Philippines’ Marcos Jnr promises ‘utmost prudence’ as he signs bill creating first-ever sovereign wealth fund

The Maharlika Investment Fund has been touted by Philippine President Ferdinand Marcos Jnr as a way to modernise infrastructure and accelerate growth
Earlier concerns about transparency prompted revisions to the bill to address worries over how the fund would be managed and financed

The Philippines

Reuters

Published: 3:15pm, 18 Jul 2023

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Philippine President Ferdinand Marcos Jnr on Tuesday approved a bill creating the country’s first sovereign wealth fund, which he touted as a key plank of his economic goals to modernise infrastructure and accelerate the country’s growth.

The bill, which has earlier raised concern including from the central bank over transparency in its governance, has undergone revisions to address worries about how the fund would be managed and financed.

“I assure you that the resources entrusted to the fund are taken care of with utmost prudence and intent,” Marcos Jnr said in a speech after signing into law what he described as an “extremely important” measure.

The creation of the Maharlika Investment Fund, Marcos Jnr said, will also allow the Philippines, one of Asia’s most active issuers of sovereign debt, to cut its reliance on borrowing to fund infrastructure development.

An advert for the 1Malaysia Development Berhad is seen in 2015. A multibillion-dollar corruption scandal engulfed Malaysia’s sovereign wealth fund, causing widespread political repercussions. Photo: AP

It follows moves by neighbours Malaysia and Singapore and more recently Indonesia in establishing sovereign wealth funds, albeit with mixed results.

In Malaysia, a multibillion-dollar corruption scandal engulfed the 1Malaysia Development Berhad (1MDB) fund, causing widespread political repercussions.

Marcos Jnr said the new Philippine fund would be managed by professionals and be free from political interference.

For its capital, the fund will be allowed to issue a total of 500 billion pesos (US$9.19 billion) worth of preferred and common shares which the national government, state-run firms and banks can purchase.

It was not immediately clear when the fund will be launched. It will be allowed to invest in instruments like foreign currencies, tradeable commodities, fixed income securities, stocks to generate income to help finance infrastructure projects.

Marcos Jnr, who began his six-year term as president in June last year, aims to expand the Philippine economy by as much as 8 per cent to keep its place among Asia’s fastest-growing countries, and halve the poverty rate, which was 18.1 per cent in 2021, the most recent figure.