The Senate has approved its final version of the proposed Maharlika Investment Fund (MIF) Act on third and final reading early Wednesday, May 31.
Senate President Juan Miguel “Migz” F. Zubiri poses for photo with his colleagues during the marathon session early morning Wednesday, May 31, 2023, following the passage of Senate Bill No. 2020 or the Maharlika Investment Fund (MIF) Bill. The bill was approved on third and final reading with a total of 19 senators voting in favor.
The bill, a sovereign wealth fund that the government intends to use to make investments, has been certified as urgent by President Ferdinand “Bongbong” Marcos Jr.’s administration.
Nineteen (19) senators voted in favor of the bill; Sen. Risa Hontiveros objected, Sen. Nancy Binay abstained from voting.
The bicameral conference committee meeting is set at 11 a.m. where lawmakers are expected to thresh out the differences between the versions of Senate Bill No. 2020 and House Bill No. 6608.
Following the rigorous debates on the bill, the Senate introduced major amendments to the measure, particularly the absolute prohibition of the use of funds of the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance (PhilHealth) corporation, Pag-IBIG, Overseas Workers Welfare Administration (OWWA), Philippines Veterans Affairs Office (PVAO) in the capitalization and investments in the Maharlika fund.
Under the bill, the Maharlika Investment Corp. (MIC), the corporate body that would be created upon enactment of the measure into law, shall have an authorized capital stock of P500-billion to be divided into five (5) billion shares, with a par value of P100 (one hundred pesos) per share.
The share shall have the following classifications and features namely:
Common shares of P3.750-billion, equivalent to P375-billion to be subscribed by the national government, its agencies or instrumentalities, including government-owned and controlled corporations (GOCCs) or government financial institutions (GFIs): provided that P1.25-billion shares equivalent to P125-billion shall initially be subscribed from
Land Bank of the Philippines (Landbank)—P50-billion;
Development Bank of the Philippines (DBP)—P25-billion;
The Senate also accepted the amendments introduced by Senate deputy minority leader Sen. Risa Hontiveros providing that the MIC shall admit into its ranks only those persons unblemished by any hint of corruption. The bill also includes stiff penalties against persons who perpetrate any corrupt acts.
Sen. Juan Edgardo “Sonny” Angara also moved to ensure that there would be a 25 percent limit to the investible funds of the DBP and the Land Bank that would be exposed to the operations of the Maharlika Fund.
Sen. Sherwin Gatchalian also moved to protect the financial strength of the Bangko Sentral ng Pilipinas (BSP). Under the Senate version of the measure, the 100 percent of the BSP’s total declared dividends, as computed under Republic Act 7653, also known as the New Cenral Bank Act, shall be remitted to the national government for the capitalization of the MIC in the amount not exceeding the P50-billion initial subscription of the national government.
Under the blll, the monetary board may recommend to the President of the Philippines the reduction of BSP’s dividend contribution to the MIC whenever economic conditions may warrant.
Also under the bill, the MIC will be mandated to
a) Establish a diversified portfolio of investments in the local and global financial markets and in other assets that promote the objectives of the Fund;
b) Manage and invest the initial and future contributions to the Fund in accordance with this Act;
c) Accept and manage investment mandates whose investment purpose is to increase income for development goals;
d) Develop and foster skills in finance, economics, risk mitigation, good governance, and other related areas, consistent with the capacity and capabilities build-up of human resources in the industry; and,
e) Implement international best practices in investing and managing assets in accordance with the Santiago Principles and other internationally-accepted standards and principles of transparency and accountability.
Also under Article IV of the proposed Maharlika bill, the Board of Directors of the MIC may engage in the following investments:
- Cash, foreign currencies, metals, and other tradeable commodities;
- Fixed income instruments issued by sovereigns, quasi-sovereigns and supranationals;
- Domestic and foreign corporate bonds;
- Listed or unlisted equities, whether common, preferred, or hybrids;
- Islamic investments, such as Sukuk bonds;
- Joint Ventures or Co-Investments, MERGERS AND ACQUISITIONS;
- Mutual and Exchange-traded Funds invested in underlying assets;
- Real estate and infrastructure projects: provided that investments in infrastructure projects shall be directed towards the fulfillment of national priorities such as the Department of Public Works and Highway’s (DPWH) infrastructure program and other infrastructure agencies.
- Health, education, research and innovation programs and projects that contribute to the attainment of sustainable development.
- Loans and guarantees to, or participation into joint ventures or consortiums with Filipino and foreign investors, whether in the majority or minority position in commercial, industrial, mining, agricultural, housing, energy, and other enterprises, which may be necessary or contributory to the economic development of the country, or important to the public interest; and
- Other investments with sustainable and development impact aligned with Section 17 of the proposed Act, as may be approved by the Board.
Under the Senate version of the bill, all investment policies approved by the MIC Board shall be posted on its website, which shall be immediately updated and made easily accessible to the public.