Philippines’ first sovereign fund slammed by critics: ‘our children will be buried in debt’

Supporters of the US$8.9 billion Maharlika Investment Fund say it will attract the foreign investors needed to pump-prime one of Asia’s fastest-growing economies

But analysts say there are many ‘red flags’, including its funding sources, and lack of checks and balances at the Maharlika Investment Corporation

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A protester holds a placard during a rally in front of the House of Representatives in Quezon City on December 12, 2022. Photo: AFP

Published: 7:00pm, 6 Jun 2023

To its backers, the Philippines’ first sovereign wealth fund is a breakthrough chance to finance the major infrastructure projects needed to keep the economy spinning and to tackle endemic poverty.

But to sceptics the US$8.9 billion Maharlika Investment Fund is a hastily assembled political vehicle of Ferdinand Marcos Jnr’s government, which comes with serious “red flags” that could pile on national debt and eat into state bank reserves.

As the fund was approved by Congress last week, Senate President Juan Miguel Zubiri jubilantly told reporters its flagship project would be the 32km ‘Manila Bay’ toll bridge between Bataan and Cavite, a US$3 billion (175.7 billion pesos) project.

As the fund was approved by Congress last week, Senate President Juan Miguel Zubiri told reporters its flagship project would be the 32km Manila Bay toll bridge between Bataan and Cavite, a US$3 billion (175.7 billion pesos) project. Photo: AFP

Once complete, Zubiri said it would be the world’s second-longest of its kind after the bridge linking Macau and Hong Kong, and become a scheme to “make us really proud to be Filipinos”.

The fund will be administered by the Maharlika Investment Corporation (MIC) with an authorised capital of US$8.9 billion.

Of that, 125 billion pesos (about US$2.2 billion) would be subscribed and paid up by the Landbank of the Philippines (50 billion pesos), with same amount matched by the national government from the Central Monetary Authority, Bangko Sentral ng Pilipinas, gambling revenues and sale of state assets.

The remainder will come from the Development Bank of the Philippines, according to details published on the Senate website.