On October 18, several media outlets, notably Nikkei Asia, reported that the Maharlika Investment Fund had been suspended. The source for this rather surprising news was not an official announcement by the Philippine government, but rather a memo that contained a statement by the Office of the Executive Secretary: "President Ferdinand R. Marcos Jr. issued a suspension because he wanted to study carefully the [implementing rules and regulations] to ensure the purpose of the fund will be realized for the country's development with safeguards in place for transparency and accountability.”
Nikkei’s story quoted what appear to some skeptics of the sovereign wealth fund (there are quite a few), including opposition politician France Castro, who told Nikkei that it would be best to just scrap the project. An anonymous government official told the publication that there also concerns about the finances of the two state banks that will be supporting the fund, Land Bank of the Philippines and Development Bank of the Philippines.
Not long after these media reports about the Maharlika Investment Fund being suspended were published, Marcos clarified the situation at a media briefing. He said that the fund was not being suspended, but “on the contrary, we are just finding ways to make it as close to perfect and ideal as possible,” adding that the Philippines intends to have the fund operational before the end of the year.
It is unclear why the memo mentioned a “suspension” if Marcos never intended to put the fund on ice. It sounds like he’s just playing it safe – which would be a wise decision given what transpired with 1MDB.
Meanwhile, Marco recently visited Saudi Arabia and discussed the fund with his Saudi hosts. Marcos told them that the Philippines is open to consulting Saudi businesses on the structure of wealth funds. Saudi Crown Prince and Prime Minister Mohammed Bin Salman reportedly
conveyed his interest to enhance trade and investment relations with the Philippines, and expressed “keen interest” in the Maharlika Investment Fund and other business-to-business engagements.
Marcos told reporters that in addition to Saudi Arabia, “other Gulf countries have expressed an interest” in the fund.
Ultimately, is true that the countries with the best track records on sovereign wealth funds tend to be advanced economies with minimal corruption problems, such as Norway and Singapore. However, we believe the Philippines can make the Maharlika Investment Fund a success if it ensures that concerns about transparency, accountability and professional management of the fund are thoroughly addressed.