While the Government Service Insurance System (GSIS) and the Social Security System (SSS) are barred from investing in the Maharlika Investment Corp. (MIC), they may invest in its projects, the government’s top economic officials said Monday.
In a press briefing, National Treasurer Rosalia de Leon addressed fears that if the Maharlika Investment Fund (MIF) loses money, the pensions of state and private workers would be put at risk.
“It’s prohibited [for the SSS and GSIS to invest in the MIF] directly and indirectly,” De Leon said in a mix of Filipino and English.
But De Leon and Finance Secretary Benjamin Diokno both said the two pension funds may invest in projects, but not in the MIC itself.
They added that a risk management unit within the MIC would determine where the money will be invested.
MIC can also form joint ventures with conglomerates for big-ticket Public Private Partnership (PPP) projects, they said.
Diokno, who will head the MIC by virtue of his position as Finance secretary, said they will consider all possible investment projects, regardless of size. They will also work on developmental projects that could have a high return.
“The MIC can invest in the stock market or short-term bonds,” Diokno said in Filipino. “There’s an allocation for this. Long term, or short term, maybe high risk but high return. It’s the risk management committee that will determine this.”
Among the sources of funds for the MIF are proceeds from the sale of government assets. Some P2.5 billion worth of government properties are lined up for sale this year.
Diokno said the MIC is expected to be fully operational before the end of the year.
He said the Maharlika Investment Fund (MIF) Act of 2023 is expected to be signed by President Ferdinand R. Marcos Jr. before his second State of the Nation Address (SONA) in July.
Once enacted into law, Diokno said: “We’re expected to prepare the implementing rules and regulations (IRR), and we’re expected to look for people to man the MIC.”
“That is the direction and I see this to be fully operational before the end of the year,” he added.
Congress approved the MIF Act of 2023 last week.
The sovereign wealth fund will 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.
Diokno said the MIC would have at least P75 billion in paid-up capital this year.
Of the total, P50 billion will come from the Land Bank of the Philippines while the remaining P25 billion will be from the Development Bank of the Philippines.
Despite concerns that raising additional investments for the fund will be quite challenging this year given the economic environment both here and globally, Diokno said: “The Philippines is in a better position now compared to years ago.”
“Globally there’s a lot of distress but for us, we got an upgrade [from Fitch]. It’s like our star is shining bright so maybe that will help attract more investments,” Diokno said.
De Leon said that the government would be “very aggressive” to make sure that there will be resources for the MIF.