Passed in 2023, MIF seems grounded for now

THE YEAR 2022 closed with the Maharlika Investment Fund (MIF) making headlines. Benjamin Diokno, then secretary of finance, said it was proposed during the Duterte administration and President Ferdinand Marcos Jr. had given it his go-signal. Marcos certified the bill as urgent 17 days after it was filed by legislators related to the president. These included House Speaker Martin Romualdez, Romualdez’s wife, and the president’s son, First District of Ilocos Norte Representative Sandro Marcos. But even with the high-powered sponsorship, the bill faced challenges all through 2023.

When the newly minted president first talked about it in November 2022, he used the words “sovereign wealth fund;” a term that refers to funds set aside by governments with surplus wealth — not quite the case in the Philippines. Respected members of his economic team did not take to the idea at first, but warmed up to the idea quickly enough. Meanwhile, experts outside of government openly questioned its purpose. 

Media coverage tracked the special fund through a policy maze with interviews and explainers trying to make sense of its point. What news made clear was that this was central to Marcos Jr.’s legacy.  

The public was involved enough to spark an explosion of complaints on social media, mainly to protest the fund drawing seed money from citizens’ pension funds held by the Government Service Insurance System (GSIS) and the Social Security System (SSS). Meanwhile, proponents in Congress, the treasurer, and other economic managers of the administration chorused their assurance that there were enough safeguards to protect the integrity of the fund. 

Reports continued to pick up commentary from economists, financial analysts, and political analysts who were concerned about certain features: the designation of the Development Bank of the Philippines (DBP) and Land Bank as sources of seed money; the general weakness of the economy; and the president’s role and politics in establishing MIF.

On May 31, the Senate approved the bill on third and final reading. Nineteen senators voted for the bill, while Senator Risa Hontiveros objected and Senator Nancy Binay abstained. 

On July 18, days before his SONA and seven months after it was first proposed in Congress, Marcos gathered high officials of the administration in full ceremony for the signing. 

The Bureau of Treasury released on August 29 the MIF’s implementing rules and regulations (IRR), which took effect on September 12. The LandBank remitted PHP50 billion and the DBP PHP25 billion to the MIF on September 15.

And then what? 

But in October, both LandBank and DBP sought regulatory relief, as their contributions to the fund reduced their minimum capitalization requirements. Marcos issued a memorandum suspending the MIF’s IRR, asking the public not to “misinterpret” the move as he was finding “ways to make it as close to perfect and ideal.” 

CMFR cheered the Philippine Daily Inquirer for a report that called attention to key issues surrounding the controversial MIF. (See: “Inquirer report reveals why foreign investors are wary of Maharlika fund”) Inquirer picked up the insightful briefing of economist Frederic Neumann who pointed out that they have yet to know more about the fund and its management. There are unanswered questions about transparency and “investor safeguards,” which were keeping foreign investors at bay.

From Davos, Malaysia, Saudi Arabia, and other countries, Marcos’ frequent trips have always included among his purposes the promotion of the MIF. Should we question the Marcos’ ability to sell the MIF abroad; or a dubious plan for its real use?  MT