Zubiri: Maharlika constitutionally sound

MANILA (2nd UPDATE) — President Ferdinand Marcos, Jr. on Tuesday signed the measure creating the Maharlika Investment Fund (MIF), which economic managers regard as a vehicle for economic growth, and despite concerns raised by other groups.

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Marcos signed Republic Act No 11954 during a short ceremony in Malacañang. Reporters, though, have yet to receive a copy of the law.

The law establishes the Maharlika Investment Corporation that will be managed by a board of directors chaired by the finance secretary.

The Palace said the law provides for the establishment of an "independent Maharlika by investing funds, coordinating, and strengthening investment activities of top-performing financial institutions to promote economic growth and social development."

In his speech, Marcos, Jr said the Maharlika is a "bold step" towards PH's economic transformation as it recovers from the COVID-19 pandemic.

This would also prevent government from being burdened by debt to finance infrastructure. A total 194 infrastructure projects have been approved by the National Economic Development Authority (NEDA) under the Marcos administration.

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

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

"We now have an available fund that will provide us the seed money for investment and to attract other investments and for us to be able to participate in those operations and those investment without additional borrowing."

For the efficient management of the Maharlika Investment Corporation to happen, decisions should be free from politics. This was also the reason why he was "not in favor" of putting the President as its chairman.

But the real challenge was to "maintain the integrity" of Maharlika.

"Inevitably if you put me or the secretary of finance or in a decision making loop, those decisions will be colored by political considerations and that must not be the case," said Marcos.

"So long as structurally... we removed the political decisions from the fund and those political decisions are left with the political bureaucracy, and the fund is left to be a fund and operating on a sound and proactive financial basis," he added.

Based on the version passed by Congress, the board is made up of the president and chief executive officer of the Land Bank of the Philippines, two regular directors, and three independent directors from the private sector.

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Senate President Juan Miguel Zubiri described the law as "constitutionally sound."

When asked what changes were made in Congress before its submission to the President, Zubiri said it was just "typo error." This was on the 10-year proscription period for the penalties and its implementation based on laws.

This was an "honest mistake," he told Palace reporters.

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MPC pool

"Subject to styling lang... Dapat i-check ng secretariat yung ganoong klaseng errors. It has nothing to do with the meat of the bill. Wala po ito sa essence of the measure," he said.

"Nagkamali lang sila, naglagay sila ng dalawang magkaparehong provisions pero sa totoo lang, tiningnan namin ulit yung transcript of records at iisa lang ang na-mention [on proscription of penalties]."

Zubiri said while they were not able to cross-check the matter, when this was corrected, the legislative process "was still ongoing."

"It was truly reflected in the transcript of records," he said.

Meanwhile, Zubiri said he would suggest that the construction of a P175-billion bridge linking Cavite and Bataan would be included in the projects under Maharlika. He also described this possibility as a "big game changer."

Sen. Mark Villar meanwhile called MIF a "historic legislation."

“The MIF is a historic legislation. We are now at par with other countries who also have their own sovereign wealth fund,” he said.

Deputy Speaker Gloria Macapagal Arroyo also joined the chorus of lawmakers hailing the passage of the law creating the Maharlika Investment Fund.

"It's a very big milestone for our economy," the former president said.

Budget Secretary Amenah Pangandaman, for her part, said her agency "fully supports" the law is it would help expand the Philippines' fiscal space and promote fiscal stability through strategic investments.

"The Fund is envisioned to be invested in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate and high-impact infrastructure projects, and projects that contribute to the attainment of sustainable development," a statement from the Department of Budget and Management read.

"Unlike other Government-Owned or -Controlled Corporations (GOCCs), the MIF will be able to maximize government assets through its investments in projects that generate bigger returns," it added.

But for Senate Minority Leader Koko Pimentel, the signing of the bill was a "sad day in the history of our country."

"The MIF is a bad idea, a bad decision, a bad act," Pimentel said.

Sen. Risa Hontiveros also had a similar view.

“Ang national budget ang unang magiging biktima ng Maharlika Fund," Hontiveros said.

University of the Philippines economists earlier published a paper titled "Maharlika Investment Fund: Still Beyond Repair" which called on Marcos “to seriously reconsider” signing the MIF bill.

The economists, which included former National Economic and Development Authority (NEDA) Secretary Ernesto Pernia, said the “MIF violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector — notwithstanding its proponents’ good intentions.”

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