MANILA – The Bureau of the Treasury (BTr) issued the implementing rules and regulations (IRR) of the Maharlika Investment Fund (MIF) Act of 2023 on Aug. 28, the Department of Finance (DOF) said on Tuesday.
In a statement, the DOF said the IRR shall take effect on Sept. 12.
The IRR was issued following consultations with founding government financial institutions (GFIs), Landbank of the Philippines (LBP) and Development Bank of the Philippines (DBP), and the Technical Working Group consisting of the Department of Finance (DOF), Department of Budget and Management (DBM), Securities and Exchange Commission (SEC), National Economic and Development Authority (NEDA), Office of the Government Corporate Counsel (OGCC), and the Governance Commission for GOCCs (GCG).
“The MIF will serve as a crucial financing mechanism to widen fiscal space, ease the burden on local funds, and reduce reliance on official development assistance [ODA] in funding big-ticket projects such as those specified in the recently approved Infrastructure Flagship Project [IFP] list,” Finance Secretary Benjamin Diokno said.
“We will pursue public road networks, tollways, railways, green energy, water resources, agro-industrial ventures, and telecommunications. These critical areas offer high rates of return and significant socioeconomic impact," he said.
Diokno said the MIF can also be used for countryside development and environment, social, and governance and cutting-edge technologies.
The Maharlika Investment Corporation (MIC), which has an authorized capital stock of PHP500 billion, shall act as the sole entity to mobilize and utilize the MIF for investments in transactions that will generate optimal returns on investments (ROIs).
The national government shall source its PHP50 billion contribution from 100 percent of the dividends of the Bangko Sentral ng Pilipinas (BSP) for the first and second fiscal years upon effectivity of Republic Act No. 11954; its 10 percent share from the income of the Philippine Amusement and Gaming Corporation (PAGCOR) for a period of five years; 10 percent of revenues from gaming operations of other government-owned gaming operators or regulators; government assets and proceeds from privatization of government assets; and other sources such as royalties and/or special assessments for a period of five years.
Other GFIs and government-owned and controlled corporations (GOCCs) may invest into the MIF as well, subject to their respective investment and risk management strategies.
Those providing social security and public health insurance services, however, are absolutely prohibited from investing in the MIF.
The Finance department said that as enumerated under section 14, the MIC is authorized to invest in a wide-range of products, activities and projects such as cash and other tradable commodities; fixed income instruments issued by sovereigns; domestic and foreign corporate bonds; listed or unlisted equities; and Islamic investments, such as Sukuk bonds, among others.
The MIC may also issue all kinds of bonds, debentures and securities but these will not be guaranteed by the Philippine government.
The MIC’s board of directors will be composed of the Secretary of Finance as ex officio chairperson; the president and chief executive officer (PCEO) of the MIC as vice chairperson; president and CEO of the LBP; president and CEO of the DBP; two regular directors; and three independent directors from the private sector.
"The success of the implementation of the Maharlika Investment Fund hinges on selection of the best people to oversee and manage the Fund and strict compliance with the provisions of the law. This is why we made sure to include all possible safeguards in the IRR, ensuring that all our bases are covered," Diokno said.
The IRR also lists the penalties to be imposed to ensure the integrity of the fund.
The law provides for the imposition of fines ranging from PHP1 million to PHP15 million and imprisonment from six to 20 years for various offenses, such as willfully holding office while in possession of any disqualification; knowingly certifying the corporation’s financial statements despite its gross incompleteness or inaccuracy; willingly allowing oneself to be used for fraud; and failure to sanction, report or file appropriate action for graft and corrupt practices.
“The Maharlika Investment Fund Act’s IRR is faithful to the law to ensure that the prescribed procedures and guidelines will lead to its harmonized application,” National Treasurer Rosalia de Leon said.
“The Bureau of the Treasury, along with founding GFIs, DBP and LBP, worked closely with the Technical Working Group to make sure that the IRR is consistent with the Maharlika Act,” she added. (PNA)