Maharlika Investment Fund, ahead of its time?

PHILIPPINES - In Brief 13 Oct 2023 by Diwa Guinigundo

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It is safe to say everybody in the Philippines recognizes that the economy needs foreign investments to help sustain the momentum of growth and upgrade its likelihood to escape the so-called "lower middle-income trap". But not too many would share the view that the Philippines’ Maharlika Investment Fund (MIF) is the right instrument at this time. It's obvious domestic savings are not enough, given the country’s chronic current account deficit. Last year, the shortfall reached $18.1 billion and $8.2 billion in the first half of 2023. The ability of the National Government (NG) is also impaired; its fiscal deficit in 2022 reached P1.6 trillion or 7.3% of GDP. For the January-June 2023, the shortfall in public finance totaled P733 billion or 4.8% of GDP. In the ASEAN, the amount of foreign investment, both direct and portfolio, coming into the Philippines is one of the lowest. This is most unfortunate because the Philippines remains one of the fastest growing economies in the region, its demographics is young and talented. Numerous opportunities exist for mining, real estate and construction, financial technology, tourism and even manufacturing. Credit rating upgrades in the last ten years have been very impressive. The Philippines can use more strategic thinking in formulating public policy. The Maharlika Fund was approved by Congress and signed into law by President Bongbong Marcos only on July 18, 2023. Yet, the President already presented it before the World Economic Forum in Davos, Switzerland last year in bare bones. It could have used more time for a proper evolution. Supported by the seed fund from two government financial institutions (GFIs) such as the Landbank ...