Maharlika Investment Fund
The Maharlika Investment Fund (MIF), also known as the Maharlika Wealth Fund (MWF), is a newly enacted sovereign wealth fund for the Philippines. The MIF is the Philippines' first sovereign wealth fund. It will be allocated across a variety of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and infrastructure projects.The MIF is expected to generate returns that support the government's economic goals, as outlined in the Medium-Term Fiscal Framework, the eight-point Socioeconomic Agenda, and the Philippine Development Plan. Background

Legislative process

In late November 2022, seven lawmakers in the Philippine House of Representatives, including Martin Romualdez and Sandro Marcos, filed House Bill No. 6398, proposing the creation of a sovereign wealth fund for the Philippines to be known as the Maharlika Wealth Fund (MWF). The fund, if established, would be managed by the Maharlika Investments Corporation (MIC). President Bongbong Marcos has backed the establishment of a sovereign wealth fund, believing that it would be advantageous for the country. After President Marcos certified the bill as urgent, it was passed on its third reading in the lower house, with 279 lawmakers voting in favor of passing the bill. Only six lawmakers voted against: Gabriel Bordado (Camarines Sur–3rd), Arlene Brosas (Gabriela), France Castro (ACT Teachers), Mujiv Hataman (Basilan–Lone), Edcel Lagman (Albay–1st), and Raoul Manuel (Kabataan). From filing to approval, it took the House of Representatives 17 days to deliberate on the bill. On May 24, 2023, Marcos certified the creation of the Maharlika investment fund as urgent to the Senate. On May 31, 2023, the upper house had approved the third and final reading with a total of 19 senators voting in favor, one negative (Risa Hontiveros) and one abstention (Nancy Binay). It would need President Marcos' signature before it becomes law. A bill that is certified as urgent allows lawmakers to bypass the constitutional rule requiring bills to be passed on three readings on separate days. The president's certification of urgency is typically made to respond to public calamities or emergencies. In February 2023, a petition was filed to the Supreme Court requesting to nullify Marcos's certification of urgency, arguing that it is unconstitutional because no public calamity or emergency was expressly stated in Marcos's letter to the House. This was later dismissed by the Court in May, citing that the petitioners "failed to present to Court any fact establishing the existence of an actual case or controversy ripe for adjudication". On July 5, 2023, the copy of the bill was transmitted to Malacañang for President Marcos's signature. On July 18, he signed the bill into law as Republic Act No. 11954. GSIS and SSS funding
Initially, the Government Service Insurance System (GSIS) and the Social Security System (SSS) were obliged to contribute funds to the MIF under the proposed bill establishing the fund. The two institutions were later dropped as mandatory contributors. However, both the boards of the GSIS and SSS would be permitted to contribute if they approve such a move. Reception
Economist Michael Batu said the fund, if managed properly, can help raise money to help the government's programs and achieve development goals. Global Source economist Romeo Bernardo, on the other hand, believes that the proposal is poorly timed and that a sovereign wealth fund would just add to the Philippines' current financial and fiscal risks and raised concern for potential mismanagement, mentioning the 1Malaysia Development Berhad scandal. A group consisting of 12 organizations, namely the Foundation For Economic Freedom, Competitive Currency Forum, Filipina CEO Circle, Financial Executives Institute of the Philippines, Institute of Corporate Directors, Integrity Initiative, Inc., Makati Business Club, Management Association of the Philippines, Movement for Good Governance, Philippine Women's Economic Network, UP School of Economics Alumni Association and Women's Business Council Philippines, Inc., made a collective statement against the proposal. The group believes that there is no gap or "missing institution" in the Philippine economy that necessitates the creation of a sovereign wealth fund and prescribes the government to focus on the management of the country's fiscal deficit and public debt to avoid impediments to the delivery of public services and to prevent a downgrade of the Philippines' sovereign investment credit rating. It also notes that the Philippine economy has no commodity-based surpluses or surpluses from external trade from state-owned enterprises. It also opposed the idea of the GSIS and SSS contributing to the fund. The Philippine Stock Exchange has made its support of the proposal, stating that the "primary mission is to facilitate the flow of capital into more productive and beneficial channels and as a result, contribute to efficient capital formation for the country". The legislation also met criticisms. Critics see it as a plunder fund as, according to tax expert Raymond Abrea, the fund is "prone to corruption and money laundering". Economists remain skeptical about the bill as it contains provisions that could affect the independent functions of government financial institutions and the Bangko Sentral ng Pilipinas. In June 2023, University of the Philippines School of Economics faculty members issued a paper stating that the fund "violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector – notwithstanding its proponents' good intentions". They emphasized its unclear purpose even after delibrations at the bicameral Congress, possible encroachment on the budget process, huge risks to public funds, moral risks, possible contradiction to other economic plans given its vagueness, red flags in governance structure, and unlikely substantial growth to finance projects as crucial points to consider. Legal challenges in the Supreme Court
On September 18, 2023, Senate Minority Leader Koko Pimentel, representative Ferdinand Gaite (Bayan Muna), and former representatives Neri Colmenares and Carlos Isagani Zarate (Bayan Muna) filed a 56-page petition before the Supreme Court to ask the declaration of Maharlika Investment Fund Act of 2023 as unconstitutional. They claimed that it "entrusts hundreds of billions in public funds to unknown fund managers and an amorphous nine-member Board of Directors." Suspension of MIF's IRR
On October 12, 2023, President Ferdinand Marcos Jr. ordered the suspension of the implementing rules and regulations (IRR) of the laws setting up the Maharlika Investment Fund, claiming that he wanted to further study it "to ensure that the purpose of the fund will be realized for the country's development with safeguards in place for transparency and accountability." See also
Coco Levy Fund scam
Pork barrel scam

Notes

References

Sovereign wealth funds
Proposals in the Philippines
2022 controversies
2023 controversies
Bongbong Marcos administration controversies