MANILA, Philippines – A week after President Ferdinand Marcos Jr. certified its Senate version as urgent, senators on Wednesday, May 31, at 2:32 am, approved the controversial measure creating the Maharlika Investment Fund (MIF).

With a vote of 19-1-1, the Senate swiftly passed Senate Bill No. 2020, or the proposed Maharlika Investment Fund Act of 2023. Opposition Senator Risa Hontiveros voted against the bill, while Senator Nancy Binay abstained from voting.

Senate Minority Leader Koko Pimentel, Senator Francis Escudero, and Senator Imee Marcos were not present to cast their vote.

“At 2:32 in the morning, we have 19 affirmative votes, 1 negative vote, and 1 abstention – Senate Bill 2020 is approved on third reading,” Senate President Migz Zubiri said a few minutes after the chamber approved the measure on second hearing.

Wednesday’s early morning vote came after an 11-hour plenary session that saw senators scrambling to pass the priority legislation of the Marcos administration.

During a nearly two-hour speech against the Maharlika bill, Pimentel on Tuesday, May 30, moved to send the measure back to the committee on government corporations as he believed that this should be the proper panel to handle the measure. But Pimentel’s motion was rejected by the body.

The MIF is a proposed sovereign wealth fund that will be used by the government to invest in key sectors like domestic and foreign corporate bonds, commercial real estate, and infrastructure projects – to help fund the country’s priority programs.

Senators included an amendment in the bill that explicitly prohibited the Social Security System, Government Service Insurance System, Philippine Health Insurance Corporation, Pag-IBIG, Overseas Workers Welfare Administration, Philippine Veterans Affairs Office, and Home Development Mutual Fund from investing in the MIF, whether on a mandatory or voluntary basis. Investments from these agencies were a major cause for concern among some senators and pensioners.

In December 2022, Marcos also certified as urgent the House version of the Maharlika bill, which paved the way for its passage on second and third reading on the same day.

The proposed Maharlika fund has sparked public outcry from pensioners, and faced a legal challenge before the Supreme Court. Critics questioned the timing of the bill as there are more pressing issues the government needs to focus on like addressing high inflation.

While inflation eased down to 6.6% in April from 7.6% in March, the figure is still much higher than the target range of 2% to 4%.

The seed capital of MIF will come from Landbank (P50 billion), DBP (P25 billion), and the national government (P50 billion). Landbank and DBP will fully pay for their contribution upon creation of the fund, while the government’s P50 billion is only subscribed, which means they can pay any time.

The Senate version of the bill provides that bonds issued under the proposed measure would not be guaranteed by the government – a safeguard pitched by Villar, to prevent a repeat of Malaysia’s multibillion-dollar 1MDB scandal.

Villar said that any bonds or debt instruments issued by the Maharlika Investment Corporation (MIC) would be secured by its own assets, meaning the government would not be liable for whatever happens to the MIF.

The Senator also believes that the yield of the MIC will be higher than government treasury bills, which are sometimes used as the basis for the risk-free rate of investment.

Prior to its passage, Pimentel raised transparency concerns over MIC since it would decide on “mega infrastructure” projects of the government without the usual public scrutiny during deliberations at the Senate and the House of Representatives.

The MIC will be led by a 9-member board of directors. The board has the power to “direct the management and operations, and administration of the MIC.” Under the proposed measure, the following will be the composition of the board:

• finance secretary (chairperson)
• chief executive officer of the MIC (vice-chairperson; three-year term)
• president of Landbank
• president of DBP
• two regular directors (three-year term)
• three independent directors from the private sector (one-year term)

Representatives from both chambers will meet on Wednesday at 11 am to reconcile the differences between the House and Senate versions of the bill. – Rappler.com