MANILA, Philippines – The Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) remitted their P75-billion contribution to the Maharlika Investment Corporation, infusing the controversial sovereign fund with start-up capital and paving the way for operations to start by the end of 2023.

According to Finance Secretary Benjamin Diokno, also the chairman of Landbank, the lender’s investment was already settled with the Bureau of the Treasury (BTr) on Thursday, September 14.

“​​We are witnessing a growing interest for investments in the MIF (Maharlika Investment Fund) from multilateral financial institutions and foreign investors. With the regulatory requirements in place, and after securing the seed capital from state-run institutions, we are confident that the fund will be operational by year-end,” said Diokno in a statement on Friday, September 15.

Meanwhile, the DBP also remitted its investment to the Maharlika fund on Friday, DBP President and Chief Executive Officer Michael de Jesus confirmed.

“We also remitted P25 billion today to the Bureau of [the] Treasury. All good,” De Jesus told Rappler.

The law establishing the Maharlika fund was signed on July 18 while the implementing rules and regulations (IRR) took effect only on Tuesday, September 12. (READ: FAST FACTS: What’s in the Maharlika fund’s implementing rules?)

Under the IRR, Landbank and the DBP are required to deposit P50 billion and P25 billion, respectively, with the BTr by Sunday, September 17. This, along with dividends from the Bangko Sentral ng Pilipinas, will form the initial capital for the Maharlika Investment Corporation.

At the same time, Diokno said nominations and applications for the corporation’s board of directors is ongoing. The deadline is on September 27.

The decision to set up a sovereign fund at a difficult time for the Philippine economy has proved divisive. Still, Landbank President and CEO Lynette Ortiz has defended it, saying that the law has incorporated enough “safety nets to ensure full disclosure and transparency in the management of the fund, as well as the integrity and professionalism of the management team that will be entrusted to lead the Maharlika Investment Corporation.” 

However, critics are still fearful that the establishment of the fund – a pet project of President Ferdinand Marcos Jr. – is seemingly being railroaded by the government.

The proposal to create the Philippines’ first sovereign fund was raised just in late 2022 when House Speaker Martin Romualdez and several other lawmakers, including presidential son Senior Deputy Majority Leader Sandro Marcos filed the bill in Congress. President Marcos then certified the bill as urgent, allowing the proposal to breeze through the House and the Senate. 

A strongly-worded discussion paper by the University of the Philippines School of Economics said the Maharlika fund “violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector – notwithstanding its proponents’ good intentions.” 

The criticism hasn’t stopped President Marcos from promoting the fund to investors. In the 2023 Asia Summit held in Singapore, Marcos said Maharlika would pool unused government money to fund investments without having to increase the country’s borrowings.

“It will be run as a fund. It is not run by the government. It is run by professional fund managers, and that is one of the main assurances that I had to give,” Marcos said during the summit on Wednesday, September 13. – Rappler.com