With the legislative approval of the Maharlika Investment Fund (MIF), Camarines Sur Rep. and National Unity Party (NUP) president LRay Villafuerte said the 19th Congress has opened the gateway to an alternative, potentially huge source of investment funds that would let the national government (NG) spend bigger on its big-ticket programs to shore up President Marcos’ “Agenda for Peace and Prosperity.”
The final version of the MIF bill, which the House of Representatives and the Senate had passed on the eve of the Congress’ sine die adjournment, is envisioned to provide a new funding stream for investments other than the traditional sources of funds, namely, the General Appropriations Act (GAA) or national budget, official development assistance (ODA) from our overseas partners and the business sector via the public-private partnership (PPP) mode, according to Villafuerte.
Under the bill, the MIC is the corporate body to be created upon enactment of the measure into law, and it shall have an authorized capital stock of P500-billion.
“As another, potentially immense, funding instrument for priority investments of the NG, the MIF has the makings of a prime source of fresh capital for accelerated infrastructure development, agricultural modernization and food security, climate action, energy development and other big-ticket projects that the Marcos administration needs to carry out to shore up the President’s ‘Agenda for Peace and Prosperity,” said Villafuerte, who is a co-author of the House version—House Bill (HB) 6608—of the approved consolidated MIF bill.
Villafuerte said that in becoming a new investment fund source for high-impact, economically-viable programs and projects, “the MIF would help the NG prevail over two drawbacks that threaten to handicap the Marcos administration’s agenda to sustain the robust economic growth path post-pandemic, create jobs and attack poverty, and keep the Philippines on its AmBisyon Natin 2040 path of becoming a prosperous middle-class society in less than two decades.”
And these two main challenges to high and inclusive growth, he said, are, “One, the government’s presently limited fiscal space as a consequence of the immense public spending on Covid-19 response that the preceding Administration have had to resort to; and second, the economic slowdown across the world resulting from, among others, the intertwined factors of persistent elevated inflation, international oil price shock, and Russia’s invasion of Ukraine that continues to impact global supply chain logistics.”
The final congressional version actually resulted from the agreement by members of the bicameral conference (bicam) committee last Wednesday for the House to adopt Senate Bill (SB) 2020, and that this would be the enrolled bill that the Congress would submit to Malacañan Palace for President Marcos’ approval and signature into law.
Held at the Manila Golf and Country Club in Makati City, the meeting took place just hours after senators passed SB 2020 early Wednesday morning.
The House passed HB 6608 in December 2022 yet before the Congress went on its traditional yearend break.
That the proposed MIF is expected to win support from the investor community is borne out by the fact, said Villafuerte, that even before President Marcos could sign the bill into law, the Japan Bank for International Cooperation (JBIC) has already expressed interest in it as it sought tie-ups with Philippine companies on energy development projects.
As reported by Malacañang, he said that in courtesy call on the President at the Palace, JBIC chairman Tadashi Maeda said this Japanese institution was interested in addressing the role of liquified natural gas (LNG) as a traditional source of power and the country’s need for other energy sources such as hydropower, solar, and wind.
Villafuerte pointed out that the MIF proposal has popular support, with one in every two Filipinos who are aware of this investment fund plan actually supporting it.
With additional funding available for government priority programs via the MIF, Villafuerte said the MIF would empower the Marcos administration to do the following:
· Spend much more on programs to stimulate economic activity and sustain the post-pandemic growth momentum;
· Raise investment spending on infrastructure projects, which has the highest multiplier effect on the economy and will create a lot more jobs and livelihood opportunities;
· Level up investments in agriculture modernization and food security, if not self-sufficiency; which will raise farmers’ incomes, boost harvests and bring down the retail cost of farm goods for the benefit especially of ordinary consumers;
· The abovementioned investments will improve living standards and accelerate poverty reduction, benefitting poor and low-income families;
· Higher spending on priority programs like digitalization, transportation and communications will make the Philippines an attractive hub for investors, hence all the more generating foreign direct investment (FDI) inflows that will generate more jobs; and
· With a new funding source for priority programs, the government will manage to save its internally-generated resources and set aside more public funds for other projects beneficial to the people, without need for more foreign borrowings.
As pointed out by the President’s economic team, Villafuerte said the MIF could partly bankroll the government’s pipeline of 194 flagship projects approved by the National Economic and Development Authority (NEDA) and requiring total funding of a whopping P9 trillion.
These projects, he said, are those on physical and digital connectivity, irrigation and water supply, flood management, health, energy, agriculture, climate change mitigation and other major infrastructure.
Villafuerte said the “doubting Thomases” have no reason to worry about possible fund misuse as the MIF bill has assorted safeguards in place, including the required internal and external audits by the Maharlika Investment Corp. (MIC) Board, periodic review by a Congressional oversight committee, scrutiny by the Commission on Audit (COA), and its adherence to the government procurement law.
Unlike other state-run corporations, he said the MIC can maximize use of government assets through its would-be investments in projects that generate bigger returns.
Under the bill, the MIC is the corporate body to be created upon enactment of the measure into law, and it shall have an authorized capital stock of P500-billion.
Villafuerte noted that the final congressional version explicitly prohibits state-run pension funds from investing in the MIF.
These pension funds that will no longer provide seed money—as originally proposed—for the MIF are those managed by the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance Corp. (PhilHealth), Home Development Mutual Fund or HDMF (Pag-IBIG), Overseas Welfare Workers Association (OWWA) and Philippine Veterans Affairs Office (PVAO).
Villafuerte pointed out that the MIF proposal has popular support, with one in every two Filipinos who are aware of this investment fund plan actually supporting it.
“This is enough reason for even the doubting Thomases to give the MIF proposal a chance to prove its worth,” he said, in referring to last December’s mobile-based nationwide survey by market research and opinion pollster Tangere that showed that of the 83.75% of Filipinos aware of the MIF, 54.08% of them support its passage into law.
Of the 2,400 people polled across the country, Tangere reported that 2,010 knew about the MIF, of whom 54.08% supported it, 65.47% believed its establishment was timely, 57.86% said it could help fuel crucial Administration projects, and 56.67% believed it would help grow our economy.
“The Tangere survey results illustrated that aside from having the backing of various business groups and leaders as well as of international institutions like the ADB (Asian Development Bank), this investment vehicle plan enjoys broad support among Filipinos who are aware of it,” Villafuerte said.
He noted that ADB Philippines country director Kelly Bird had said that such a Fund could “help deepen the domestic capital market. It creates a large institutional investor and that allows mobilization of savings within the economy for investments and so on. So it does have very good benefits.”
