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MANILA, Philippines – President Ferdinand Marcos Jr. put the brakes on plans to implement the Maharlika Investment Fund (MIF) right away, citing a need for further study.
A memorandum issued by Executive Secretary Lucas Bersamin last Thursday, October 12, upon the directive of the President, ordered the suspension of the execution of the implementing rules and regulations (IRR) of the law setting up the MIF, his office confirmed on Wednesday, October 18.
“President Ferdinand R. Marcos Jr. issued a suspension because he wanted to study carefully the IRR to ensure that the purpose of the fund will be realized for the country’s development with safeguards in place for transparency and accountability,” the Office of the Executive Secretary said.
The letter was addressed to the treasurer of the Philippines, and the heads of the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP).
DBP President and Chief Executive Officer Michael de Jesus confirmed that the state bank has received the order.
“Yes, [the memorandum] directed the treasurer to suspend implementation of the IRR, pending further study,” De Jesus told Rappler on Wednesday. “Letter [was] received two days ago.”
Before this, Finance Secretary Benjamin Diokno said the government was “confident that the fund will be operational by year-end.”
Under the IRR, Diokno will serve as chairman of the Maharlika Investment Corporation, and the CEOs of Landbank and the DBP would also be given board seats.
Diokno has told the media several times that Maharlika’s advisory body was already looking at potential applicants to fill the new company’s positions. The deadline for applications for positions ended in late September.
Senate Minority Leader Aquilino “Koko” Pimentel III welcomed the suspension calling it a”very good development.”
“The law has a lot of defects. The concept has not been fully studied from the very start. Hence, we should not wonder why apparently the law is not ready for implementation,” he said. “Good that the Marcos administration appears to listen to reason.”
Maharlika, a controversial fund
The MIF has faced strong criticism since its inception in the House of Representatives to its quick passage as a law. Economists feared that it would fail to achieve its objective of creating a sovereign wealth fund that focuses on infrastructure and other development projects.
Recently, fears also arose that the creation of the Maharlika fund might endanger the integrity of the state banks from which it sourced its initial capital. Under the law, Landbank and the DBP were required to give up P50 billion and P25 billion to form Maharlika’s start-up money.
For the state banks, particularly the comparatively smaller DBP, losing that much would mean violating the capital requirements of the central bank. (READ: Behind ‘regulatory relief’: Landbank, DBP’s challenge after funding Maharlika)
Asked whether the suspension would mean that the DBP gets back its P25-billion contribution to the Maharlika fund, the bank’s CEO told Rappler, “That is a question we are asking.”
Meanwhile, just a day before the suspension memorandum came out last Thursday, Marcos also issued an executive order exempting Landbank from remitting any part of its 2022 earnings to the government after the massive contribution left the bank’s capital position weakened.
Although the executive order mentioned the need for Landbank to rebuild its capital, it did not mention Landbank’s P50-billion required contribution to the Maharlika fund that compromised its capital position in the first place.
Landbank clarified in a statement on Sunday, October 15, that it “remains strong, adequately capitalized, and compliant with regulatory requirements” of the Bangko Sentral ng Pilipinas despite its contribution to Maharlika. – with a report from Dwight de Leon/Rappler.com