Philippines: MIF to create more investment opportunities, says DBP exec
MANILA, Philippines — The proposed establishment of the pioneering sovereign wealth fund in the country is seen addressing the dearth in sources of long-term capital, according to state-run Development Bank of the Philippines.
DBP president and CEO Emmanuel Herbosa said the Maharlika Investment Fund (MIF) is imperative to broaden investments in critical areas such as food, water, green energy, agro-industrial ventures, telecommunications, public infrastructure and road networks toll-ways, which can offer better rates of return and greater socio-economic impact.
“From my personal standpoint, the creation of a SWF is a superb opportunity to address the dearth in sources of long-term capital, which is integral to support these capital intensive investments,” Herbosa said in a statement.
Herbosa shares the sentiments of business leaders and leading economists on the need to boost investments in high-growth sectors to sustain the country’s growth momentum.
“As head of a government bank, the SWF is closely aligned with our operating principle of bolstering economic additionality through timely and meaningful support of critical industries and sectors,” he said.
The House of Representatives approved on third and final reading the bill creating the MIF within just 18 days after it was filed, garnering the solid support of 90 percent of congressmen.
The proposed bill has undergone several refinements and hurdled interpellations by the opposition bloc in the Lower House.
According to Herbosa, the introduction of additional safeguards in the proposed measure, such as heavy scrutiny by the Commission on Audit (COA) apart from regular examinations by both an internal and external auditor, has assuaged concerns of various sectors and ensures that the fund will be adequately shielded from fraud, abuse and undue political interference.
The DBP chief added that the provision of sovereign guarantees for specific contributions adds another layer of confidence in the sustainability, reliability and integrity of the SWF, especially in funding projects with long gestation periods, while attracting private sector and even foreign funders that would ensure transparency and greater accountability in managing the fund.
“At this juncture it’s best that we allow the bill to take its proper course in the legislative mill as I believe this would lead to a solid and watertight law in view of the purification and purging process that it underwent,” Herbosa said.
As revised, the proposed law lists DBP, Land Bank of the Philippines, Philippine Amusement and Gaming Corp. (PAGCOR) and the Bangko Sentral ng Pilipinas (BSP) as contributors to the MIF.
Their initial contributions are P50 billion for Landbank, P25 billion for DBP and 100 percent of dividends the BSP would give to the national government. PAGCOR’s share is 10 percent of gross gaming revenues.
The latest version has removed the Social Security System and Government Service Insurance System, which are pension funds for the private sector and government workers, from the list of contributors due to concerns raised by their members.