June 14th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) called on the Marcos administration’s economic managers to “commit to listing Maharlika Investment Fund in the stock markets here and abroad, and engage strategic partners among the multilateral banks” as a way to ensure “good corporate governance and oversight, and to leverage private sector funding.”
“The best way to make it work is through the capital markets. Make Maharlika a listed company. List it secondarily in other stock markets abroad. Engage World Bank, ADB, and other international banks as strategic partners. That will increase oversight of the bank. More people will want more information before they invest. It will increase transparency,” Salceda said.
“The final version which was sent to the President is silent about public listing, but it implies it. I hope for a more explicit plan of action in the implementing rules and regulations. This can’t be just another GOCC,” Salceda added.
Salceda said that listed companies are “subject to stricter disclosure standards. That is why, in the House version, we expressly discussed and envisioned eventual public listing. It was in all the presentations. It was in all the discussions. And we believed it to be a very strong safeguard.”
Salceda adds that the other corporate safeguards, “including that independent directors be a third of all board members, were designed to prepare MIF for public listing. Even companies with legislative franchises are required to list publicly.”
“And of course, we should allow the public to contribute to, and share in the success of the MIF. What better way than to list in the stock exchange?”
Maharlika could “energize” PSE
Salceda also said that the MIF could “improve the lackluster performance of the Philippine Stock Exchange Index”
“It could energize the capital markets, once it lists as a publicly-traded company,” the House tax chair said.
“One of the reasons for the sluggishness of the Philippine stock exchange is the lack of options for investors. Across the ASEAN 6, we have the fewest public companies, at just 286. Even Vietnam, a communist country, has 745 companies in their stock exchange.”
“Once Maharlika is introduced in the stock market, it could easily command a market capitalization of at least 780 billion, even assuming just that the authorized capitalization will be book value. Government-Linked Companies (GLCs) tend to command a 20-30% premium in valuation, and I see no reason why that will be less of a case with Maharlika.”
Engage international banks
Salceda also urged the economic managers to engage international financial institutions “at the outset.”
“By allowing equity investments by multilaterals and private partners, instead of outright borrowing for the general budget or PPPs with contractual liabilities, Maharlika could lower the financing cost of putting up major infrastructure investments.”
“This will ultimately make available more fiscal resources for other government programs – since the government will no longer need to offer for PPP or fully fund projects that Maharlika could do instead, and will also pay lower financing costs on these programs,” Salceda explained.
“Engaging these banks also gives you global exposure, technical assistance and support, and international credibility. They should be our partners from the very start,” Salceda added.
Marcos’s economic superpower
Salceda also calls MIF “PBBM’s potential economic superpower, or supertool. But only if it’s used to build things rather than hidden in the toolshed. It has to be a publicly listed company with strategic international partners, so it’s out in the open.”
“Otherwise, you end up with a company like the National Development Corporation – an investment GOCC with strategic projects, but acts mostly on its own and has no public ownership.”
“The House acceded to the Senate’s and the economic managers’ request, out of respect for our counterparts and a trust that the economic managers will get this done well. That’s why we adopted the Senate version. The ball is now in the economic managers’ court.”