Manila, Philippines — Economic managers are considering the Maharlika Investment Fund (MIF) as a potential financing source for the Philippine government’s infrastructure projects, which are worth PHP 8.3 trillion and form part of the Build Better Program. The program comprises over 190 infrastructure projects related to agriculture, water resources, and connectivity. More than half of the budget allocation will come from Official Development Assistance (ODA), while 30% is expected to be funded by Public-Private Partnerships. The remaining amount is said to come from MIF, which has yet to be given legislative sanction.
Finance Secretary Benjamin Diokno stated that they want the Maharlika Fund to finance some of these infrastructure projects because once it becomes an upper-middle-income country, the Philippines will no longer have access to the same ODA financing. The National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan believes that the Philippines can become an upper-middle-income economy by 2025 by attracting more investors. Meanwhile, Department of Budget and Management Secretary Amenah Pangandaman assures that the administration will allocate sufficient funding for distressed sectors such as education, health, food security, and social protection.
However, the proposed fund has raised concerns among economists. They believe that the objectives of the fund remain unclear, and there appears to be confusion about its funding sources. Marcos has yet to sign the MIF bill into law, which further complicates the issue.
According to Diokno, the Maharlika Fund bill is expected to be fully operational by the end of 2023, with the Maharlika Investment Corporation (MIC) managing the sovereign wealth fund, MIF. The MIF will be a pool of funds sourced from state-run financial institutions and invested in high-impact projects, real estate, and financial instruments. The bill specifies that the fund will be created using P50 billion from the Land Bank of the Philippines (LBP), P25 billion from the Development Bank of the Philippines (DBP), and P50 billion from the national government’s contribution.
Diokno also mentioned that the MIF would have an initial capitalization of PHP 75 billion by the end of the year, which will come from Landbank and DBP. Meanwhile, National Treasurer Rosalia de Leon clarified that while the MIC has an authorized capital stock of PHP 500 billion, the initial paid-up capital of PHP 75 billion may already be invested in several ventures or capital markets.
The MIF bill ensures transparency, accountability, fund integrity, and risk management by establishing the MIF Board of Trustees. The board will oversee the investment policy framework, investment strategy, and guidelines of the fund, ensuring that its investments align with its objectives and risk appetite. Additionally, the board will conduct regular performance reviews to assess whether the MIF is meeting its investment objectives and managing risks effectively.
The program has been designated to provide financial support for various government infrastructure projects, such as the Manila Bay Rehabilitation Project, Bulacan Airport, and the North-South Railway Project. These initiatives have the potential to generate employment opportunities, stimulate economic growth, and improve the nation’s competitiveness.
The North-South Railway Project is an extensive railway network that will span 639 kilometers, connecting Legazpi City in Albay with Metro Manila. Its completion is anticipated to reduce travel time between Manila and Legazpi from 13 hours to just six hours, with an estimated project cost of PHP 873.62 billion.
The Bulacan Airport initiative, alternatively known as the New Manila International Airport, is a proposed international gateway with four runways and two terminals capable of accommodating up to 100 million passengers annually. The airport aims to ease congestion at Ninoy Aquino International Airport (NAIA) and drive economic expansion in its surrounding regions, with an expected budget of PHP 735.63 billion.
The rejuvenation of Manila Bay is a high-priority project that aims to restore the ecological health of one of the world’s most polluted bays. The ambitious plan involves cleaning up the waterways and rivers that flow into the bay, as well as relocating informal settlers who reside along the shoreline. With a price tag of PHP 67 billion, the initiative is a massive undertaking that requires significant resources and effort.
Meanwhile, the proposed MIF bill intends to create more fiscal space for the government by reducing the need for borrowing from both domestic and foreign sources. By doing so, the government aims to maintain financial stability and avoid the risks associated with excessive borrowing. Additionally, the MIF will serve as an additional source of revenue for the government, which could be used to fund critical social services such as healthcare and education.
Despite the potential benefits of the MIF bill, several economists have raised concerns about the objectives and sourcing of funds for the initiative. Some argue that improving the efficiency of existing infrastructure should take precedence over new projects. Others worry that the investment process lacks transparency and could result in corruption. Despite these concerns, the government remains committed to exploring the possibilities presented by the MIF bill.
The Philippine government is dedicated to realizing its infrastructure plans, emphasizing the potential advantages it can bring both to the economy and the Filipino populace. With confidence in the success of the Managed Infrastructure Fund (MIF), the administration sees it as a sustainable way to finance the country’s infrastructure projects and drive economic expansion.
To explore other possible financing avenues, the government is looking into loans from international organizations such as the Asian Development Bank (ADB) and the World Bank, which offer favorable terms and low-interest rates that are particularly attractive for developing countries like the Philippines.
Furthermore, the government is supporting the use of public-private partnerships (PPP) as a means of financing infrastructure projects. By working together, the private sector can provide financing and expertise while the government provides regulatory oversight and support, resulting in efficient infrastructure asset development and operation.
The Build, Build, Build initiative has effectively enticed private sector involvement in the infrastructure sector of the Philippines. Private companies have signed contracts worth PHP 1.3 trillion with the government in 2019 for various projects, such as seaports, airports, and highways.
Despite the obstacles brought about by the COVID-19 pandemic, the government’s dedication to its infrastructure plans remains steadfast. Recently, it declared its intent to hasten the implementation of infrastructure projects to help accelerate the country’s economic recovery program.