After heated debate, Senate passes Maharlika Investment Fund bill

By Jennifer T. Santos

PASAY CITY – Despite heated debate and some opposition in and out of the Senate, senators approved on third and final reading at 2 a.m. on May 31 the bill seeking to establish the controversial Maharlika Investment Fund (MIF), a sovereign wealth fund that the government can use to make investments.

A total of 19 senators voted in favor of the bill, while Senators Risa Hontiveros and Aquilino Pimentel objected. Senators Imee Marcos, Nancy Binay and Francis Escudero abstained.

Oppositionists to the bill pointed out that even the Norway Sovereign Wealth Fund, the “gold standard” of SFWs, suffered $164 billion losses in 2022.

Sponsored by Senator Mark Villar, the MIF seeks to establish the Maharlika Investment Corporation (MIC), which “shall act as the sole vehicle for the purpose of mobilizing and utilizing the MIF for investments in transactions in order to generate optimal returns on investments (ROIs).”

As this developed, the state pension funds will not be used as “seed fund” for the proposed Maharlika Investment Fund (MIF), President Ferdinand R. Marcos Jr. assured.

Marcos gave the assurance on the sidelines of the 86th anniversary celebration of the Government Service Insurance System (GSIS) in Pasay City.

“I perfectly agree. We have no intention of using ang pera – kukuha tayo ng pera ng pension fund (get the money from the pension fund). That’s not the (intention). We will not use it as a seed fund,” Marcos told reporters, when quizzed about the possibility of using the state pension funds as funding source for the proposed MIF.

Marcos, however, noted that pension funds may invest in the MIF, if they consider it as a “good investment.”

“If the pension fund decides the Maharlika Investment Fund is a good investment, it’s up to them if they want to invest in it,” he said.

The marathon discussions that took more than 12 hours ended at around 2:30 a.m.

The Senate bill was immediately presented to the bicameral conference committee meeting which approved it over the House of Representatives version.

The Senate delegation to the bicam were composed of Senators Mark Villar, Allan Peter Cayetano, Ronald Bato dela Rosa, Sherwin Gatchalian, Francis Tolentino, Juliana Pilar Pia Cayetano and Aquilino “Koko” Pimentel III.

The measure was earlier certified as urgent by President Ferdinand Marcos Jr. who is now reportedly expected to tackle the measure in his State of the Nation Address (SONA) when Congress re-opens this July after almost two-month break.

According to the bill, the MIF will be created through the funds which will be sourced from Land Bank of the Philippines (LBP) (P50 billion), Development Bank of the Philippines (DBP) (P25 billion) and the National Government (P50 billion)

The contribution from the national government will come from the Bangko Sentral ng Pilipinas’ total declared dividends, national government’s share from the income of PAGCOR; properties, real and personal identified by the DOF-Privatization and Management Office; and other sources such as royalties and/or special assessments.

Among the major amendments introduced to the measure was the absolute prohibition of the use of funds of the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance Corp. (PhilHealth), Pag-IBIG, Overseas Workers Welfare Administration (OWWA) and the Philippines Veterans Affairs Office (PVAO) in the capitalization and investments in the Maharlika fund.

A heated debate erupted in the Senate after Maharlika Investment Fund (MIF) bill sponsor Senator Mark Villar blocked Senate Minority Leader Pimentel’s move to further question the proposed measure.

After more than two hours of questioning focused on the Maharlika Investment Corp., its board of directors, and details on the implementation of the investment fund, Pimentel asked Senate President Juan Miguel Zubiri to suspend his period of interpellation and continue in the next session.

“I object. I think we’ve debated this extensively and I’ve answered all the interpellations. And without prejudice to the amendments being proposed, I’d like to object and move to close interpellation,” Villar said, cutting off Pimentel.

Zubiri immediately backed Villar’s objection.

Senator Mark Villar cited numerous benefits that the country will attain once the MIF bill is passed into law.

“Actually, there are a lot of benefits that we can get from the MIF. First, it would create more jobs, more infrastructure projects mean more job opportunities for Filipinos. Secondly, we will promote economic growth since better infrastructure leads to more efficient transportation, communication, and other systems. Also, this will be a vehicle to reduce poverty, this would help the government manage its budget and mitigate fiscal pressures during economic downturns as it acts as a safety net for the country.” Villar explained.

Villar also pointed out that the MIF may be used to invest on sectors such as agriculture and energy.

Pimentel III said there should be an iron-clad provision that will guarantee that pension funds will not be touched or compromised in the Maharlika Investment Fund (MIF) bill.

“Our workers’ hard-earned pension should be shielded from any adverse implications that could arise from the establishment of MIF,” he added.

Unfortunately, the threat that MIF would dip its hands into retirees’ pension funds is still very much alive, he said.

The Maharlika Investment Corporation (MIC), according to Pimentel, will be vested with the power to incur more debt.

Pimentel said “the implications of the proposed Maharlika Investment Fund Act are simply too grave for us not to do anything to stop it.”

“These are difficult economic times,” Pimentel said, citing not less than three US banks have failed recently such as the First Republic Bank, Silicon Valley Bank, and Signature Bank. And the contagion reached the banking safe-haven of Switzerland, leading to the collapse of Credit Suisse.