House Approves Maharlika Investment Fund on First Reading; President Marcos publicly expresses support

The Maharlika Wealth Fund, now known as the Maharlika Investment Fund, underwent major revisions after receiving backlash from lawmakers, civil society, and the public.

The House Committee on Banks and Financial Intermediaries approved changes to House Bill (HB) 6398 on Monday, December 12. The same committee referred the amended version of the bill, HB 6608, to House Committee on Rules later that day. Below is a summary of the bill’s amendments thus far:

• The MIF will no longer source capital from the GSIS, SSS, and the General Appropriations Act (GAA). The Bangko Sentral ng Pilipinas (BSP) will instead contribute 100 percent of its national government dividends, while the funding from the Landbank of the Philippines (LBP) and Development Bank of the Philippines (DBP) will be retained. This means MIF’s capital will now begin at PHP 110 billion (approximately USD 1.98 billion). Other government-funded institutions will be allowed to contribute according to their discretion.

• The Secretary of Finance will now serve as the Maharlika Investment Corporation (MIC) Board’s chairperson, replacing the President of the Philippines. The Board will also have two more independent directors. As it stands, the Board will be made up of about 15 members.

• The bill now has a provision for penalizing fraudulent and corrupt individuals who will cause the MIF to suffer any losses. Convicted persons can face imprisonment of one up to five years, and fines worth PHP 50,000 to PHP 2 million (approximately USD 896 to USD 35,825).

• At least 20 percent of the MIF’s net profits will be remitted to the national government for use in social welfare projects.

• Certain exemptions from the GOCC Governance Act of 2011 were removed. Among these, the MIF is now required to fully disclose all audited financial statements, reports, and other activities through a public website and other platforms.

• Exemption from the Philippine Competition Act has also been removed.

Rep. Irwin Tieng, chairperson for the HOR’s Committee on Banks and Financial Intermediaries, said that he is not yet sure whether the bill will be approved during the HOR’s plenary session on Wednesday, December 14.

Some initial critics have softened their stance towards the MIF. BSP Governor Felipe Medalla, who had reservations against the original version, recently signed a joint statement expressing approval for the new bill. Rep. Paul Daza of Northern Samar’s 1st District also said the bill is now a much better version and believes that “democracy prevailed” with the removal of contested provisions.

Still, others maintain that the MIF is still an unwise move given prevailing economic conditions. National Scientist for Economics Raul Fabella stated that the MIF is “irreparable,” and no amount of revisions can make up for the bill’s fundamental flaw: “the moral hazard arising from unnecessary state intervention and the unjustified economic backdrop.” Fabella recalled past funds that had similar functions to the MIF, such as the Oil Price Stabilization Fund, which ended up bankrupting its sources of capital and pushing the country deeper into foreign debt due to corruption. Because of the country’s dismal rule-of-law, he added, large infrastructure projects are better off funded by public-private partnerships (PPP).

A study published in 2021 also showed that should the country ever pursue a sovereign wealth fund, its capital should come from surpluses, such as income from the Malampaya oil field, and not from borrowings. It should also be overseen by a third-party, preferably international, management firm to avoid any kind of political influence over the fund.

Chief Presidential Legal Counsel Juan Ponce Enrile, who once said he had a moral duty to protect the President, also expressed reservations as he told President Ferdinand Marcos, Jr. to exercise caution in passing the bill. Should succeeding administrations misuse the MIF, Enrile said, the blame may be pinned on President Marcos as the bill’s signatory. “I’m not against it, but I want to be sure that the President will not be historically damaged,” he added.

There have been allegations that the bill is being railroaded in the HOR due to the swiftness of its development relative to other bills. While no counterpart has been filed in the Senate yet, Senate President Juan Miguel Zubiri disclosed that he and House Speaker Martin Romualdez have previously gone over the proposal. He also said that the President has instructed them to “seriously consider” their own version of the bill. He maintained that they were not told to hasten the Fund’s passage, but Sen. Aquilino Pimentel III believed that the President’s statements about the bill are a signal for lawmakers to pass it.

President Marcos publicly expressed support for the bill on Sunday, December 11, saying that he wouldn’t have brought it up otherwise. “It’s very clear that we need the added investment. This is another way to get that,” he said. He added that debates on the bill should be reserved for its final version, and that lawmakers should be allowed to refine the bill: “Let them do their jobs.”