Maharlika backers confident big bet on controversial fund will pay off

MANILA, Philippines — Defenders of the Maharlika Investment Fund in Congress welcomed the president’s signing of the bill on Tuesday, drumming up confidence in its potential returns despite a public that remains divided on its benefits.

House Speaker Martin Romualdez reiterated the government's intended use for the MIF, which is to pump money into government coffers and big-ticket infrastructure projects without incurring more foreign debt.

Besides "widening the fiscal space" and reducing reliance on local funds and development assistance, the MIF could also be used to support government projects without the collection of more taxes, Romualdez said in a statement Tuesday.

RELATED: Filipinos split on whether Maharlika fund can deliver benefits — SWS  

The president's cousin also cited another big promise that he said the MIF can deliver: increasing the funds for social services like education and health using the projected investment returns.

“While the Philippines can offer investment opportunities, given that we are still a growing economy, we see that the cost of debt has risen, making the need to explore other vehicles to attract equity financing,” Romualdez said.

The MIF is the president’s brainchild and a priority legislative measure that he signed into law Tuesday after a swift passage through Congress.

Investible funds ‘need to go somewhere’

Rep. Joey Salceda (Albay, 2nd District), who led the technical working group creating the House version of the Maharlika bill, defended the measure from critics doubting its necessity, saying that trillions of investible funds “need to go somewhere.” 

“We have close to P19 trillion in investible funds in the Philippine banking system. That needs to go somewhere productive in order to contribute to the economy. The Maharlika Investment Fund is a vehicle to do that – for both the Landbank and the DBP, as well as for other banks,” said Salceda who chairs the House ways and means committee.

RELATED: Amid calls to abandon Maharlika dream, Marcos signs investment fund into law   

According to the final copy of the measure, the Maharlika Investment Corp. will get at least P75 billion in paid-up capital this year: P50 billion from the Land Bank of the Philippines and P25 billion from the Development Bank of the Philippines (DBP).

Salceda added that the controversial investment fund could also simplify the process of undertaking large-scale projects in the Philippines.

“One of the difficulties with undertaking big projects here in the Philippines is navigating all the attached issues – bureaucracy, social acceptance, land use and tenure, among others. They increase the risk of investment and can deter these investors," Salceda said in a statement sent early Tuesday.

“With MIF, investors can outsource those issues to a government-owned company, instead of doing all that on their own. That makes the job easier and the investment less risky,” he added.

Marcos said during the signing of the Maharlika bill or Republic Act 11954 that the investment fund will help transform the country’s economic as it recovers from the pandemic. It will also be managed with “financial, not political” decisions, the president said.

Previously, various members of civil society, including business groups, academia, and economists, as well as opposition lawmakers, flagged several provisions of the MIF bill as problematic, such as the use of state pension funds as seed money. 

Pushback had led lawmakers to strike off the controversial provision on financing from state pension funds on the final version of the bill, which was transmitted to the president on July 4.