The Philippines’ $2.3 billion sovereign wealth fund is going back to basics, plans to build economic pillars

A farmer tends to her crops. Ezra Acayan/Getty Images
Forbes | 21 Dec 2023

The Philippines’ $2.3 Billion Sovereign Wealth Fund Is Going Back To Basics, Plans To Build Economic Pillars

Jonathan Burgos
Forbes Staff

Maharlika Investment Corp.—the Philippines’ newly created sovereign wealth fund—is going back to basics by investing in projects to help build the country’s economic pillars such as agriculture, energy, tourism and infrastructure.

With an initial capitalization of 125 billion pesos ($2.3 billion)—contributed by state-owned lenders the Development Bank of the Philippines and the Land Bank of the Philippines as well as the national government—Maharlika plans to develop some 2 million hectares of idle government land across the country into agro-industrial estates to support the economic growth of rural areas, Maharlika president and CEO, Rafael Consing Jr., said in a recent interview with Forbes Asia.

“We hope to achieve the socio-economic goals of the Philippines,” said Consing, a former executive at International Container Terminal Services Inc. and HSBC Holdings. The fund aims to double its capitalization to 250 billion pesos in about two years by inviting institutional and retail investors to invest in Maharlika, and in about 8-10 years, assets under management should reach 500 billion pesos, including potential returns on investments, he added

Maharlika will invite foreign and domestic manufacturers to build their facilities in agro-industrial estates developed on state land in the provinces, providing farmers a captive market for their produce. To cut the bureaucratic red tape (a common complaint of investors in the Philippines), Consing said the government has already created green lanes to speed up the investment approval process.

To help boost farmers’ productivity, Maharlika plans to build telecommunications towers in remote rural areas and lease the facilities to mobile phone giants PLDT and Globe Telecom. “We’re planning to bridge the digital divide,” in the countryside, Consing said.

Maharlika also plans to invest in toll roads, bridges and airports to help boost tourism in the country. “Tourism is a cornerstone of the Philippine economy,” Consing said. The sector generated about $5.6 billion in tourism receipts in the first nine months of 2023.

The fund will also commit capital to rehabilitate some of the power generating assets of the state-owned National Power Corp so that these facilities can operate at more efficient and optimal levels, as well as building new renewable energy sources, even though private companies, including Aboitiz Group, San Miguel Corp. and Metro Pacific, have been actively investing in the sector.

“There’s a reason why they’re there—it’s profitable,” Consing said. “We want part of those profits. We don’t want to crowd them out. We want to co-invest with them.” Maharlika aims to generate unlevered returns of between “mid to high teens” on its investments, he added.

Mindful of concerns that Maharlika could become a conduit of corruption after Malaysia’s state fund 1MDB was embroiled into a multi-billion-dollar scandal, Consing said safeguards have been put in place to ensure transparency and accountability. For instance, the fund’s investments will have to be cleared by the nine-man board, which is comprised of private sector and government representatives.

Philippine President Ferdinand Marcos Jr. on Wednesday appointed the private sector members of the Maharlika board, including Vicky Castillo Tan, a veteran banker who previously worked at the Asian Development Bank and Citibank.

“We are confident that under the Board of Directors’ leadership, Maharlika will become a powerful engine for positive change, catalyzing opportunities and fostering a brighter future for all Filipinos,” Consing wrote in a LinkedIn post.

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