Philippine President Ferdinand Marcos Jr. passed a measure establishing the nation’s first sovereign wealth fund, which he hailed as a cornerstone of his economic plans to upgrade the nation’s infrastructure and spur economic development.
The measure has undergone amendments to address concerns about how the fund would be handled and financed, which originally generated concerns from the central bank and others about openness in its governance.
“I assure you that the resources entrusted to the fund are taken care of with utmost prudence and intent,” Ferdinand Marcos said in a speech after signing into law what he described as an ‘extremely important’ measure, Zawya reported.
According to Ferdinand Marcos, the establishment of the Maharlika Investment Fund will also enable the Philippines—one of Asia’s most active sovereign debt issuers—to lessen its reliance on borrowing to finance infrastructure development.
It comes after neighbouring Malaysia, Singapore, and more recently Indonesia took steps to establish sovereign wealth funds, though with varying degrees of success.
The 1Malaysia Development Berhad (1MDB) fund in Malaysia was the target of a multi-billion dollar corruption scandal that had far-reaching political effects.
According to Ferdinand Marcos, the new fund would be professionally run and unaffected by politics.
The fund will be permitted to issue preferred and common shares valued at a total of 500 billion pesos (USD 9.19 billion), which the federal government, state-run businesses, and banks may purchase.
It was unclear when the fund will start operations. To produce income to support the funding of infrastructure projects, it will be permitted to invest in things such as foreign currencies, tradable commodities, fixed-income securities, and equities.
In order to maintain the Philippines’ ranking as one of Asia’s fastest-growing nations, Ferdinand Marcos, who took office as president in June of last year, wants to boost the GDP by as much as 8%. He also wants to reduce the poverty rate, which was 18.1% as of 2021.