High expectations for the MIF

With President Marcos signing the Maharlika Investment Fund (MIF) law, it’s all systems go for the country’s first sovereign fund.

Upon the issuance of its implementing rules and regulations, Mr. Marcos has to appoint the members of the Maharlika Management Corp. (MIC) that would manage the fund.

The MIC’s board of directors shall consist of the secretary of finance (who shall act as its chair), the presidents of Landbank of the Philippines and Development Bank of the Philippines, two regular directors, three independent directors from the private sector, and the president and chief executive officer (PCEO).

The PCEO shall “direct and supervise the operations and internal administration of the MIC,” which includes risk management, financial performance, human resources, accounting and legal affairs.

The law requires the PCEO to have, among others, “10 years management experience, including extensive commercial lending/credit administration experience” and “strategic knowledge of cash flow and capital planning management.”

No doubt, there are many Filipinos here in the Philippines and elsewhere in the world who are qualified to efficiently manage the MIF’s P500-billion investment resources.

Having made their pile, taking on the PCEO position would be a good opportunity for them to give something back to the country.

It helps that the law clearly spells out the criteria to be followed in making investment decisions and that there are lessons from the experiences of other sovereign funds that can be leaned on for guidance.

The qualifications of the PCEO may be considered the barest minimum for the job. Since the MIF has no precedent in the domestic banking industry, its management would test the mettle of its first PCEO.

He or she would be responsible for a treasure chest that consists of taxpayers’ money entrusted to government offices whose mandate is to properly manage them for the benefit of their constituencies.

In light of the controversy generated by the MIF’s creation, that PCEO would, in a manner of speaking, be working in a glass bowl. Expect his or her actions to be the subject of discussion and scrutiny in public fora and the media, in particular, social media.

And then there is Congress where some of its members may call for investigations or hearings “in aid of legislation” in case some investment decisions appear to deviate from the law’s guidelines, or just for the sake of publicity.

Under these circumstances, the PCEO cannot be onion-skinned. He or she has to take criticisms or nasty remarks as par for the course in government service, more so when billions of pesos of the people’s money are involved.

Like ants attracted to sugar, the MIF would likely draw the interest of some politicians or business people who claim closeness to the powers-that-be and attempt to poke their fingers in its investment decisions.

Although the President had promised that he will shield the fund from political interference, the past track record of some government financial institutions has shown that it is not easy to keep at bay outside (read: political) influence in those decisions.

A high level of firmness or resoluteness on the PCEO’s part would be needed to ensure that the MIF would operate in the manner envisioned by the law and not become a pork barrel of sorts for some well-placed political or business personalities.

This can only happen if the PCEO enjoys the full trust and confidence of the President and the latter makes it known to all and sundry that he does not want any monkey business, both internal and external, in the MIF.

In light of the high expectations for the MIF and rosy forecasts by the government’s economic managers about its benefits to the economy, that PCEO would, from day one, be under pressure to make investment decisions that would justify the President’s strong push for its speedy enactment into law.

He or she would need all the luck in the world. INQ

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