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A recently established sovereign wealth fund for the Philippines is called the Maharlika Investment Fund (MIF), commonly referred to as the Maharlika Wealth Fund (MWF).
On July 18, 2023, President Ferdinand Marcos Jr. approved the Maharlika Investment Fund (MIF), a sovereign wealth fund aimed at benefiting the country in several ways. The MIF is expected to have the following positive impacts:
What is a Sovereign Wealth Fund?
A Sovereign Wealth Fund (SWF) is an investment vehicle owned by the government and typically financed with surplus funds or reserves. These funds are invested by the government in both financial and real assets with the intention of balancing budgets, boosting savings, and fostering economic growth.
What is the mandate of the Maharlika Investment Corporation (MIC)?
The Maharlika Investment Corporation (MIC) is mandated to act as the sole vehicle for the purpose of mobilizing and utilizing the MIF for investments in transactions in order to generate optimal returns on investments (ROIs), while contributing to the overall goal of reinvigorating job creation and accelerating poverty reduction by sustaining the economy’s high growth trajectory while ensuring sustainable development.
How much is the capitalization of the MIC?
The Maharlika Investment Corporation shall have an authorized capital stock of 500 billion pesos (approximately 8.9 billion dollars), the 375 billion pesos of which shall constitute common shares available for the subscription of the National Government, its agencies or instrumentalities, GOCCs, or Government Financial Institutions (GFIs). The remaining 125 billion pesos in capital shall correspond to the preferred shares available for the subscription of the National Government, its agencies or instrumentalities, GOCCs or GFIs, and reputable private financial institutions and corporations.
How much is the initial capitalization of the MIC?
Of the 375 billion pesos in capital that correspond to the common shares, 125 billion pesos (or about 2.2 billion dollars) shall be initially subscribed to by the National Government, and the two Government Financial Institutions (GFIs), the Land Bank of the Philippines and the Development Bank of the Philippines. The National Government shall contribute 50 billion pesos, while the Land Bank of the Philippines and the Development Bank of the Philippines shall contribute 50 billion pesos and 25 billion pesos, respectively. The contributions from the two founding GFIs shall be fully paid upon the incorporation of the MIC.
Where will the National Government source its 50 billion pesos contribution to the initial capitalization of the MIC?
The 50 billion pesos contribution of the National Government to the initial capitalization shall be sourced from the following:
Can the MIC issue bonds?
Yes. The MIC may issue all kinds of bonds, debentures, and securities. However, these cannot be guaranteed by the Philippine government.
What are the allowable investments of the MIC?
To know more about the MIF, you may consider this topic: Bureau of the Treasury (BTr) Issues Maharlika Investment Fund (MIF) Implementing Rules and Regulations
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Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
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