President Ferdinand Romualdez Marcos Jr. signed the Maharlika Investment Fund Act of 2023 on Tuesday, effectively establishing the Philippines' first sovereign wealth fund.
The fund will have 75 billion Philippine pesos ($1.4 billion) deposited into the wealth fund, with 50 billion pesos from the Land Bank of the Philippines and 25 billion pesos from the Development Bank of the Philippines, wrote a statement issued by the Office of the President of the Philippines on Tuesday.
An investment body called the Maharlika Investment Corp. will be created and be responsible for the governance and management of the fund, according to a separate statement by the country's Department of Finance, also on Tuesday.
The corporation is expected to be fully operational by the end of 2024.
The Maharlika Investment Fund will have two subfunds: one with a long-term horizon that will invest in infrastructure, and another with a short- to medium-term horizon that will invest in other asset classes such as fixed-income securities and stocks.
The sovereign wealth fund will identify financial and commercial infrastructure projects to invest in and will develop investment strategies that tap emerging trends such as environment, social and governance, digitalization, and health care.
The establishment of the fund comes after fierce criticism from the public when an earlier version of the proposed bill allowed the use of funds from retirement plans such as the Social Security System, Quezon City, and the Government Service Insurance System, Pasay, each with roughly $30 billion in assets, and concerns over transparency and accountability over management of the fund.
The final version of the bill addressed some of these concerns. For instance, it prohibits government agencies and government-owned corporations that provide social security and public health insurance to contribute to the fund.
In January, the Milken Institute released a report that made several recommendations for the MIF including a clear governance structure, stakeholder engagement, and long-term investment strategies with designated performance benchmarks.
The authors of the report were not available for additional comment.