Philippine Senate Approves First-ever Sovereign Investment Fund

People enjoy the sunset in Manila Bay along the baywalk in Manila, the Philippines on Aug. 31, 2020. Photo: Xinhua/Rouelle Umali

MANILA -- The Philippines Senate on Wednesday approved a bill establishing the Maharlika Investment Fund (MIF), the country's first-ever sovereign investment fund.

With 19 affirmative votes, one negative and one abstention, the senators approved the bill after nearly 13 hours of marathon deliberation. The approval came almost one week after Philippine President Ferdinand Romualdez Marcos certified the passage of the proposed bill at the Senate as "urgent."

"This fund will serve as a new growth catalyst, accelerating the execution of strategic and impactful large-scale infrastructure projects that will stimulate economic activity and foster development," Marcos said.

A bicameral conference committee will hold a meeting on Wednesday to harmonize the versions of the bills of the Senate and the House of Representatives before Marcos signs the measure into law. The House has passed last December a bill on creating Maharlika Investment Fund.

Senate President Juan Miguel Zubiri said the approved Senate version of the bill "satisfies the thirst for transparency and accountability of the measure."

The economic managers, led by Finance Secretary Benjamin Diokno, expressed hope the bill will be signed into law before Marcos' State of the Nation Address scheduled on July 24.

"The Maharlika Investment Fund, which shall be the country's first-ever sovereign investment fund, is designed to promote economic development by making strategic and profitable investments in key sectors," he said.

In the near and medium term, the MIF will widen the country's fiscal space and ease pressures in financing public infrastructure projects, Diokno said.

The Philippines' main finance mechanisms for infrastructure projects include the national budget, public-private partnership arrangements, and official development assistance.

"The Fund is an additional vehicle allowing the government to tap surpluses that cannot be utilized under current legal frameworks. It will also be open to co-financing with foreign investors and multilateral institutions to facilitate financing capital-intensive big-ticket infrastructure," Diokno added.

He said the MIF will provide an opportunity to invest in critical infrastructure projects in logistics, telecommunications, and transportation, adding these projects will increase the future growth potential of the Philippine economy.

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