Gwene Bernardo Salitrero

BSCEN 3RD-YEAR

Engineering Economy ( ENS191 )

Maharlika Fund

The MWF ( Maharlika Wealth Fund ) is a sovereign wealth fund which will be used by the
government to invest in a wide range of outlets such as foreign currencies, fixed-income instruments,
domestic and foreign corporate bonds, commercial real estate, and infrastructure projects, among others.

Maharlika is not surplus based but will be a strategic or national fund that focuses on certain domestic
priorities, with four goals: (a) optimal returns, (b) poverty alleviation, (c) economic goals, and (d)
sustainable development. It’s focus in terms of sectors will include: infrastructure ( physical, digital and
social ), energy security, tourism, agroforestry industrial urbanism, aerospace and aviation.

The Fund's goal is to maximize the utilization of government financial assets and encourage their
intergenerational management in order to spur economic development and quicken the nation's
progress.

The declared policy of the MIF is to generate, preserve and grow national wealth, create jobs, promote
trade and investments, foster technological transformation, strengthen connectivity, expand
infrastructure, and achieve energy, water and food security. (Sec. 2 of Republic Act No. 11954)

Maharlika Investment Corp (MIC), which will administer the fund, has an authorized capital stock of
P500 billion, out of which P125 billion is to be initially subscribed and paid in by government financial
institutions. (Sec. 6, RA 11954)

While this amount might be considered small compared to other sovereign wealth funds, the law
allows the MIC to issue bonds, debentures, and other securities. This means that the fund can
significantly increase its total assets and investible funds. (Sec. 10, RA 11954)

The MWF will help the administration achieve its Agenda for Prosperity and the objectives for
inclusive and sustainable economic growth we have outlined in our Medium Term Fiscal Framework,
8-Point Socioeconomic Agenda, and in the Philippine Development Plan 2023-2028. This was shared
by Budget Secretary Pangandaman on behalf of the Economic Team.

The MWF will be governed by a Board of Directors with nine (9) members chaired by the Secretary
of Finance. Other members include the Chief Executive Officer (CEO) of the MIC; the President and
CEO of the Land Bank of the Philippines; the President and CEO of the Development Bank of the
Philippines (DBP); two (2) Regular Directors; and three (3) Independent Directors from the private
sector. It will identify financially and commercially viable infrastructure projects to invest in and will
formulate investment strategies covering emerging megatrends such as environment, social and
governance (ESG), digitalization, and healthcare.

Direct benefits of the MWF include increased investments in and funding of big-ticket infrastructure
projects, high-return green and blue projects, and countryside development, including agriculture.
Intergenerational benefits include increased access of future generations to income from investments,
such as potential earnings from extracted natural resources such as in mining. In the near and medium
term, a Sovereign Wealth Fund will enhance our fiscal space and reduce fiscal pressures as the fund
pursues public infrastructure projects, as well as reduce uncertainties in cases when fund resources are
channeled to high-yielding financial undertakings and assets that are underinvested in today’s
environment of high global inflation and the lingering effects of the COVID-19 pandemic.

We have confidence that with professionals managing the funds, there will be efficient use and
management of these investible public funds. They will be able to ensure the availability of an
alternative high return investment platform, obtain the best absolute return for the funds, find additional
sources of liquidity as the need arises, and perform better risk management, given additional layers of
checks and balances in the use of investible funds. Ultimately, this will redound to growth and help us
achieve our economic transformation towards inclusivity and sustainability.

The real question is, is it beneficial to Filipino people? The Department of Finance (DOF) offers a
more concise and logical explanation of the law's alleged purpose: The Fund will accelerate
infrastructure development in the country, create a lot of high-quality jobs, attract more foreign
investors, and propel the country toward higher growth.

In order to finance key projects and achieve the objectives outlined in the Philippine Development
Plan, the 8-Point Socioeconomic Agenda, and the Medium-Term Fiscal Framework, the government
will augment its current procedures with the MIF. The MIF will increase available budgetary space,
lessen the demand on local resources, and lessen the need for government development assistance to
finance initiatives like Infrastructure Flagship Projects (IFPs).

The following are some statements disclosed by Senator Mark Villar during the press release that
happened on May 30, 2023: "Actually, there are a lot of benefits that we can get from the MIF. First, it
would create more jobs, more infrastructure projects mean more job opportunities for Filipinos.
Secondly, we will promote economic growth since better infrastructure leads to more efficient
transportation, communication, and other systems. Also, this will be a vehicle to reduce poverty, this
would help the government manage its budget and mitigate fiscal pressures during economic downturns
as it acts as a safety net for the country." Villar explained.
 Senator Mark Villar also pointed out that the MIF may be used to invest on sectors such as agriculture
and energy.

"Ang kapalit ng pondo natin ay investment hindi lang sa imprastraktura kung hindi pati sa agrikultura
at enerhiya na kailangan na kailangan na natin. This is what the Mahaklika is there for, it's to generate
jobs and generate investments in the sectors that lack investment." Villar said.

Senator Villar also mentioned that other benefits from the Maharlika Investment Fund would include
capital accumulation, sustainable development, economic stability, financial sustainability, foreign
investments and reduction of foreign debt.

The bill underwent a rigorous deliberation process in the Congress and was approved on May 31,
2023. The timely passage of the Philippines’ first sovereign wealth fund demonstrates the PBBM
administration’s commitment to pursue its goals for economic growth.

“Congress passed a game-changing measure––the Philippines’ first-ever sovereign investment fund–

–that could accelerate infrastructure development in the country, create a lot of high quality jobs, attract
more foreign investors, and propel the country towards higher growth,” Finance Secretary Benjamin E.
Diokno said.

A survey by Social Weather Stations (SWS) released Thursday showed at least 46 percent of adult
Filipinos expect much benefit from the proposed Maharlika Investment Fund (MIF), which aims to
optimize national funds by generating returns to support the administration's economic goals.

The SWS poll, conducted from March 26 to 29, also found that 51 percent of adult Filipinos said they
expect little or no benefit from the MIF. SWS said around 20 percent of the respondents have at least
partial but sufficient knowledge about the MIF, while 33 percent have only a little knowledge about it.
Meanwhile, the plurality 47 percent said they have almost no knowledge or no knowledge at all about
the MIF.

The survey likewise showed that 31 percent of adult Filipinos said they have much confidence that
the MIF will not end in corruption, 38 percent were undecided, while 29 percent have little confidence.
SWS said there is higher net confidence that the MIF will not end up in corruption among those who
expect to benefit much from it than those who expect to benefit little or not at all. The March survey
was conducted using face-to-face interviews of 1,200 adults nationwide: 300 each in Metro Manila,
Balance Luzon, Visayas and Mindanao.

Foreign investors and companies are in agreement that one of the strengths and advantages of the
Philippines is its people. Most Filipinos speak English, the population is relatively young providing a
strong work force and consumer base, and Filipinos have good communication and interpersonal skills.
It would be regrettable if we fail to enhance and cultivate the skills of our workforce to enable Filipinos
to remain competitive.

In conclusion, the MIF holds great promise and, hopefully, it will be deployed in the most efficient
and effective manner to benefit the Philippines.

Citation:

Maharlika Wealth Fund, an investment vehicle and economic driver - Economic Team. (n.d.).
https://www.dbm.gov.ph/index.php/management-2/372-maharlika-wealth-fund-an-investment-
vehicle-and-economic-driver-economic-team

Fund of the Month (Feb’24): Maharlika Investment Fund (MIF) (GlobalSWF). (n.d.-b).
https://globalswf.com/news/fund-of-the-month-feb-24-maharlika-investment-fund-mif-
#:~:text=%5BMIF%5D%20Maharlika%20is%20not%20surplus,and%20(iv)%20sustainable%20devel
opment.

Lo, K. (2023b, July 18). Newly enacted Maharlika Investment Fund to serve as vehicle for growth.
Department of Finance. https://www.dof.gov.ph/newly-enacted-maharlika-investment-fund-to-serve-
as-vehicle-for-growth/

Statement of economic managers on the creation of the Maharlika Wealth Fund. (n.d.).
https://www.dbm.gov.ph/index.php/management-2/370-statement-of-economic-managers-on-the-
creation-of-the-maharlika-wealth-
fund#:~:text=Direct%20benefits%20of%20the%20MWF,and%20countryside%20development%2C%
20including%20agriculture.

The Maharlika Investment Fund: Boon or bane? | Heinrich Böll Foundation | Southeast Asia
Regional Office. (2023, August 9). Heinrich Böll Foundation | Southeast Asia Regional Office.
https://th.boell.org/en/2023/08/09/maharlika-investment-
fund#:~:text=The%20Fund%20will%20accelerate%20infrastructure,the%20country%20toward%20hi
gher%20growth.