The Maharlika Investment Fund (MIF) is the country’s first ever sovereign fund. Reports have it that it was the brainchild of certain influential members of the House, and that it was intended to continue the Duterte administration’s “Build, Build, Build” program that has resulted in a slew of useful projects initiated and finished by the previous government. The fact that it was the declared intention by its creators in the House to invest the MIF in local infrastructure, amid reports that a third of the House members were government contractors, should have raised alarm bells.
What should have also raised red flags is that countries with sovereign funds usually source the funds from surplus export earnings and/or excess foreign exchange reserves. Our country has none of these. Thus, initially, the MIF was to be funded, not just from monies from two large government banks (Land Bank and the Development Bank of the Philippines) and the Bangko Sentral ng Pilipinas (BSP), but from state pension funds held by the Government Service Insurance System (GSIS) and the Social Security System (SSS). But after a huge outcry about putting the contributions of pensioners into a venture that carried its own risks, the legislature backtracked.
And risky it is. Many sovereign funds have lost money, especially during the pandemic, but their size made it possible for them to recover in the long term. Mahaba ang pisi, to use a colloquialism. Our MIF, in contrast, appears gakulangot (to use another colloquial term) compared to those of other countries, and may not be able to ride out a short-term loss.
For comparison, the biggest sovereign fund — that of Norway — has 1.7 trillion US dollars in assets. Three others in the Top 10 have trillions in their portfolios. Our MIF ranks No. 56, with a paltry 9 billion dollars. A great part of that was sourced from our BSP, which had to sell off a lot of its actual gold reserves this year to make up for the reserves transferred to the MIF, making our BSP the biggest seller of gold for 2024 (and the year isn’t even done yet). That’s sad.
What is sadder still is that, after having gotten all that money from government banks and the BSP, the MIF remains dormant more than a year after its creation. Meaning, no investments either locally or abroad. And foreign investments are supposed to be where sovereign funds should be placed, according to some experts, precisely to protect a country’s wealth from the vicissitudes of domestic financial markets.
It would appear that the MIF has been bogged down in wranglings over who should be part of its management, where the posts pay lucratively. The plum position of Chief Executive Officer eventually went to one Rafael Consing, a former high-ranking officer of International Container Terminal Services Inc. (owned by oligarch E. K. Razon) and with previous employment at Aboitiz Equity Ventures, another oligarch-owned enterprise. Consing, of course, would lose no time in demanding for himself more than 2.5-million pesos in basic pay, else why would he leave the private sector?
And so, more than a year after President Marcos signed Republic Act 11954, the MIF remains dormant. Ironically, Marcos certified the bill as “urgent” precisely because — he said — he did not want the funds languishing in the state banks to be unused.
Which just goes to show that there was neither necessity nor urgency in creating the fund. As the year comes to a close, those tasked with managing it are saying that they are still trying to identify areas of investment, something they should have already done when the Maharlika bill was still on the floor of the legislature.
I just hope this is not another case of a swindle perpetrated on the Filipino people, which would make the MIF nothing but a SUBA-reign fund.