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Marcos says Maharlika fund will diversify Philippines' financial portfolio

President Ferdinand "Bongbong" Marcos Jr. on Tuesday (Wednesday, PH time) underscored that the proposed Maharlika wealth fund was among his administration's measures to diversify the country's financial portfolio.

Marcos mentioned the proposed sovereign wealth fund during his opening remarks at the Philippines Country Strategy Dialogue in Davos. The President is currently in Switzerland to participate in the 2023 World Economic Forum.

"The process of establishing our first-ever sovereign wealth fund is underway," Marcos said.

"Such a fund is one tool among many in our efforts to diversify our financial portfolio, which includes our existing institutions pursuing investment that will generate stable returns, but also welfare effects spanning employment creation, improvement of public service, and a decrease in costs of economic activities," he added.

The Chief Executive has said the proposed wealth fund will make investments in the basic areas of agriculture, energy, digitalization and climate change. He is hoping that this will be a mechanism to increase the country's economic stability and alleviate poverty.

'Very ordinary'

In a separate interview, Finance Secretary Benjamin Diokno said having a sovereign wealth fund is a "very ordinary" practice in other countries to maximize long-term investments.

"Ang tinatawag namin sovereign wealth fund, napaka-ordinary niyan for other countries. Diyan nila kinukuha 'yung kanilang long-term investments," Diokno said.

(The sovereign wealth fund is very ordinary for other countries. This is where they get long-term investments.)

Diokno said having this fund would help finance the Philippines' priority projects.

"Pinanghihiram pa natin ng pera 'yun eh from Japan, China, IMF, sa World Bank, ADB. Kung mayroon tayong ganoong fund, puwede natin mapondohan 'yun," he said.

(We borrow funds from Japan, China, IMF, World Bank and ADB for our projects. If we have the sovereign wealth fund, we can finance these projects.)

Meanwhile, Senator Mark Villar, chairperson of the Senate banks, financial institutions, and currencies committee, said the proposed Maharlika Investment Fund caught the interest of the investors during a WEF meeting.

“Galing po ako sa dialogue kahapon at masasabi ko na marami po nagiging interested. Marami pong interesado sa Pilipinas at siyempre po sa wealth fund dahil ito ay isang pondo na nakikita nila na magagamit natin para lalong bumilis ang development ng ating bansa and of course as investors gusto rin nilang makita na active tayo sa infrastructure at sa mga products or funds that can help the government,” Villar, who accompanied Marcos in Davos, said in a recorded and edited interview provided by RTVM.

(I attended the dialogue yesterday and I can say that a lot of attendees were interested in the Philippines and also in our wealth fund because they saw that we can use it to boost development in our country and of course, the investors want to see that we are active in terms of pushing for infrastructure and other product or funds that can help our government.)

Villar, one of the senators who was tapped by Senate President Juan Miguel Zubiri to study the MIF as proposed by the lower chamber, said the wealth fund would help in improving the fiscal situation of the Philippines.

The House of Representatives already approved on final reading House Bill 6608, which creates the Maharlika Investment Fund (MIF) and was certified as urgent by the President.

The Senate is waiting for the transmittal of the House bill to the upper chamber before they deliberate on the matter.

The measure creating the MIF states that it would be funded by the investible resources of the Landbank of the Philippines (P50 billion), the Development Bank of the Philippines (P25 billion), and the dividends/profits of the Bangko Sentral ng Pilipinas.

Before Marcos and his delegation left for Davos, Department of Foreign Affairs Undersecretary Carlos Sorreta disclosed that the proposed sovereign wealth fund will have a "soft launch" at the WEF.

Senate Minority Leader Aquilino "Koko" Pimentel III said the plan to tackle the MIF at the WEF however is a "ploy to force the Senate into passing" the measure. So far, there is no counterpart bill filed at the Senate.

Retired Supreme Court Associate Justice Antonio Carpio said the proposed wealth fund could be a losing proposition as the cost of putting up the fund could exceed the expected returns.

For his part, former BSP Deputy Governor Diwa Gunigundo said based on country’s experience during the Martial Law years, the investment portfolio of the MIF could drive public funds to people and firms with vested interests—KG/KBK/RSJ, GMA Integrated News