The Bureau of the Treasury has released the implementing rules and regulations for the Maharlika Investment Fund (MIF) Act of 2023 which sets the stage for the establishment of the country’s first sovereign wealth fund by September 12.
“The MIF will serve as a crucial financing mechanism to widen fiscal space, ease the burden on local funds, and reduce reliance on official development assistance (ODA) in funding big-ticket
projects such as those specified in the recently approved Infrastructure Flagship Project list,” Diokno said.
The Maharlika Investment Corp. (MIC), which serves as the sole entity responsible for mobilizing and utilizing the MIF, will initially be capitalized with P125 billion.
The national government will contribute P50 billion, while the Land Bank and DBP will provide P50 billion and P25 billion, respectively, within five days of the IRR’s implementation.
“We will pursue public road networks, tollways, railways, green energy, water resources, agro-industrial ventures, and telecommunications. These critical areas offer high rates of return and significant socioeconomic impact. The MIF can also be used for green and blue projects, countryside development, and emerging megatrends such as ESG or environment, social, and governance and cutting-edge technologies,” Diokno said.
The national government shall source its P50 billion contribution from 100 percent of the dividends of the Bangko Sentral ng Pilipinas for the first and second fiscal years; its 10 percent share from the income of the Philippine Amusement and Gaming Corp. (PAGCOR) for a period of five years; 10 percent of revenues from gaming operations of other government-owned gaming operators/regulators; government assets and proceeds from privatization of government assets; and other sources such as royalties and/or special assessments for a period of five years.
Other GFIs and government-owned and controlled corporations (GOCCs) may invest in the MIF as well, subject to their respective investment and risk management strategies.
However, those providing social security and public health insurance services are absolutely prohibited from investing in the MIF.
As enumerated under section 14, the MIC is authorized to invest in a wide range of products, activities, and projects: Cash and other tradable commodities; Fixed income instruments issued by sovereigns; Domestic and foreign corporate bonds; Listed or unlisted equities; and Islamic investments, such as Sukuk bonds, among others. (See full story online at manilastandard.net)
“Our non-deal roadshows abroad show that the MIF is being well-received by foreign institutions looking to invest in the Philippines. The private sector will play a huge role in bringing in funds to grow the MIF,” Diokno said.
The MIC may issue all kinds of bonds, debentures, and securities. However, these will not be guaranteed by the Philippine government. The MIC’s board of directors will be composed of the Secretary of Finance as ex officio chairperson; the president and chief executive officer of the MIC as vice chairperson; president and CEO of the LBP; president and CEO of the DBP; two regular directors; and three independent directors from the private sector.
The board’s qualification and selection process are explicitly set out in the IRR. “The success of the implementation of the Maharlika Investment Fund hinges on the selection of the best people to oversee and manage the Fund and strict compliance with the provisions of the law.
This is why we made sure to include all possible safeguards in the IRR, ensuring that all our bases are covered,” Diokno said. National Treasurer Rosalia de Leon said the Maharlika Investment Fund Act’s IRR is faithful to the law to ensure that the prescribed procedures and guidelines will lead to its harmonized application.