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The Maharlika Investment Fund (MIF) is the Philippines' first sovereign wealth fund, established under Republic Act No. 11954, signed into law by President Ferdinand Marcos Jr. in July 2023. The fund aims to utilize state assets for investment ventures to generate additional public funds, particularly for infrastructure projects, thereby reducing the government's reliance on borrowing.

Initial Funding and Structure

The MIF was seeded with contributions from two state-owned banks: the Land Bank of the Philippines (P50 billion) and the Development Bank of the Philippines (P25 billion), totaling P75 billion. These contributions were made to the Bureau of the Treasury in September 2023, marking the initial operational phase of the fund. The Maharlika Investment Corporation (MIC) was established to manage the fund, with a governance structure that includes a nine-member board of directors, comprising key financial leaders and independent directors from the private sector.

Investment Plans and Challenges

As of early 2025, the MIC is preparing to make its first investments, primarily in the energy sector, with plans to invest in critical infrastructure such as transmission lines. The MIC's president, Rafael D. Consing Jr., has indicated that the fund is ready to deploy capital but emphasizes the importance of due diligence before proceeding with investments. The first investment is expected to occur in the first quarter of 2025, with a focus on energy security, healthcare, and resource development.

Despite the initial plans, the fund has faced challenges in identifying specific investment opportunities. As of late 2024, the MIC had not yet made any investments, citing the need to establish its organizational structure and hire personnel. The fund has generated interest income of approximately P2.3 billion in 2024, but no significant capital deployment has occurred yet.

Regulatory Compliance and Financial Health

The International Monetary Fund (IMF) has raised concerns regarding the capital infusions into the MIF, urging the government to implement plans for capital restoration for the state banks involved. The Land Bank has assured that it remains stable and compliant with regulatory requirements, maintaining a Capital Adequacy Ratio (CAR) well above the minimum threshold.

Future Outlook

Looking ahead, the MIC aims to be fully operational in 2025, with significant investments planned across various sectors, including energy, digital connectivity, and healthcare. The corporation is also exploring the possibility of thematic sub-funds to allow retail investors to participate in its investment activities. The strategic plan for the MIC is set to be approved soon, which will outline the specific sectors and projects for investment.

In summary, while the Maharlika Investment Fund has made strides in its establishment and initial funding, it faces the critical task of identifying and executing investment opportunities to fulfill its mandate of fostering economic growth and development in the Philippines.