Foreign investors are keeping their eyes on the proposed Maharlika Investment Fund (MIF) as the government’s economic managers have already received some expressions of interest from the global community.
In a joint statement yesterday, the economic team said that the MIF is an ideal vehicle and well-positioned to bring in investments as the Philippine economic outlook remains robust amid the global economic slowdown.
“Some international investors have already expressed interest in investing, such as the Japan Bank for International Cooperation as well as several US investors, and certainly, there will be more interest once the MIF is officially launched,” the government officials said in its statement.
The joint message was issued by the Department of Budget and Management, Department of Finance, the National Economic and Development Authority and the Bangko Sentral ng Pilipinas.
The economic team said it released its statement to reaffirm its support for the establishment of the MIF as a vehicle for economic growth.
“As an additional vehicle for financing, the MIF is expected to widen the fiscal space in the near- to medium -term as it reduces heavy reliance on local funds and development assistance as the main financing mechanisms for infrastructure projects,” the statement said.
“By providing an alternative source to public infrastructure spending, there would be a bigger budgetary allowance for other priority expenditures,” it added.
The four agencies also said that the achievement of upper-middle income status will render the country ineligible to avail of the low-interest loans and grants that are offered to low-income and lower-middle-income economies. Thus, the MIF can serve as an alternative funding source to relieve the country from relatively higher interest rates imposed by alternative sources of financing.
Meanwhile, the statement also said that investing in the Maharlika Investment Corp. (MIC) will allow government financial institutions to possibly obtain medium- to long-term returns that are higher than their 10-year average return.
“For instance, the Land Bank of the Philippines (LBP) has a 10-year average return on investment (ROI) of 4.23 percent and the Development Bank of the Philippines (DPB) has a 10-year average ROI of 3.59 percent. Meanwhile, the expected return of Maharlika is estimated to be around 8.6 percent on average, much higher than their cost of capital and the return in their current investment places. This is based on simulations which take into consideration the blend of investment placements between the planned capital market investment sub-fund and sectoral investment sub-fund,” the economic team said.
“The public can remain confident in the stability of the LBP and the DBP even given their investment in the MIC. Limitations have also been established, i.e. investments should not exceed 25 percent of their net worth,” they added.
