FOR THE first time in the history of the Philippines, we now have a sovereign wealth fund through the newly enacted Republic Act No. 11954, also known as the Maharlika Investment Fund (MIF) Act of 2023.
On Nov. 8, 2022 a bill establishing the MIF was first filed in the House of Representatives (House). The final version was passed on Dec. 15, 2022. The final bill, which was passed by the Senate and adopted by the House, was done on May 31, 2023.
The purpose of the MIF is to help catalyze economic development and accelerate the country’s growth by optimizing the use of government financial assets. According to Section 12, Article III of the said law, the MIF “shall initially be sourced from the capitalization of the MIC [Maharlika Investment Corporation]; the invisible funds of select GFIs [Government Investment Institutions] and from contributions of the National Government as well as other sources of funds” as provided under the law.
Prior to the approval of the law, there were crucial amendments to the Senate’s version. The public called for the prohibition of investments from the Social Security System (SSS), Government Service Insurance System (GSIS), Philippine Health Insurance Corp., Home Development Mutual Fund, Overseas Workers Welfare Administration, and the Philippine Veterans Affairs Office.
Thus, no pension funds are allowed in investing in the MIF. As expressly stated in the law, government agencies and GOCCs that provide for “the social security and public health insurance of government employees, private sector workers and employees, and other sectors and subsectors, such as but not limited to the SSS, GSIS, PhilHealth, PAG-IBIG Fund, OWWA, and PVAO Pension Fund shall be absolutely prohibited, whether mandatory or voluntary, to invest in the MIF.”
Favorably, the Bangko Sentral ng Pilipinas (BSP) will now contribute 100% of its remittances during the first and second years of the establishment of the MIF. The Land Bank of the Philippines and the Development Bank of the Philippines are capped at 25% of the GFI’s net worth. However, MIC has an authorized capital stock of P500 billion.
A provision was added in case of merger, consolidation, abolition, or dissolution involving the GFI; it will be occupied by the next highest-ranking officer of the surviving GFI who assumed its rights.
Penalties for violations are heavier this time especially when it comes to graft and corrupt practices.
Interestingly, the documents to be used will be available in both English and Filipino languages. These documents include investment policies, investment, and risk management plans, statements of assets and liabilities (SALNs), and audit documents.
The benefits of the MIF are to enhance the investment funds to improve economic growth; infrastructure development, foreign investment, and improved governance. These are in line with the law’s objectives to promote socioeconomic development as well as prudent and transparent management of government resources./PN
