What is ‘Maharlika Investment Fund’ bill?

December 2, 2022 - 6:28 PM
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This undated file photo shows one hundred peso bills. (The STAR/Walter Bollozos/File Photo)

House Bill No. 6398, which seeks to establish the “Maharlika Wealth Fund,” was approved by the House Committee on Banks and Financial Intermediaries on Thursday, December 1.

Maharlika Investment Fund is an independent fund that seeks to generate government revenue through investments in real and financial assets.

This bill is backed by some of the family members of President Ferdinand Marcos Jr., such as his cousin House Speaker Ferdinand Martin Romualdez (Leyte, First District), Martin’s wife Rep. Yedda Marie Romualdez (Tingog Sinirangan) and the president’s son Rep. Sandro Marcos (Ilocos, First District).

Who will lead the MIF?

MIF will be managed by the Maharlika Investments Corp. (MIC), a government-owned and controlled corporation, which will be created once this bill becomes law.

Based on Article V, Section 15 of the bill, there will be nine board members, which includes the following.

  • Six partners from the founding government financial institutions. The number of seats to be allotted shall be proportional to their investments.
  • Two independent directors. The advisory body will choose them from the private sector.
  • Secretary of Finance as the official representative of the National Government

The board of directors has the power to “govern and manage the MIF, its assets, and investments.”

Among these board members, one will also assume the role of both the chairperson and chief executive officer for a seven-year term.

Where to invest?

Under this bill, MIC can invest in the following:

  • Cash, foreign currencies, metals, and other tradeable commodities;
  •  Fixed income instruments issued by sovereigns, quasi-sovereigns and supranationals;
  • Domestic and foreign corporate bonds;
  • Listed or unlisted equities, whether common, preferred, or hybrids;
  • Financial derivatives;
  • Islamic investments, such as Sukuk bonds;
  • Joint ventures or co-Investments; Mutual and Exchange-traded Funds;
  • Commercial real estate and infrastructure projects; and
  • Other investments as may be approved by the Board

These investments shall be subject to strict compliance with Investment and Risk Management Guidelines.

Where will funds be sourced?

To fund the initial investment of P250 billion, the bill proposed to source it to the following government financial institutions:

  • Government Service Insurance System – P125 billion
  • Social Security System – P50 billion
  • Land Bank of the Philippines- P50 billion
  • Development Bank of the Philippines – P25 billion

The bill also requires the national government to initially contribute P250 billion to the MIF.

Aside from these fundings, the bill also seeks the following annual contributions:

  • Bangko Sentral ng Pilipinas – foreign currency equivalent of 10% of overseas Filipino workers’ remittances
  • BSP – 10% of the annual contribution of the Business Processing Outsourcing
  • Philippine Amusement and Gaming Corp. – 10% of gaming proceeds
  • General Appropriations Act or Supplemental Appropriations
  • Other sources, which include special assessments on natural resources, and public borrowing, among others

Similar bills

This is not the first time a lawmaker pushed for a sovereign wealth fund.

In October 2016, Former Sen. Paolo Benigno “Bam” Aquino filed Senate Bill 1212 that sought to form a sovereign wealth fund.

Sen. Joseph Victor “JV” Ejercito filed similar legislation in March 2018.

RELATED: Does the P250-B Maharlika Wealth Fund make sense?