Philippines enacts law on creating its 1st sovereign wealth fund

ANKARA

The president of the Philippines approved a law on Tuesday for the creation of a sovereign wealth fund, the first for the Southeast Asian country.

"The MIF (Maharlika Investment Fund) is a bold step towards our country's meaningful economic transformation," Ferdinand Marcos Jr. said at the signing ceremony for the law, according to a statement by the Presidential Communications Office.

Speaking to the signing ceremony held at the presidency in the capital Manila, Marcos said his government designed the plan to boost the nation's economic development.

Some economists had earlier raised transparency- and governance-related concerns on the proposal to establish the fund. Marcos responded by saying it would be managed by highly competent professionals with a track record of integrity.

"Let us make sure that the decisions that are being made for the fund are not political decisions, that they are financial decisions because that is what the fund is," Marcos said, calling his administration's initiative a "bold step" toward sustainable progress.

Under the new law, the country will have the capacity and capability to invest in important projects across sectors including agriculture, infrastructure, and digitalization, as well as in efforts to strengthen the value chain.

Government financing institutions will now pool together non-debt financial resources, to avoid crowding out other lending obligations they need to fulfill under their respective mandates, according to the official statement.

The MIF can also funnel in external financing, reducing the government's burden to fund infrastructure through debt and taxes.

"The establishment of a sovereign wealth fund will widen the government's fiscal space and ease pressure in financing public infrastructure projects," said President Marcos.

Under the law, the government will also create the Maharlika Investments Corporation (MIC), which will be the sole vehicle for mobilizing and utilizing the MIF for investments.

The MIC is expected to have at least 75 billion Philippine pesos (about $1.3 billion) in paid-up capital this year, with 50 billion pesos from the Land Bank of the Philippines (LBP) and 25 billion pesos from the Development Bank of the Philippines, according to the Presidency.

The Fund will invest in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate and high-impact infrastructure projects, and projects related to sustainable development, it added.

*Writing by Islamuddin Sajid