Maharlika fund

Marcos glosses over Maharlika Investment Fund’s political risks

Ralf Rivas

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Marcos glosses over Maharlika Investment Fund’s political risks

MAHARLIKA LAW. President Ferdinand Marcos Jr. delivers his speech after he signed Republic Act 11954 or the Maharlika Investment Fund Act at Kalayaan Hall in Malacau00f1ang on July 18, 2023.


President Ferdinand Marcos Jr. says the Maharlika Investment Fund will not be 'colored by political considerations,' even though its members are presidential appointees

MANILA, Philippines – President Ferdinand Marcos Jr. did not tackle the contentious provisions of the Maharlika Investment Fund Act in his speech after he signed the bill into law on Tuesday, July 18, saying that the wealth fund would not be “colored by political considerations.”

After the signing of the law in Malacañang, Marcos emphasized that he ordered the removal of the original declaration of the bill where the president was the chairman of the Maharlika Investment Corporation (MIC), the entity that would manage the P500-billion fund.

“Inevitably, if you put me or the secretary of finance in a decision making loop, those decisions will be colored by political considerations, and that must not be the case,” Marcos said.

“We have to look at any potential operation of the fund in a cold, calculating manner,” he added.

Marcos, however, did not mention that the president is empowered to appoint all members of the MIC’s board, including “independent” directors. The secretary of finance is also part of the MIC structure as chair.

The MIC will be governed by the board of directors with nine members chaired by the secretary of finance. Other members include the chief executive officer (CEO); the president and CEO of the Land Bank of the Philippines; the president and CEO of the Development Bank of the Philippines; two regular directors; and three independent directors from the private sector.

Within the MIC is an advisory body composed of the secretary of the Department of Budget and Management, secretary of the National Economic and Development Authority, and the Bureau of the Treasury that will assist the board of directors in crafting general policies related to investment and risk management.

The MIC board approves and implements investments and asset allocation for the fund.

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PROTEST. Youth and student groups hold an indignation protest in Manila as President Ferdinand Marcos Jr. signed the controversial Maharlika Investment Fund bill into law on Tuesday, July 18, 2023. Photo by Rappler.

Faculty of the University of the Philippines School of Economics earlier flagged this, noting that this governance structure “opens the floodgates for political interference, mismanagement, and corruption.”

UPSE faculty earlier warned that the lack of guardrails in place may lead to the Philippine wealth fund suffering a fate similar to Malaysia’s sovereign wealth fund, from which billions of dollars were embezzled due to weak governance structure and lack of oversight.

Malaysia’s experience shows that such good intentions can be totally undone by poor governance,” UPSE’s discussion paper read.

In his speech, Marcos also underscored the need to maximize government finances through the MIC, but did not directly address criticisms that the fund lacked focus.

“We will leverage a small fraction of the considerable but underutilized investable funds of government and stimulate the economy without the disadvantage of adding additional fiscal and debt burden,” Marcos said.

Experts earlier said that any sovereign wealth fund must be clear, be it for stabilizing government finances, accumulating wealth, or funding development projects.

Proponents of the Maharlika said that the fund would yield returns of about 8.6% on average, higher than the 6.6% global average returns of sovereign wealth funds. The figure is also higher than the 7.4% five-year average return of Norway’s pension wealth fund. (READ: FACT CHECK: Maharlika fund won’t draw from ‘Marcos wealth’)

Vehicle for growth

Marcos’ economic managers said that the fund is designed to optimize the use of government financial assets and promote their intergenerational management. 

“The bill underwent a rigorous deliberation process in Congress and was approved on May 31, 2023. The timely passage of the Philippines’ first sovereign wealth fund demonstrates the [Marcos] administration’s commitment to pursue its goals for economic growth,” the Department of Finance said in an emailed statement.

The MIF will have sub-funds classified according to objectives, according to the DOF.

One will focus on a long-term horizon, investing in profitable infrastructure, while another sub-fund with short- to medium-term horizon focused on investing in capital market assets such as fixed income securities and stocks. The MIC is expected to be fully operational by end-2024.

The drafting of the implementing rules and regulations is currently underway and will be finalized by September 2023. –

1 comment

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  1. FB

    Bottom line: We don’t trust BBM and his cronies. Lies. More lies.

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.