Maharlika Fund gets ready to court investors as it approves investment policies

MANILA, Philippines – The Maharlika Investment Corporation (MIC) has finalized its investment and risk management framework and has joined an international organization for sovereign wealth funds, bringing it closer to actually launching its Maharlika Investment Fund (MIF).

During its 12th board meeting on Thursday, July 18, the MIC board approved the founding principles and framework for the company, along with the MIC board protocol, revised implementing rules and regulations, and general principles of good governance.

The framework in particular will cover the “detailed policies, strategies, and risk management practices guiding the MIC’s investment decision-making and portfolio management,” according to a Department of Finance (DOF) press statement. It also details the company’s governance structure and investment approach from 2024 to 2028.

Republic Act No. 11954, the law which establishes the MIC and MIF, requires the board of directors to formulate its investment policies before it can proceed with its investments. The same law also requires those investment policies to be “posted on its website, which shall be immediately updated and be made easily accessible to the public.” As of Friday, July 19, the investment policy is not yet available on the Maharlika Fund’s website.

A carefully crafted set of investment policies is key if the MIC wants to shake off fears that the country’s first sovereign wealth fund may be politicized or fall victim to corruption, such as what happened in Malaysia’s infamous 1MDB scandal.

Researchers from the government think-tank Philippine Institute for Development Studies (PIDS) warned that the MIC needs a “credible return benchmark,” which should not be used to “mask” the performance of a fund that performs poorly.

Margarita Debuque-Gonzales, a former senior research fellow of PIDS, reminded the Filipino public that they “should be the ones monitoring, because this is your fund.”

Aside from this, the MIC has also secured membership in the International Forum of Sovereign Wealth Funds (IFSWF), which sets governance standards for sovereign wealth funds globally.

Its application to the IFSWF was approved on July 11, after the MIC expressed its “willingness to endorse, on a voluntary basis, the Santiago Principles.” The Maharlika Fund’s implementing rules and regulations also require audits of the MIC to include an assessment of the implementation of the Santiago Principles, which are a set of internationally accepted best practices for sovereign wealth funds.

With these developments, the MIC now has the “authority to begin engaging with investors and gain access to tap global network of experts,” according to the DOF.

Even before this, MIC President and Chief Executive Officer Rafael Jose Consing Jr. has been scouting for numerous investment opportunities.

For instance, the MIC is reportedly “very interested” in investing in jeepney terminals that can support the government’s Public Utility Vehicle Modernization Program. After a series of meetings, Francisco Motors CEO Elmer Francisco told Rappler that the MIC has already agreed to fund the development of the first jeepney terminal.

The MIC is also looking at investment opportunities in the Clark Freeport and Special Economic Zone. The sovereign wealth fund signed a memorandum of understanding with the Bases Conversion and Development Authority to “further discuss, share knowledge, and explore potential collaboration opportunities that will lead to a development of a feasibility study report.” – Rappler.com