MANILA, Philippines — The bill passed by the House of Representatives in December 2022 and the bill

being debated in the Senate to create the Maharlika Investment Fund allow for the Social Security
System and the Government Service Insurance System to invest in the proposed sovereign wealth fund.

While both House Bill 6608 and Senate Bill 2020 prohibit government companies providing social
security to Filipinos such as the SSS, GSIS and the Home Development Fund from being requested or
required to contribute to the Maharlika fund, there is a loophole in both measures that could let these
entities participate in the fund.

In the House bill, this loophole can be found in Section 11, which states that other government financial
institutions (GFI) and companies may be allowed to contribute to the Maharlika fund as long as it is
approved by their board of directors.

A similar provision can be found in Section 12 of the Senate bill.

‘Not prohibited’
Sen. Mark Villar, who is shepherding the passage of SB 2020, confirmed Monday during debates with
Sen. Risa Hontiveros that the GSIS and SSS are not prohibited from investing in the Maharlika fund.

“It is something that they’re not prohibited from doing, which I don’t think they should be prohibited
from making any kind of investment that may be beneficial to their members,” Villar said.

Earlier iterations of the Maharlika fund proposal required the SSS and GSIS to invest in it, prompting
intense backlash from the public and senators who aired their vehement objections to the inclusion of
the pension funds in the contentious measure.

House members then removed this provision, but retained in the version—which passed the chamber—
the option for other GFIs and state firms to contribute to the Maharlika fund.

“This provision seems innocent,” Sen. Risa Hontiveros said in Filipino during her interpellation of the
Maharlika fund. “I would really rather not have this section at all.”

“After the people’s anger was felt and the SSS and GSIS funds were removed from the House version, we
are now opening a backdoor in the version of the Senate,” Hontiveros added.

‘P1 trillion at stake’

Citing an unnamed “reliable source,” she also claimed that GSIS president and general manager Jose
Arnulfo Veloso was the brains behind the creation of the Maharlika fund.

“If the GSIS board changes their investment strategy, then it can gamble more than P1 trillion in its
funds for Maharlika,” Hontiveros said.
Villar, however, assured that GFIs have managed their funds “very professionally.”

“There’s nothing in the bill that will change the investment strategy of these institutions. There’s no
reason for us to think that the safety of the investments of the members will be compromised in any
way by the Maharlika,” he said.

The Senate leadership is aiming to follow Malacañang’s deadline to approve the Maharlika fund before
President Ferdinand "Bongbong" Marcos Jr.’s State of the Nation Address in July, with Senate Majority
Leader Joel Villanueva raising the possibility of holding a rare Thursday session to ensure its passage.
Finance Secretary Benjamin Diokno presented the Maharlika Investment Fund (MIF) as a tool for
economic development to the business community during the Asia CEO Forum entitled “Maharlika
Wealth Fund: Financing the Future” on February 24, 2023 at the Manila Marriott Hotel.

“The Maharlika Investment Fund, which shall be the country’s first-ever sovereign investment fund, is
designed to promote economic development by making strategic and profitable investments in key
sectors,” he said.

Secretary Diokno cited key examples such as public road networks, tollways, green energy, water, agro-
industrial ventures, and telecommunications, which offer better rates of return and greater
socioeconomic impact.

In the near and medium term, the passage of the MIF will widen the country’s fiscal space and ease
pressures in financing public infrastructure projects. Currently, the national budget, public-private
partnership (PPP) arrangements, and official development assistance (ODA) serve as the Philippines’
main finance mechanisms for infrastructure projects.

“The Fund is an additional vehicle that would allow the government to tap surpluses that cannot be
utilized under current legal frameworks. It will also be open to co-financing with foreign investors and
multilateral institutions to facilitate financing of capital-intensive big-ticket infrastructure,” Secretary
Diokno added.

He assured that the Fund will be established with the highest standards of accountability, fiscal
responsibility, and good governance.

“The proposed Fund will adhere to the Santiago Principles, which pertain to the generally accepted
principles and practices to ensure the effective operations of sovereign wealth funds globally, and will
be governed by the relevant investment and risk management guidelines,” Secretary Diokno explained.

House Speaker Ferdinand Martin Romualdez delivered a pre-recorded message during the event,
explaining the provisions of the MIF bill, while economist Dr. Bernie Villegas spoke about the Fund’s
potential positive impact on economic growth and poverty reduction.

Secretary Diokno, Dr. Villegas, and Congressman Irwin Tieng, Representative of the 5th District of Manila
and Chairperson of the House Committee on Banks and Financial Intermediaries, engaged in an open
forum with business sector attendees, moderated by Asia CEO Chairman Richard Mills.

The MIF bill is currently pending at the committee level in the Senate.

“As Congress deliberates the Maharlika Investment Fund bill, the economic team is committed to
guiding our legislators to ensure that this Fund will be used for programs and projects that promote
economic growth, create jobs, and increase incomes for our people––now and in the future,” said
Secretary Diokno.
The Asia CEO Forum brings together the business community through its large-scale events in the
Philippines that serve as hubs for fruitful discourse and relationship building.