Maharlika Fund Yet to Make First Investment: What’s the Hold-Up?

Nearly a year after the establishment of the Maharlika Investment Fund (MIF), the state-owned Maharlika Investment Corp. (MIC) has not yet initiated any investment activities. According to MIC president and CEO Rafael Consing Jr., the corporation is still in the process of setting up its organizational structure and assembling its team.

Consing announced that the MIF’s first investment is expected by the fourth quarter of 2024. He mentioned that the focus for the first half of the year has been on organizing the MIC, with the Department of Budget and Management (DBM) fine-tuning the budget. Coordination efforts are also underway with the Governance Commission for Government-Owned and Controlled Corporations (GOCCs) and the Civil Service Commission (CSC).

One of MIC’s primary investment targets is developing transmission and distribution infrastructure in off-grid islands to reduce electricity costs in rural areas. This initiative is part of a proposed P35-billion investment plan for the year.

MIC also plans to issue “thematic sub-funds” in the future, allowing retail investors to participate in the MIF’s investments. Consing expressed confidence that the MIC would be fully operational and making investments by the end of the year.

To ensure robust governance, MIC’s Board of Directors is crafting by-laws for its committees. As stipulated by Republic Act 11954, which established the MIF, the MIC will have a Risk Committee and an Audit Committee. Additionally, the board has created four more committees: Corporate Governance and Ethics, Nomination and Remuneration, Related Market Transactions, and Investment.

Consing emphasized that all investment decisions will go through these board committees. He also highlighted the need to offer competitive salaries to attract highly technical personnel comparable to those in the private sector.

The Maharlika Investment Fund, created by RA 11954 and signed into law by President Ferdinand Marcos Jr. on July 18, 2023, aims to invest in foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate, and high-impact infrastructure projects. The fund is intended to boost capital inflow into the Philippines, with an expected multiplier impact of 2.1 times per peso invested.

MIC, governed by a nine-member board, serves as the primary vehicle for mobilizing and utilizing the MIF to achieve optimal returns. The board includes the Finance Secretary as chairperson, the MIC president and CEO, the Land Bank of the Philippines president and CEO, the Development Bank of the Philippines president and CEO, two regular directors, and three independent directors from the private sector.

In mid-November 2023, seasoned banker Rafael Consing was appointed as the MIC president and CEO, marking the start of the fund’s operational phase. Despite initial opposition and revisions, the law establishing the MIF was passed in less than a year, and its implementing rules and regulations were crafted swiftly. President Marcos temporarily suspended these regulations to allow for necessary adjustments.

The MIF, with an authorized capital stock of P500 billion, aims to provide an alternative source of funding for infrastructure projects. Its initial capitalization includes contributions from the national government and the country’s two largest state-run banks, with Landbank and the Development Bank of the Philippines transferring P50 billion and P25 billion, respectively, to the fund.