Review on Maharlika Fund's implementing rules done 'soon' —Pangandaman

The review on the implementing rules and regulations (IRR) of the Maharlika Investment Fund (MIF) Act will be finished “soon,” Budget Secretary Amenah Pangandaman said Thursday.

This was after President Ferdinand “Bongbong” Marcos Jr. reiterated his administration’s commitment to make the sovereign wealth fund operational by the end of 2023.

“We subscribe to the wisdom of PBBM in suspending the IRR as this is not just an economic strategy for us, but a historic first sovereign investment fund,” Pangandaman said in a message to reporters through Viber.

“The economic team will work closely with the President to prudently review all provisions line by line and make sure that all things are in order,” the Budget chief said.

Pangandaman is part of the MIF’s Advisory Body, along with the secretary of the National Economic and Development Authority (NEDA), and the Treasury.

In a memorandum dated October 12, 2023, signed by Executive Secretary Lucas Bersamin by authority of Marcos, the Bureau of the Treasury, Land Bank of the Philippines, and Development Bank of the Philippines were directed to suspend the implementation of the IRR of Republic Act No. 11954 or the MIF Act, “pending further study.”

Asked if there are “problematic” provisions in the IRR that require review, Pangandaman said, “No specifics yet. Provisions are for study/review.”

The IRR, which would spell the beginning of MIF's operationalization, was released in August.

Marcos, on Thursday, said, however, that the MIF was not put on hold and that the government is “still committed to having it operational by the end of the year."

“If operational before the end of the year. We will expect the IRR [review done] soon,” Pangandaman said.

Finance Secretary Benjamin Diokno, the chief architect of the MIF, has repeatedly said the sovereign wealth fund will be fully operational by the end of 2023 —meaning that the Maharlika Investment Corp. (MIC) Board has already conducted its first meeting to plan its investment activities.

The Finance chief also said that the MIC is expected to begin its investment activities in the first quarter of 2024 after it secured an initial capital from Landbank, DBP, and Bangko Sentral ng Pilipinas.

Under the MIF Act, the initial capitalization of the MIF would be sourced from Landbank at P50 billion, DBP at P25 billion, and the national government at P50 billion.

The contribution from the national government will come from the following sources:

• Bangko Sentral ng Pilipinas' total declared dividends
• National government's share from the income of PAGCOR
• Properties, real and personal identified by the DOF-Privatization and Management Office
• Other sources such as royalties and/or special assessments

The MIF also has an authorized capital stock of P500 billion.

Pangandaman said the suspension of the sovereign wealth fund’s IRR would be an “opportunity to engage in more multi-stakeholder groundwork in preparation for the launch of the MIF.”

Marcos signed into law Republic Act No. 11954 or the Maharlika Investment Fund Act of 2023 in July, with the aim to tap state assets for investment ventures to generate additional public funds.

The law creates the Maharlika Investment Corp. (MIC), a government-owned company that will manage the MIF — a pool of funds sourced from state-run financial institutions that will be invested in high-impact projects, real estate, as well as in financial instruments.

The MIC’s Board of Directors would be composed of the Finance secretary, who will serve as the ex-officio chairperson; presidents of Landbank and DBP; two regular directors; and three independent directors from the private sector.

Meanwhile, the IRR of the MIF lists the qualifications of those who will form the MIF as well as the forms of investments that the MIC can invest in.

The MIC is authorized to invest in a wide-range of products, activities and projects, such as cash and other tradable commodities; fixed income instruments issued by sovereigns; domestic and foreign corporate bonds; listed or unlisted equities; and Islamic investments, such as Sukuk bonds, among others.

The IRR also provides the lists of penalties to be imposed in order “to ensure the integrity of the Fund” such as imposition of heavy fines ranging from P1M to P15M and imprisonment from six to 20 years for various offenses, such as willfully holding office while in possession of any disqualification; knowingly certifying the corporation’s financial statements despite its gross incompleteness or inaccuracy; willingly allowing oneself to be used for fraud; and failure to sanction, report, or file appropriate action for graft and corrupt practices.—AOL/VBL, GMA Integrated News