Maharlika Wealth Fund

Maharlika Investment Corporation

Logo of the sovereign wealth fund
Company type	State-owned
Industry	Fund management (sovereign wealth fund)
Founded	July 18, 2023
Founder	19th Congress under the administration of President Bongbong Marcos
Headquarters	ORÉ Central Building, BGC[1], Philippines
Key people	Ralph Recto (Chairperson[a]) Rafael Consing, Jr. (President and CEO)
AUM	US$2.26 billion (2023) "Maharlika Philippines (MIF)".
Website	maharlika.dof.gov.ph

The Maharlika Wealth Fund (MWF), also known as the Maharlika Investment Fund (MIF), is a sovereign wealth fund for the Philippines which is managed by the Maharlika Investment Corporation (MIC).^[2] The MIF is the Philippines' first sovereign wealth fund. It will be allocated across a variety of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and infrastructure projects.The MIF is expected to generate returns that support the government's economic goals, as outlined in the Medium-Term Fiscal Framework, the eight-point Socioeconomic Agenda, and the Philippine Development Plan.

In late November 2022, seven lawmakers in the Philippine House of Representatives, including Martin Romualdez and Sandro Marcos, filed House Bill No. 6398,^[b] proposing the creation of a sovereign wealth fund for the Philippines to be known as the Maharlika Wealth Fund (MWF), inspired from South Korea's sovereign wealth fund. The fund, if established, would be managed by the Maharlika Investments Corporation (MIC).^[4][5] President Bongbong Marcos has backed the establishment of a sovereign wealth fund, believing that it would be advantageous for the country.^[6][7]

After President Marcos certified the bill as urgent, it was passed on its third reading in the lower house, with 279 lawmakers voting in favor of passing the bill.^[8] Only six lawmakers voted against: Gabriel Bordado (Camarines Sur–3rd, Liberal), Arlene Brosas (Gabriela), France Castro (ACT Teachers), Mujiv Hataman (Basilan–Lone, Liberal), Edcel Lagman (Albay–1st, Liberal), and Raoul Manuel (Kabataan).^[9][10] From filing to approval, it took the House of Representatives 17 days to deliberate on the bill.^[11]

On May 24, 2023, Marcos certified the creation of the Maharlika investment fund as urgent to the Senate.^[12] On May 31, 2023, the upper house had approved the third and final reading with a total of 19 senators voting in favor, one negative (Risa Hontiveros) and one abstention (Nancy Binay).^[13] It would need President Marcos' signature before it becomes law.^[14]

A bill that is certified as urgent allows lawmakers to bypass the constitutional rule requiring bills to be passed on three readings on separate days.^[11] The president's certification of urgency is typically made to respond to public calamities or emergencies.^[15] In February 2023, a petition was filed to the Supreme Court requesting to nullify Marcos's certification of urgency, arguing that it is unconstitutional because no public calamity or emergency was expressly stated in Marcos's letter to the House.^[15] This was later dismissed by the Court in May, citing that the petitioners "failed to present to Court any fact establishing the existence of an actual case or controversy ripe for adjudication".^[16]

On July 5, 2023, the copy of the bill was transmitted to Malacañang for President Marcos's signature.^[17] On July 18, he signed the bill into law as Republic Act No. 11954.^[18]

Initially, the Government Service Insurance System (GSIS) and the Social Security System (SSS) were obliged to contribute funds to the MIF under the proposed bill establishing the fund. The two institutions were later dropped as mandatory contributors.^[19] However, both the boards of the GSIS and SSS would be permitted to contribute if they approve such a move.^[20][21]

Economist Michael Batu said the fund, if managed properly, can help raise money to help the government's programs and achieve development goals.^[22] Global Source economist Romeo Bernardo, on the other hand, believes that the proposal is poorly timed and that a sovereign wealth fund would just add to the Philippines' current financial and fiscal risks and raised concern for potential mismanagement, mentioning the 1Malaysia Development Berhad scandal.^[23]

A group consisting of 12 organizations, namely the Foundation For Economic Freedom, Competitive Currency Forum, Filipina CEO Circle, Financial Executives Institute of the Philippines, Institute of Corporate Directors, Integrity Initiative, Inc., Makati Business Club, Management Association of the Philippines, Movement for Good Governance, Philippine Women's Economic Network, UP School of Economics Alumni Association and Women's Business Council Philippines, Inc., made a collective statement against the proposal. The group believes that there is no gap or "missing institution" in the Philippine economy that necessitates the creation of a sovereign wealth fund and prescribes the government to focus on the management of the country's fiscal deficit and public debt to avoid impediments to the delivery of public services and to prevent a downgrade of the Philippines' sovereign investment credit rating. It also notes that the Philippine economy has no commodity-based surpluses or surpluses from external trade from state-owned enterprises. It also opposed the idea of the GSIS and SSS contributing to the fund.^[23]

The Philippine Stock Exchange has made its support of the proposal, stating that the "primary mission is to facilitate the flow of capital into more productive and beneficial channels and as a result, contribute to efficient capital formation for the country".^[24]

The legislation also met criticisms. Critics see it as a plunder fund as, according to tax expert Raymond Abrea, the fund is "prone to corruption and money laundering".^[25] Economists remain skeptical about the bill as it contains provisions that could affect the independent functions of government financial institutions and the Bangko Sentral ng Pilipinas.^[26] In June 2023, University of the Philippines School of Economics faculty members issued a paper stating that the fund "violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector – notwithstanding its proponents' good intentions". They emphasized its unclear purpose even after deliberations at the bicameral Congress, possible encroachment on the budget process, risks to public funds, moral-hazard risks, possible contradiction to other economic plans given its vagueness, red flags in governance structure, and unlikely substantial growth to finance projects as crucial points to consider.^[27]

On October 12, 2023, President Ferdinand Marcos Jr. ordered the suspension of the implementing rules and regulations (IRR) of the laws setting up the Maharlika Investment Fund, claiming that he wanted to further study it "to ensure that the purpose of the fund will be realized for the country's development with safeguards in place for transparency and accountability."^[28]

On November 6, 2023, President Marcos Jr. announced that the IRR for the Maharlika Fund has been finalized, and he emphasized that they are pushing to have it operational before year-end.^[29] The revised IRR was published by the Official Gazette on November 10, 2023.^[30]

Rafael Consing Jr. was sworn in as the Maharlika Investment Corporation's president and CEO on November 24, 2023.^[31] Four directors were sworn in on December 20, including Vicky Castillo Tan, Andrew Jerome Gan, German Lichauco, and Roman Felipe Reyes.^[32]

On January 1, 2024, the Maharlika Investment Corporation held its inaugural board meeting. Rafael D. Consing, Jr., President, discussed the Fund’s capitalization and identified some potential sectors that may be tapped by the MIF.^[33]

On April 18, 2024, Maharlika Investment Corporation unveiled its official logo which principally honors the Flag of the Philippines and the Philippine eagle. The design reflects the themes of rebirth and renewal inspired by "Bagong Pilipinas.”^[34]

On September 18, 2023, Senate Minority Leader Koko Pimentel, representative Ferdinand Gaite (Bayan Muna), and former representatives Neri Colmenares and Carlos Isagani Zarate (Bayan Muna) filed a 56-page petition before the Supreme Court to ask the declaration of Maharlika Investment Fund Act of 2023 as unconstitutional. They claimed that it "entrusts hundreds of billions in public funds to unknown fund managers and an amorphous nine-member Board of Directors."^[35]

After the approval of the Maharlika Investment Corporation board, controversy arose on the salary of its President and CEO, Rafael D. Consing, Jr. A basic pay of PHP 2.5 million per month (amounting to PHP 30 million per year) was requested by Consing Jr. which approached the overall compensation of BSP Governor Eli M. Remolona, Jr., which amounted to PHP 35.48 million in 2023. Deliberations on the salary of Consing Jr. have caused significant delay on operations as the proposed salary was rejected. Consing Jr. defended his proposed salary as necessary for the sovereign wealth fund to recruit appropriate staff and to be at-par with the private sector. Government officials countered that the MIC was under the supervision of the Governance Commission for GOCC as it is a government entity. In response, unnamed government officials have countered with a proposal suggesting a lesser initial salary with a gradual increase upon the accomplishment of investments by the MIC.^[36]

Consing Jr. would further defend his position, saying that it will "bring in experience and technical expertise" as was needed by the MIC. An item of contention between Consing Jr. and government officials has been Republic Act No. 11954's lack of clarity on the pay of non-technical and highly technical staff. Non-technical staff were understood to have the pay equal to that of other government employees. Consing Jr. argued that highly technical staff should be paid in a way "comparable to the private sector."^[37]

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• Maharlika Wealth Fund