Written by reporter Luisa Maria Jacinta C. Jocson.
Reworking the organization system of the Maharlika Investment Fund (MIF) and guaranteeing its efficiency.fi
Analysts stated that ensuring the financial stability of the state banks that contribute should be a key focus of the government’s evaluation of the implementing rules and regulations (IRR) for the law.
Professor Leonardo A. Lanzona, an economics professor at Ateneo de Manila University, noted in an email that it is crucial to ensure that the MIF is protected from any government interference.
The author pointed out a key aspect of the Santiago principles regarding sovereign wealth funds (SWFs), which is the autonomy of the board. This ensures that the investment vehicles can function independently and that investment choices are made objectively.fi
The focus should be on financial concerns rather than political or immediate priorities.
According to Mr. Lanzona, the President’s decision to pause the implementation of the MIF is a violation of a principle due to concerns about the fund’s organizational structure, particularly the composition of its board members.
Last week, President Ferdinand R. Marcos, Jr. halted the implementation of the IRR of the MIF law to enhance its organizational structure and strive for perfection and idealism.
Mr. Marcos confirmed that the suspension would not hinder the MIF’s goal of starting operations by the end of the year.
The group of economists stated that they are collaborating with the Office for National Statistics (ONS).ffi
The President is in the process of examining the MIF regulations. However, the specific sections of the IRR that require revision have not been specified by the government.
According to Sonny A. Africa, executive director of the think tank Ibon Foundation, the recent suspension of the Maharlika fund IRR is just another negative mark on the poorly planned economic project of the Marcos Jr. administration. He also pointed out that the reasoning behind the attempt to improve its organizational structure is unclear. This was communicated through a Viber message.
plete with contradictions.”
Sharp investors will observe that the creation of the fund is filled with inconsistencies.fl
Due to the low quality of governance in the country, there is a lack of accountability.fidence that fund management will not be similarly afflicted,” he added.
Under the MIF law, the Maharlika Investment Corp. (MIC) is tasked to manage the wealth fund. The board will consist of the president and chief executive offifficio capacity.
According to Mr. Africa, the board of directors should have a smaller number of government officials and a larger representation from the private sector. He suggested that out of the nine board members, only two to three should be from the government.
The heavily politicized structure of internal governance is a significant issue. The speaker suggested that if the government wants to dispel doubts about the fund’s autonomy, transparency, and responsibility, they should err on the side of being overly cautious.
Additionally, Mr. Africa stated privately.fi
The responsibility for headhunting should lie with RMS, and appointments should be determined by the government rather than solely by the President.
These decisions can be delegated to another individual, including appointing members to the risk management committee and advisory body. The selection of other options is also open to delegation.ffi
Private executive search can create cials.firms,” he said.
The deadline to nominate and apply for the positions of MIC president and CEO, independent directors, and regular directors was Sept. 27. According to the law, Mr. Marcos will select candidates from the shortlist for appointment.
Mr. Lanzona stated that giving the government control over the design of the MIC’s organizational structure poses a risk of political influence on financial decisions. This could potentially prevent the fund from operating independently.financial considerations.”
The speaker stated that although the funds are publicly available, the government’s involvement should be restricted to creating a clear plan for the MIF’s operations and ensuring that it aligns with the government’s goals and the public’s interests.
Mr. Lanzona requested increased transparency regarding the management of the fund.
It is important for the report to be made visible to the public.fi
The individual mentioned assessing the financial records and resources of the banks in order to evaluate if their activities and trustworthiness are being impacted by their transfers to the MIF.
Decrease in government strengthfinancial institutions (GFIs).
He stated that GFIs should not be required to contribute and regulations should not be adjusted in order to prevent MIF contributions from negatively affecting capital adequacy ratios.
The MIC’s initial funding of P125 billion will be supported by contributions of P50 billion from LANDBANK and P25 billion from DBP.
Following their remittance, DBP and LANDBANK requested for regulatory exemption from the Bangko Sentral ng Pilipinas (BSP)’s minimum capital requirements.
Despite their contributions to the fund, individuals may face financial challenges.
“We are constantly communicating with all involved parties to ensure the most favorable outcome for the Fund. Both LANDBANK and DBP are determined in their dedication to responsible management.”fi
According to a statement from DoF Secretary Benjamin E. Diokno, the agency will have proper representation in the board and will oversee financial management.
Mr. Diokno further explained that the banks’ contributions to the fund are sourced from their investible funds, rather than their loanable funds for farmers and other sectors.
According to Terry L. Ridon, a public investment analyst and organizer at InfraWatch PH, putting a hold on the IRR will give the government time to assess the real effects on state banks.
This is crucial because the country cannot afford to…ffCOM
Both LANDBANK and DBP are currently facing concerns about their viability due to the limited commercial opportunities at this time.fiscal space. However, as soon as the banks’ fi
As the financial situation becomes more defined over the next several months, the government can proceed confidently with prioritizing investments in MIF. This was stated in an email by the speaker.
On Sunday, the Department of Finance also confirmed that there has been strong interest in the MIF from investors in Saudi Arabia.
On October 19th, Mr. Diokno held a meeting with Saudi business leaders in Riyadh, Saudi Arabia to raise awareness for the MIF during the Southeast Asian Nations – Gulf Cooperation Council Summit.
According to a statement, Mr. Diokno expressed that Maharlika is interested in collaborating with other sovereign wealth funds, not only as an investment partner but also as a member of the global sovereign wealth fund community. He also mentioned the opportunity to share knowledge and adopt best practices from leading funds like those in Saudi Arabia.