Maharlika law 'constitutionally sound' —Zubiri

Senate President Juan Miguel Zubiri is confident that the Maharlika Investment Fund (MIF) Law can withstand any challenge of constitutionality before the Supreme Court.

“Halos lahat na yata ng bills na pinasa ng Congress at Senado may umaakyat sa Supreme Court asking for its legality. We don't want to preempt what the Supreme Court will say, but we believe that it is constitutionally sound. The versions of the Maharlika Investment Fund [are] constitutionally sound,” Zubiri said in an ambush interview shortly after the MIF Law was signed into law.

The Senate president also again defended the MIF Law from criticism, as he expressed optimism that it could save the country from more debt.

“Ang kagandahan ng investment fund na ito, makakapondo ito ng mga proyekto na hindi na po natin kailangan mag-utang pa,” Zubiri said.

“It will not disturb the fiscal stability of our country. It will not add to the loans of our country and of every individual nation kasi mataas na po debt to GDP ratio, I think 64%. So, ayaw na natin dagdagan ‘yan, that’s why we created this fund,” he added.

Further, he pointed out that the funds that will be used for the MIF are money not being used by the Land Bank of the Philippines and the Development Bank of the Philippines.

'Historic'

Meanwhile, Senator Mark Villar, the main proponent of the MIF bill in the Senate, described the signing of the law as “historic” as he reiterated that the fund would help the country revitalize the economy after the COVID-19 pandemic.

He said the MIF can be used to invest not only in infrastructure but also in information and communications technology and agriculture.

“Marami pong opportunities for investments sa Pilipinas. So I’m sure the board of the Maharlika [Investment Corporation] will be able to choose the best investments pag na-constitute na,” he said.

According to Villar, the effects of the MIF's creation could be felt by Filipinos as early as next year.

“Right now, I think ongoing yung [crafting of the implementing rules and regulations]. By the end of the year siguro matatapos na ang IRR ng Maharlika and we can expect that it will be operational," Villar said.

"As soon as magsisimula ang investment ng Maharlika, mararamdaman natin. As early as maybe early next year siguro mararamdaman na natin yung effect ng Maharlika,” Villar added.

For Zubiri, the promised benefits of the MIF bill will be reaped by the next administration.

The Senate president maintained that Congress put enough safeguards in the law to prevent any misuse of the funds.

After the “controversy” of having double provisions on the prescriptive period, Zubiri said the Senate will take it as a lesson to make sure that there is a clean copy of the bill before passing it on second and third reading, even if the measure is certified as urgent.

Earlier today, President Ferdinand “Bongbong” Marcos jr. signed into law the MIF bill which seeks to tap state assets for investment ventures to generate additional public funds.

"For the first time in the history of the Philippines, we now have a sovereign wealth fund designed to drive economic development," Marcos said in his speech after signing of the bill.

"Through the fund we will leverage on a small fraction of the considerable but underutilized investable funds of the government and stimulate the economy without the disadvantage of adding additional fiscal and debt burden," added Marcos.

Vehicle for financing

Speaker Martin Romualdez of Leyte, for his part, said that the MIF law will not only increase public funds for infrastructure projects but also help the country address foreign debt.

The country’s debt now stands at P14 trillion, mainly due to the loans made by the Philippine government to fund the COVID-19 response since the pandemic grounded the world in March 2020.

Of the total debt balance, 68% were sourced locally while the remaining 32% were from external sources.

“As an additional vehicle for financing, the MIF is expected to widen the fiscal space in the near- to medium-term as it reduces heavy reliance on local funds and development assistance as the main financing mechanisms for infrastructure projects,” Romualdez, who is a cousin of President Marcos, said in a statement.

“The MIF is not only beneficial but necessary. 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 such as Maharlika Investment Corp. (MIC)/MIF urgent,” added Romualdez.

Former President and House Deputy Speaker Gloria Arroyo also expressed confidence that the new law will help boost the economy.

“It is a very big milestone for our economy. The bill was able to find a form that the President will be willing to sign [into law],” Arroyo said in a video message.

“There are many sovereign funds all over the world, and that is what the President said: they looked at different models, they looked at [the fund’s] achievements and mistakes, so this is a very good bill and now, like so many [sovereign] funds, he will be in the management of it,” Arroyo added.

House ways and means chairperson Joey Salceda, who served as an economic adviser to Arroyo during the latter’s presidency, agreed.

Salceda said the Maharlika Investment Fund will be the country’s bridge between trillions in investible funds and thousands of investable development projects, given that there are around P19 trillion in investible funds in the Philippine banking system.

“That [P19 trillion] 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 (Development Bank of the Philippines), as well as for other banks,” Salceda said, referring to state-run banks.

Likewise, Salceda said the country’s largest conglomerates in Southeast Asia have generated P9.03 trillion in revenues so far this year, and such businesses have a gross saving of P5.7 trillion based on official figures from the Philippine Statistics Authority’s Income and Outlay Accounts.

“Basically, companies don’t have anywhere to put 63% of all the money they make. Unless we create a vehicle for investable projects, chances are, that’s going to be released in dividends outside the country or used to pay foreign corporate debt, rather than develop our domestic sectors,” Salceda pointed out.

“In fact, based on my analysis of the top 1,000 corporations in the country alone, from the year 2000, some P13 trillion in funds have been issued in dividends outside the country or used to pay foreign debt instruments,” Salceda added.

Salceda said that as it is, one of the challenges in pulling off big projects here in the Philippines is navigating attached issues such as bureaucracy, social acceptance, land use, and tenure, among others, which can be dealt with via the MIF law.

“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,” Salceda said.

“Meanwhile, we have an infrastructure financing gap of around P2 trillion annually until 2030. If we can get it (MIF) right, we can bridge the gap between investible funds – which we have trillions of – and the investable projects, which also demand trillions in financing. It’s grand-scale matchmaking for development,” he added. —VAL, GMA Integrated News