Maharlika operations seen before yearend

MANILA, Philippines — The head of the government’s economic team remains optimistic despite warnings that securing investments for the Maharlika fund could be challenging, and hopes to start the ball rolling before the year ends.

In a briefing, Department of Finance Secretary Benjamin Diokno said the Philippines is in a “better position” to attract resources for the Maharlika Investment Fund (MIF), the country’s first sovereign wealth fund.

He issued the statement amid concerns that it may be a challenge to finance the MIF due to volatile economic conditions here and abroad.

“Globally, many are really distressed. But we are not,” Diokno said.

“We recently got an upgrade from Fitch. It’s like our star is shining so bright right now and so that can help us attract (more investments),” he said.

The expansion of the global economy is expected to hit the brakes this year on the back of still elevated commodity prices, high interest rates and recessionary fears, among others.

On the domestic front, the Philippine economy is also seen registering slower growth than last year.

But Diokno argued that the establishment of the MIF would provide the government cushion against external headwinds that could imperil the attainment of macroeconomic and fiscal targets.

Diokno said the MIF is needed to negate the impact of weaker external conditions on the economy as it will introduce a new growth catalyst in the form of accelerated implementation of strategic and high-impact large infrastructure projects that will stimulate economic activity.

As the MIF has been approved by both houses of Congress and is set to be transmitted for President Marcos’ signature, the finance chief said the fund is expected to be fully operational before the end of this year.

Marcos is seen signing the MIF into law before he delivers his second State of the Nation Address on July 24.

“After that, we expect to prepare the IRR (implementing rules and regulations), and then we look for people who will man the MIC (Maharlika Investment Corp.),” Diokno said.

“At least P75 billion would be transmitted (to the fund) so we can have it fully operational before the end of the year,” he said.

The initial capitalization will come from the P50 billion to be taken from the Land Bank of the Philippines, P25 billion from the Development Bank of the Philippines and all the dividends of the Bangko Sentral ng Pilipinas.

National treasurer Rosalia de Leon said the government will be “very aggressive” in securing resources for the MIF.

“We have given the legislature all the ingredients, such as the Santiago Principles, good governance and transparency to ensure that we will be able to attract as much as possible,” De Leon said.

She noted that the fund will prioritize investing in government infrastructure and other developmental projects that would yield the highest return on investments, coupled with the developmental impact of lower cost of living and lower cost of basic commodities, as well as in those investments that incorporate environments, social and governance considerations and sustainable practices.