of the National Economic and Development Authority (NEDA)
3. and the Treasurer of the Philippines

There will also be a Joint Congressional Oversight Committee (JCOC) and is composed of fourteen (14) members from the House of Representatives and the Senate, each having 7 members. It will be co-chaired by the Chairpersons of the House on Banks and Financial Intermediaries and the Senate Committee on Banks, Financial Institutions and Currencies.

The MIC shall quarterly submit all investments, portfolio, and audit reports of the MIF to the JCOC. 

Aside from the strict examination from numerous bodies, an Audit Commitee, the Commission on Audit, and an internal and external auditors will conduct regular audit within the MIC and MIF. The internal auditor shall be appointed by the BOD, and will provide audit reports regularly. While the external auditor shall come from an internationally recognized auditing firm to conduct annual audit for three (3) consecutive years.

Where will the initial funds of MIF come from? 

The MIF will have an initial funding of P500 billion equivalent to five (5) billion shares.

1. Bangko Sentral ng Pilipinas – In two years, upon the effectivity of MIF Bill, 100 percent of BSP’s total declared dividends not exceeding P50 billion.
2. Government share in PAGCOR – For a period of five (5) years, the PAGCOR and all its government-owned gaming operators shall give 10 percent of its revenues, provided that the share intended for the Universal Health Care will not be diminished.
3. Department of Finance - Privatization and Management Office
4. Royalties and special assets
5. Properties, real and personal
6. Landbank of the Philippines – P50 billion, not exceeding 25 percent of their net worth
7. Development Bank of the Philippines – P25 billion, not exceeding 25  percent of their net worth

It can also be noted that according Article III, Section 12 of the law, that Government-Owned or Controlled Corporations (GOCCs) providing the social security public health insurance of the public such as Social Security System (SSS), Government Service Insurance System (GSIS), PhilHealth, Pagibig Fund, Overseas Workers Welfare Association (OWWA), and Philippine Veterans Affairs Office (PVAO) are absolutely prohibited to invest in MIF. 

Where will MIF be invested? 

1. Cash, foreign currencies, metals, and other tradeable commodities;
2. Fixed income instruments issued by sovereigns, quasi-sovereigns and supranational;
3. Domestic and foreign corporate bonds;
4. Equities;
5. Islamic investments such as Sukuk bonds;
6. Joint Ventures or Co-Investments, mergers, and acquisitions;
7. Mutual and exchange-traded funds;
8. Infrastructure projects;
9. Programs and projects on health, education, research, and innovation, 
10. Investments that promote sustainable development;
11. Loans and guarantees to Filipino or foreign investors
12. Investments in real estate, including agro-industrial estates and economic zones, estate infrastructure and other development projects

Within ninety (90) days after the bill was signed into law, the Treasurer of the Philippines together with the Government Financial Institutions, will create the Implementing Rules and Regulations (IRR) of this act that will state how the act will be implemented.

To stay updated on the first and only sovereign wealth fund in the Philippines, visit: https://maharlika.dof.gov.ph/ . 

(PIA-NCR/DOF)