Maharlika Could Double Landbank, DBP Average Return --- DBCC

The Development Budget Coordination Committee (DBCC) said the Maharlika Investment Corp. (MIC) could double the current average return on investment (ROI) of the Land Bank of the Philippines and the Development Bank of the Philippines (DBP).

Photo Insert: Landbank and DBP are among the sources for the sovereign wealth fund’s seed capital of P125 billion, contributing P50 billion and P25 billion, respectively.

This pronouncement comes as the DBCC reiterated its support behind the establishment of the MIC, an investment vehicle for the mobilization and utilization of the Maharlika Investment Fund (MIF).

In a joint statement, the inter-agency body tasked to set the government’s macroeconomic assumptions said that investing in MIC will allow Land Bank and DBP to possibly obtain medium- to long-term returns that are higher than their 10-year average return.

Currently, Land Bank and DBP have a 10-year average ROI of 4.23 percent and 3.59 percent, respectively. But according to the DBCC, the expected return of MIC is estimated to be around 8.6 percent on average, much higher than Land Bank and DBP’s 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,” DBCC said.

Landbank and DBP are among the sources for the sovereign wealth fund’s seed capital of P125 billion, contributing P50 billion and P25 billion, respectively.

“The MIC and the MIF aim to execute and sustain high-impact infrastructure and development projects, ease fiscal constraints, and maximize expected returns for our country’s investments,” DBCC said.

“The objectives are clear: to invest funds that are available in government instrumentalities and utilize them for investment purposes on the basis of their individual mandates,” it added.

The DBCC is composed of the Department of Budget and Management, the National Economic and Development Authority, the Department of Finance, and the Bangko Sentral ng Pilipinas.

Earlier, Finance Secretary Benjamin E. Diokno said the MIC is expected to be fully operational before the end of the year.

Congress already approved the MIF Act of 2023 in May and is expected to be signed by President Marcos before his second State of the Nation Address in July. Once enacted into law, Diokno said "We're expected to prepare the implementing rules and regulations, and we're expected to look for people to man the MIC.

”That is the direction and I see this to be fully operational before the end of the year," he added. The MIF will be the Philippines’ first-ever sovereign wealth fund that will optimize national funds by generating returns to support the administration’s economic goals.

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