President Ferdinand Marcos Jr.’s economic managers reaffirmed their support for the proposed Maharlika Investment Fund on Tuesday, saying safeguards are in place to minimize risks or prevent abuse. 

The MIF aims to execute and sustain high-impact infrastructure and development projects, ease fiscal constraints, and maximize expected returns for the country’s investments, according to a joint statement issued by the Department of Budget and Management, the Department of Finance, the National Economic and Development Authority, and the Bangko Sentral ng Pilipinas.

The agencies said Senate Bill 2020, which proposes the creation of the MIF, requires the MIF Board to establish a Risk Management Committee to ensure there are appropriate measures to achieve a prudent balance between risk and reward in both ongoing and new business activities, taking careful consideration of risk identification, measurement, assessment, mitigation, reporting, and monitoring. 

There is also a Joint Congressional Oversight Committee tasked with overseeing, monitoring, and evaluating the implementation of the Maharlika Investment Fund Act. It will be composed of seven members each from the House of Representatives and the Senate.

An Advisory Board composed of the Secretary of Budget and Management, the Secretary of the National Economic and Development Authority, and the Treasurer of the Philippines will assist in the formulation of general policies related to investment and risk management.

Investment and risk management plans, strategies, and activities of the MIC, involving the MIF, will be published on its website for public consumption.

The bill also prohibits pension and social funds from contributing to the Maharlika Investment Corporation (MIC) and MIF. 

“This absolute prohibition is a fiscal risk management measure to ensure that fiscal resources, particularly pension and social funds managed by the SSS, GSIS, and other pension and social funds, are used solely for the purpose for which they were created (i.e., to cater to the specific needs of the respective individual members),” the economic managers said.

The national government’s initial contribution of P50 billion will be sourced from declared dividends of the BSP, government shares in the income of the Philippine Amusement and Gaming Corporation, and proceeds from privatization of government assets, as well as other sources of the national government such as royalties/special assessments. 

“These are funds that MIC can use to finance public infrastructure projects. Prior to the inclusion of provisions on the funding of the MIF, the founding GFIs, the National Government, and the BSP were consulted on their financial viability to support the capitalization of the MIC in its initial years,” the joint statement read.

”The national government contribution only pertains to the seed fund, and the contributions of the national government to the MIC shall not be taken from any of the programmed or even unprogrammed appropriations in the national budget.”

The bill also imposes imprisonment as a penalty for certain offenses.

Activists and opposition figures have questioned the need for a sovereign wealth fund and raised concerns about the potential for corruption.

Business groups have said the government was already running huge budget deficits and that the proposed law risked downgrading its credit rating.

Conventional sovereign wealth funds are seeded by windfall government profits from natural resources, such as oil or minerals.

”The MIF is not only beneficial but necessary at this point in time. While the Philippines can offer investment opportunities, given that we are still a growing economy, we see that the cost of debt has risen, making the need to explore vehicles to attract equity financing such as MIC/MIF urgent,” the economic managers said.

‘Hence, the MIC/MIF is an investment for the future that we need to start building now. It is an ideal vehicle and well-positioned to bring in investments as the Philippine economic outlook remains robust amid the global economic slowdown.” 

Congress approved the MIF bill earlier this month and will soon send it to Marcos for his signature.