THE signing of the Maharlika Investment Fund (MIF) will give the country’s infrastructure program and economic growth targets a much-needed boost while creating more jobs, and will prepare the country for being weaned away from an over-reliance on debts for development, economic managers said on Tuesday.
The Department of Finance and the National Economic and Development Authority (Neda) struck the positive note hours after President Ferdinand R. Marcos Jr. signed into law Republic Act No. 11954 establishing the Philippines’s first sovereign wealth fund. The MIF, DOF said, will widen the government’s fiscal space and ease the burden on local funds to undertake infrastructure projects.
The MIF will also reduce the country’s reliance on official development assistance in funding big-ticket projects such as those specified in the recently approved Infrastructure Flagship Project (IFP) list.
“Congress passed a game-changing measure—the Philippines’ first-ever sovereign investment fund—that could accelerate infrastructure development in the country, create a lot of high-quality jobs, attract more foreign investors, and propel the country towards higher growth,” Finance Secretary Benjamin E. Diokno said.
Socioeconomic Planning Secretary and Neda Director General Arsenio M. Balisacan said among the potential areas the MIF can invest in are the 194 Infrastructure Flagship Projects of the “Build-Better-More” program.
“Maharlika can invest in various areas. There are strategic areas in the energy sector that we would like MIF to invest in. There are many areas that are in great need of capital, so we will never run out of investment opportunities,” Balisacan said.
He sees the MIF as a valuable alternative to debt financing when the country becomes an Upper Middle-Income Country and would no longer qualify for concessionary loans, such as Official Development Assistance or ODA.
“The MIF can attract equity financing instead of debt financing, which would enable investors and the government to become partners in development. This is also a good opportunity for us to free up other government funds that we can allocate for more social development projects. The MIF will focus on financing profitable development projects through equity,” said Balisacan.
The MIF is seen to complement existing mechanisms to finance priority projects in pursuit of goals outlined in the Medium-Term Fiscal Framework (MTFF), 8-Point Socioeconomic Agenda, and the Philippine Development Plan (PDP) 2023-2028.
The National Economic and Development Authority (Neda) said the MIF will augment the initial capitalization of P125 billion in government securities. It can also bring in more economic benefits if it can attract co-investments and fully pay up its authorized capital stock of P500 billion.
Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman said her department will provide support and technical assistance in the formulation of the law’s IRR, expected to be out in September.
“Of course, we fully support this as it will help expand our fiscal space. So we at the DBM remain committed to helping ensure that this Development Fund will be a success and implemented with utmost integrity,” Pangandaman said.
The DOF said within the MIF are sub-funds classified according to objectives. One with a long-term horizon focused on investing in profitable infrastructure, and another sub-fund with a short- to medium-term horizon focused on investing in capital market assets such as fixed income securities and stocks.
The Maharlika Investment Corporation (MIC) will be created to serve as the investment body responsible for the overall governance and management of the Fund and is expected to be fully operational by end-2024.
It will identify financially and commercially viable infrastructure projects to invest in and will formulate investment strategies covering emerging megatrends such as environment, social and governance (ESG), digitalization, and health care.
Growth, infra boost eyed with Maharlika
Source: News Paper Radio
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