Philippines’ sovereign wealth fund to be rolled out by year’s end, as Marcos Jnr reverses suspension

The president’s clarification came after a note showed he had apparently suspended the implementation of the law ‘pending further study’
Marcos said the public should not misinterpret the suspension as ‘a judgment of rightness or wrongness of the fund’

The Philippines

SCMP’s Asia desk

Published: 7:45pm, 19 Oct 2023

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Philippine President Ferdinand Marcos Jnr expressed surprise on Thursday at reports that the country’s first sovereign wealth fund had been suspended, saying he was committed to pushing it through by the end of the year.

Marcos Jnr said his administration was “finding ways to make the Maharlika Investment Fund (MIF) as close to perfect and ideal as possible”.

He said he was “a bit alarmed” by the news that the government had put the US$8.9 billion fund on hold.

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“The organisation of the Maharlika fund proceeds apace. And what I have done though, is that we have found more improvements we can make,” Marcos Jnr said before departing for Saudi Arabia to attend the Asean-Gulf Cooperation Council Summit, where he is planning to pitch the investment vehicle to key Middle Eastern business leaders.

Marcos Jnr’s clarification came after a memorandum signed by his executive secretary Lucas Bersamin released on Wednesday showed the president had suspended the implementation of the law he signed in July “pending further study”.

He also said the Philippine government was “encouraged by the reaction of our friends in the Middle East, and for that matter, around the world, to the fund, and we are very encouraged that we are going down the right path”.

Marcos Jnr said the public should not misinterpret the suspension as “a judgment of the rightness or wrongness of the Maharlika fund”, adding inputs collected from multiple stakeholders would be used to make it a better organisation, ABS-CBN reported.

Shoppers at a market in Manila. The Maharlika fund will source cash from state banks and government-run corporations and invest it in currencies, bonds, equities and infrastructure projects. Photo: Bloomberg

Earlier, senators welcomed Marcos’ “prudent” move.

“I believe that he or his economic team had good and valid reasons to study the measure further,” senate president Juan Miguel Zubiri said. “When so much money is at stake, it is better to proceed with an abundance of caution than to be reckless.”

Lawmaker Teodorico Haresco said: “If the president did not pull the trigger, then it can only be for good reasons.”

The fund will source cash from state banks and government-run corporations and invest it in currencies, bonds, equities and infrastructure projects.

Lawmaker Edcel Lagman, who voted against the passage of the bill in the House of Representatives in 2022, said the MIF Act was enacted without adequate research from the president’s economic managers and congressional allies.

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Critics, including former Philippine central bank chief Felipe Medalla had warned the Maharlika fund could end up like Malaysia’s scandal-tainted state investment fund 1MDB if not governed properly.

Medalla initially opposed a proposal to use the central bank’s reserves as seed money for the fund before he eventually backed the plan.

A poll by Social Weather Stations released in July found 51 per cent of 1,200 Filipinos surveyed expect little or no benefit from the fund.

The scandal surrounding 1MDB, set up to finance development projects in Malaysia, has ensnared people and institutions from the country’s former prime minister Najib Razak to Wall Street bank Goldman Sachs. About US$4.5 billion was believed to have been siphoned from the state fund.