Maharlika to be active in 2025 in all priority investment areas
By Beatriz Marie D. Cruz, Reporter
THE Maharlika Investment Corp. (MIC) said it expects to be committing “significant” funds next year to all its priority investment areas, led by energy security.
“I think next year will be, well, it’ll be a full-blown operation. I expect that we should be able to deploy a significant amount of our allocated capital,” MIC President and Chief Executive Officer Rafael D. Consing, Jr. said on the sidelines of a Senate hearing on Aug. 27.
“We basically identified the sectors where we’re going to be deploying them. Energy security sits on top of that list. Digital connectivity will be another one. Resource development will be another one. Healthcare will be another one. So hence, we expect to be able to deploy (funds to) all these,” he said.
During the Senate Finance Committee hearing, Mr. Consing said the MIC is expected to make its initial investments within 90 days.
Energy is expected to take up the bulk of the sovereign wealth fund’s initial investments, he said.
In the absence of investment activity, the fund has earned about P1.5 billion in interest income, Mr. Consing said.
In an Aug. 14 Senate hearing, Finance Secretary Ralph G. Recto said no funds have been allocated to the MIC next year as it is “taking time to identify investments.”
Earlier this year, the MIC signed agreements with the electric cooperatives of Palawan and Mindoro to potentially fund the power infrastructure of both islands.
“That’s ongoing. But we have to go through a process,” he said. “In terms of announcements… maybe Mindoro ahead of Palawan.”
The MIC has also yet to fill in the last seat on its board, Mr. Consing said.
John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the corporation must take up the best practices of the private sector.
“As this involves fund management, profit generation, value creation, the MIC must be run like a private-sector entity where checks and balances are strict, responsibilities and accountabilities are defined, and penalties are imposed to those who do not meet targets,” he said in a Viber message.
The MIC must also expand its investment portfolio in real estate, technology, and renewable energy, he added.
“These yield relatively higher returns but may require greater capital outlays. Investments should be made in assets and securities that have higher returns for a given level of risk. That’s why expertise (in these fields) is a must,” he said.
Leonardo A. Lanzona, an economics professor at the Ateneo De Manila, said the corporation must differentiate its investment mandate against those of other government agencies while aligning its activities with development goals.
“MIC must justify its existence by showing results that are not usually expected from the government… Yet, it must define a well-articulated investment mandate that aligns with national development goals and seeks diversified returns across various asset classes,” he said in via Messenger chat.
It must also develop a robust risk management system to mitigate financial, operational, and market risks, he added.
The MIC in July obtained membership in the International Forum of Sovereign Wealth Funds. It also completed its investment and risk management framework.
The fund has an authorized capital stock of P500 billion. Government banks Land Bank of the Philippines and Development Bank of the Philippines contributed P50 billion and P25 billion, respectively, to its initial capital. The National Government also provided P50 billion.