House leader defends Maharlika bill

A leader of the House of Representatives on Wednesday allayed the concerns over the Maharlika Investment Fund (MIF) bill's lack of a clear goal, saying the policy's objective is development, according to a report by Philippine News Agency.

House Ways and Means Committee chair Joey Salceda made the statement in response to the recent discussion paper released by the University of the Philippines School of Economics (UPSE) expressing their reservations with the MIF bill, as they urged President Ferdinand R. Marcos Jr. to "seriously reconsider" its final approval.

In a 28-page paper, the economics professors said the exact purpose of the MIF remains "unclear", arguing that clarity of goals is essential for any new sovereign wealth fund (SWF).

Salceda said Section 13 of the MIF bill makes it clear that "it is a development fund above all else", citing that its objective is "to promote socio-economic development."

"Of course, at the core, the MIF is developmental. The President has repeated this, and this is the main direction of the Fund. But it has to make money to be sustainable," Salceda said.

"So, it’s mainly a development fund, and if it takes on the characteristics of an investment fund in some respects, it does so only because it necessarily has to be involved in the financial markets," he added.

The professors also argued that due to its confused goals, the MIF bill does not adequately articulate and take account of several implications of the fund's dual-bottom line objective.

They explained that under the double-bottom line approach, the MIF will invest in financial instruments to earn commercial returns, while also investing huge portions of its funds in local development projects for economic returns.

Salceda, however, said he sees no issue with the double-bottom line approach, considering that every major company in the world, by complying with Environmental, Social, and Governance (ESG), is pursuing this approach in some manner.

He also noted that there is no implication in the bill that the developmental outcomes were to be a substitute for real financial returns.

"If anything, we emphasized during the discussions in the House that projects such as dams, grids, and toll roads are very profitable, if long-gestating projects," he said.

He likewise pointed out during House discussions that at certain points, there will be a need for a portfolio mix of long-gestating development projects and short-to-medium-term financial investments to make immediate absolute returns while the longer-term investments mature.

"It would be bad if social and economic returns were presented as a substitute for absolute financial returns. That is clearly not the case here – and it’s never a bad idea to hit two birds with one stone," he said.

On the UPSE's argument that the MIF is not aligned to the Philippine Development Plan (PDP) 2023-2028, Salceda said there were "very specific references to infrastructure" in the bill having to align with the national infrastructure program of the Department of Public Works and Highways (DPWH) and other infrastructure agencies, the inclusive innovation industry strategy of the Department of Trade and Industry (DTI), and the public investment programs of the National Economic Development Authority (NEDA).

"That includes the Philippine Development Plan, without having to mention it," he said.

The MIF will be the country's first-ever sovereign wealth fund that will optimize national funds by generating returns to support the administration’s economic goals.

The 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.

The Congress recently approved the proposed bill. It is expected to be signed by President Marcos before his second State of the Nation Address next month.