June 7th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) responded to a discussion paper signed by faculty members of the UP School of Economics (UPSE) which attributed “confused goals” to the Maharlika Investment Fund (MIF), by saying that the bill ratified by both Houses of Congress “is clear about the objective of the Fund as a development fund.”
“Section 13 of the bill clearly says that the ‘The objective of MIF is to promote socio-economic development. There it is. It’s a development fund,” Salceda said.
Salceda was responding to criticism from the paper that the MIF is confused about whether it is a sovereign wealth fund or a development fund.
“Now, clearly stating whether the MIF is a developmental fund or a financial investments fund is a false dichotomy. Of course, at the core, the MIF is developmental. The President has repeated this, and this is the main direction of the Fund. But it has to make money to be sustainable,” Salceda added.
“So, it’s mainly a development fund, and if it takes on the characteristics of an investment fund in some respects, it does so only because it necessarily has to be involved in the financial markets. The bill makes clear that investments in financial instruments are means to an end, not an end in their own. The true goal is socioeconomic development,” Salceda explained.
Salceda also responded to the criticism that the Fund could be using a “double-bottomline approach,” which takes into account both financial profits and socioeconomic outcomes as corporate objectives.
“Well, there’s nothing wrong with that, first of all. But second, that is not the case with MIF. Profit is still a primary criteria even for development projects. That will ensure the financial sustainability of the Fund.”
“Every major company in the world, by virtue of complying with Environmental, Social, and Governance (ESG), is pursuing this approach in some manner.”
“Furthermore, there is no implication in the bill or in the discussions towards the bill, that the developmental outcomes were to be a substitute to real financial returns. If anything, we emphasized during the discussions in the House that projects such as dams, grids, and toll roads are very profitable, if long-gestating projects,” Salceda added.
Salceda’s responses to other points in the paper were part of a three-page statement released by the House tax chair to the media today.
Maharlika should list in stock exchange, engage multilaterals as strategic partners
Salceda also suggested that, since the proposal to absorb the National Development Corporation in the MIF was not adopted, “What would give the MIF additionality over the NDC is (1) size, (2) broader access to the capital markets, and (3) having multilaterals as strategic partners at inception. I urge the economic managers to take this direction.”
Salceda has also advocated for having multilateral banks as strategic partners and for the Fund to eventually list in foreign and domestic stock exchanges.
“That’s the best way to leverage the State’s initial investment in the Fund – having other investors with credibility come in and co-invest,” Salceda added.
“And the Maharlika listing has been praised by experts and opinion leaders as a good way to raise money, increase transparency, and encourage good corporate governance.”
Maharlika priorities should be in SONA
Salceda also suggested that President Marcos include key priority investments of the MIF in his State of the Nation Address this July.
“The inclusion of MIF priorities in the SONA will provide concrete policy direction for the Fund. The managers will know which way the ship should sail.”
“It’s also an opportunity to concretize what the President envisions for the Fund. The whole diplomatic corps will be watching the SONA. And, as I can attest to when we were doing discussions on the bill, several countries and their partner banks are interested in this Fund. The President’s words on Maharlika will matter,” Salceda said.