Metro Manila (CNN Philippines, March 20) – The latest version of the controversial Maharlika Investment Fund in the Senate provides for an initial capital of ₱125 billion and removes tax exemptions and other privileges initially sought for it.
Senator Mark Villar, chairman of the Committee on Banks, Financial Institutions, and Currencies, sponsored the 32-page panel report at the plenary on Monday.
Under the proposal, the initial capital shall come from investible funds of the Land Bank of the Philippines (₱50 billion) and Development Bank of the Philippines (₱25 billion), as well as contributions of the national government (₱50 billion).
“These GFIs are likely to earn more than what they are earning now, considering that they are investing in conservative investments such as government securities,” Villar said.
“In fact, the expected return of Maharlika, which is estimated to be around 8.6 percent on average, is much higher than their cost of capital and the return in their current investment placements,” he added.
Meanwhile, the national government’s share in the initial capital shall include 100% of the Bangko Sentral ng Pilipinas’ dividends, and 10% of the government’s share in the Philippine Gaming Corporation and other government owned gaming operators and regulators. Other sources include proceeds from privatization and the transfer of government assets, as well as royalties and special assessments.
All in all, the Maharlika Investment Corporation, which shall manage the fund, is allowed a maximum number of shares worth ₱500 billion, to be divided into 5 billion shares worth ₱100 each. Aside from the ₱125 billion initial capital, common shares worth ₱375 billion shall be subscribed by the national government, and its agencies or instrumentalities, including GOCCs or government financial institutions.
Villar also noted that transactions and assets of the Maharlika Investment Fund and the Maharlika Investment Corporation shall be subject to local and national taxes, salary standardization, and procurement rules.
“To ensure a level playing field, the exemptions and privileges were removed from the originally filed bill,” Villar said.
The committee report also mandates that all documents related to the fund shall be “open, available, accessible to the public” as an additional safeguard measure.
Lawmakers from the House of Representatives first pushed for the creation of the fund late last year in a bid to accrue profits from government assets.
The proposed measure – which also has the backing of President Ferdinand Marcos Jr. – hurdled the lower chamber on Dec. 15.
READ: The proposed Maharlika Investment Fund: What you need to know
