All eyes on composition of Maharlika fund’s board

THE APPOINTMENT of the board members to the company overseeing the Maharlika Investment Fund (MIF) will be crucial to ensure there is proper oversight of the fund, analysts said.

“What (we are waiting to see) is the governing body setup. Who will be on the board? We hope there will be more private sector representation and oversight. I take it that there must be oversight and the usual reporting,” Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said in a phone interview.

Last week, President Ferdinand R. Marcos, Jr. signed Republic Act (RA) No. 11954, which creates the country’s first sovereign wealth fund.

“We are waiting to see who will be on the (MIC) board. That’s very important, the members of (the MIC),” British Chamber of Commerce Philippines (BCCP) Executive Director Chris Nelson said in a Viber call interview.

The Maharlika Investment Corp. (MIC), which will manage the wealth fund, will have a board of directors composed of nine members.

In a press chat on Friday, Finance Secretary Benjamin E. Diokno said that the government is currently looking for candidates for the MIC board, which is expected to be completed by September.

The fund itself is expected to be “up and running” before the end of the year, he added.

Mr. Diokno said that the appointment of the board of directors will undergo a “strict screening process, just like any government appointment.”

“Let me make it crystal clear, the Finance secretary will not manage the fund. That role is entrusted to the president and chief executive officer of the MIC and its directors,” he said.

Under RA No. 11954, the Finance secretary will serve as the board chairperson in ex-officio capacity.

The board will consist of the president and chief executive officer of the MIC, the president and chief executive officer of the Landbank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP), as well as the two regular directors and three independent directors from the private sector.

“Right now, we are looking for good men and women to apply. We need two regular directors with a term of three years. And then there will be three independent directors. The independent directors, like other government corporations, will serve for one year but (it is) renewable. Usually when it’s independent, there is a term limit of nine years,” Mr. Diokno said.

Meanwhile, Mr. Nelson said that the MIF’s focus on infrastructure projects will help boost economic growth.

“First of all, the concept of the Maharlika fund as outlined is to invest in infrastructure, if it occurs, it’s a welcome move. Any investment, if it can accelerate infrastructure in the Philippines is welcome,” he said.

“There’s a lot of renewed interest. We continue to highlight the opportunities in the Philippines. If the Maharlika fund can do this by investing in infrastructure, clearly that’s going to assist the economy,” he added.

Mr. Nelson noted it was important to “keep the momentum” in further opening up the economy and developing infrastructure.

For Mr. Barcelon, the government will also need to keep an eye out for the risks that may come with the investment strategy of the fund.

“The objective of the fund is to make more money than putting it in Treasury bonds. Any such investment you have to have a higher appetite for risk, that’s the thing that the government will give due focus,” he added.

On Friday, Mr. Diokno said the LANDBANK board approved its PHP 50-billion contribution to the MIC, while the Bangko Sentral ng Pilipinas (BSP) Monetary Board declared a dividend of PHP 31.859 billion “in favor of the NG.”

“This is based on 50% of BSP’s net income, after income tax, in 2022 of PHP 63.731 billion,” he added.

However, he noted that it is still not clear if the BSP’s latest declared dividend will be given to the MIC.

“The law (states) two years after the enactment of the bill, so it’s still unclear if the PHP 31.859 billion is part of that. If the Treasury is willing to give it to us, we are willing to accept. One thing, they might want to use it for the budget or give it back to BSP for their capitalization. But it can go to the NG, that is our recommendation,” Mr. Diokno said.

By the end of the year, the fund should also have at least P100 billion in capital, Mr. Diokno said.

Under the law, the MIC will have an authorized capital stock of PHP 500 billion. The MIC will have an initial funding of PHP 125 billion, which will come from the LANDBANK (PHP 50 billion), the DBP (PHP 25 billion), and the National Government (PHP 50 billion).

The NG’s contribution will come from the Bangko Sentral ng Pilipinas, which is required to remit 100% of its total declared dividends to the fund in its first two years upon the effectivity of the act.

“It’s safe to say the fund is well capitalized at the very start. You can start before the end of the year,” he added.

National Treasurer Rosalia V. de Leon also said that the Finance department has reached out to the DBP to begin processing their contribution of PHP 25 billion. –  Luisa Maria Jacinta C. Jocson, Reporter