DBP's Herbosa backs creation of Maharlika Investment Fund

Development Bank of the Philippines (DBP) president and chief executive officer Emmanuel Herbosa on Thursday expressed support for the passage of the controversial Maharlika Investment Fund (MIF), citing "better rates of return."

In an emailed statement, Herbosa said the proposed sovereign wealth fund (SWF) would diversify the country’s investments, "which can offer better rates of return and greater socio-economic impact."

"From my personal standpoint, the creation of a SWF is a superb opportunity to address the dearth [of] sources of long-term capital [that] is integral to [supporting] these capital-intensive investments," he said.

"As head of a government bank, the SWF is closely aligned with our operating principle of bolstering economic additionality through timely and meaningful support of critical industries and sectors," he added.

Under the proposed MIF, previously called the Maharlika Wealth Fund, the seed funding will come from LandBank with P50 billion, the DBP with P25 billion, and dividends and profits of the Bangko Sentral ng Pilipinas (BSP).

As a state-led lender, the DBP is mandated to provide banking services principally to cater to the medium- and long-term needs of agricultural and industrial enterprises, with an emphasis on small and medium-scale industries.

"At this juncture, it’s best that we allow the bill to take its proper course in the legislative mill, as I believe this would lead to a solid and watertight law in view of the purification and purging process that it underwent," Herbosa said.

The MIF was initially aimed to have a capital of P275 billion, with P175 billion coming from the Government Service Insurance System (GSIS) and the Social Security System (SSS), but lawmakers dropped these funding sources to douse public opposition.

With the seed funding, the proposed measure seeks to allow the government to invest surplus reserves in real estate and financial assets for greater gains.

The proposed measure has been certified as urgent by President Ferdinand "Bongbong" Marcos Jr., allowing Congress to approve it on second and third reading on the same day.

Among its authors are House Speaker Ferdinand Martin Romualdez, and Ilocos Norte 1st District Representative Ferdinand Alexander "Sandro" Marcos III, cousin and son of the President, respectively.

It is backed by the government’s economic cluster, led by Finance Secretary Benjamin Diokno, who earlier this month said the central bank has "too much" reserves that could be used for the fund.

BSP data show, however, that the gross international reserves (GIR) slipped to $93.954 billion in November from $94.027 billion in October, due to outflows from payments by the government for its debt obligations.

A number of individuals and groups have already expressed concern over the proposed measure, including the Makati Business Club (MBC), the Management Association of the Philippines (MAP), the Philippine Chamber of Commerce and Industry (PCCI), and the President’s sister, Senator Imee Marcos. —VBL, GMA Integrated News