THE success of the Maharlika Investment Fund (MIF) will depend largely on the board of directors who will manage the fund, which the government hopes to appoint by September, Finance Secretary Benjamin E. Diokno said.
“The key to the success of this fund is to choose the (right) men and women… and the President recognizes that,” Mr. Diokno said in a television interview on ANC on Monday.
“We continue to receive applicants, names given to us, men and women. My timetable is that we should be able to appoint them before the end of September,” Mr. Diokno said.
“We have infrastructure projects which will give a return of about 20-25%. The decisions will be governed by the group composed of good men and women, and they will recommend to us the strategy and the projects that will be funded by Maharlika,” he added.
The MIF, recently signed into law, will be managed by the Maharlika Investment Corp. (MIC), led by a nine-member board.
In a brief, GlobalSource Partners noted the challenges that may arise in recruiting candidates for the board.
“Job one, finding credible highly regarded fund managers, chief executive officer, and board directors, will not be easy given the ambitious return and development objectives that its sponsors have publicized,” it said.
The MIC board will consist of the president and chief executive officer of the MIC, and the president and chief executive officer of the Land Bank of the Philippines and the Development Bank of the Philippines.
It will also have two regular directors and three independent directors from the private sector. The regular directors have a term of three years while the independent directors have a term of one year, but are eligible for reappointment provided their term does not exceed nine years.
The Secretary of Finance will chair the board in an ex-officio capacity.
Citigroup, Inc. Chief Executive Officer for the Philippines Paul A. Favila said that the fund could bring in major investments if managed correctly.
“It does have the potential to actually facilitate investments. That’s what we obviously want for the country… we think it’s the opportune time to actually help bring in those investments. If the Maharlika fund does its job, then that should be good,” he told reporters on Monday.
Mr. Favila said the MIF is more of an infrastructure fund than a sovereign wealth fund.
GlobalSource said that the MIF needs “detailed mapping out to ensure that as a vehicle for bringing in private investment in strategic sectors; it should not be a source of unmanageable fiscal risks down the road.”
“They also need to find an institution builder that will define the rules, risk management principles, investment guidelines, and other governance guardrails of this new agency. It’s actually better if this is done separate from the investment mindset, so such guardrails are shorn of agendas and biases,” it added.
Mr. Diokno said that the MIF will help unburden the budget from financing infrastructure projects and reduce the need to take on debt.
“The MIF creates additional funding for some 194 priority projects of this government, and that is worth about P8 trillion. Without the MIF, about 55% of that will be funded through official development assistance, around 10% through the budget, and around 30% will be through public-private partnerships,” he said.
“With the MIF, you open another area of financing. That’s the beauty of the MIF. We can accelerate the implementation of all these projects, which we need very badly,” he added.
Last week, President Ferdinand R. Marcos, Jr. signed Republic Act No. 11954, which creates the MIF. The fund is expected to be operational before the end of the year. — Luisa Maria Jacinta C. Jocson
