Maharlika Fund: Dubious, pretentious and self-serving

December 2, 2022

by Sonny Africa

Maharlika is one of the innumerable things that the Marcoses touched and spoiled. The name was doubtless chosen for the grandiose sovereign wealth fund (SWF) proposed as part of the family’s sinister intent to rehabilitate the justifiably tarnished Marcos name. Instead, it is oddly appropriate – a bad name for a bad idea.

The Maharlika – the distinguished warrior class of ancient Tagalog society in Luzon – are part of the rich pre-colonial heritage of the country. Unfortunately, they are now more closely associated with among the earliest political disinformation campaigns in the country.

The world-class dictator and human rights violator Ferdinand Marcos Sr. claimed that he led the Ang Mga Maharlika guerrilla unit against Japanese forces during the Second World War. The unit was as fictitious as the war heroism he claimed. But these were repeated endlessly until, presaging expansive digital deceits in the age of social media, they became central fictions in his political identity. Maharlika eventually supersized to become among the key imagery of the dictatorship’s New Society.

The tainted concept is being recycled for the creation of the Maharlika Wealth Fund (MWF), reportedly and unsurprisingly approved by Pres. Ferdinand Marcos Jr. himself. Putting the Marcos family’s fingerprint on the Maharlika sovereign wealth fund is appropriate – it is dubious, pretentious and self-serving.


It is dubious because an opaque body is being created to handle hundreds of billions of pesos in public funds. The law explicitly seeks exemptions from the GOCC Governance Act, Government Procurement Reform Act, and Competition Law – all of which are laws with safeguards for protecting the public interest (Article VII, Sections 24 and 26). Its contracts are placed beyond review by the Office of the Government Corporate Counsel.

These exemptions have the effect of enabling the fund to be used to support big business allies and cronies or, worse, creating the conditions for corruption with impunity.

There is so much money involved. It will start with Php250 billion from government financial institutions – Php125 billion from the Government Service Insurance System (GSIS), Php50 billion from the Social Security System (SSS), Php50 billion from Land Bank of the Philippines (LBP) and Php25 billion from Development Bank of the Philippines (DBP) – with another Php25 billion from the national government budget for a total of Php275 billion.

This is just the start though and future annual infusions are planned from the national budget, Bangko Sentral ng Pilipinas (BSP), Philippine Amusement and Gaming Corporation (PAGCOR), and other as yet unidentified sources. In the following year, as provided in the law, the 10% “foreign currency equivalent” of remittances might be at least Php175 billion and 10% of BPO revenues around Php165 billion; 10% of PAGCOR revenues is Php3.3 billion. These are based on IBON’s interpretation of Article III, Section 9.

The start-up fund of Php275 billion possibly growing to at least Php618.3 billion in the second year are huge sums of public money. Full disclosure, transparency and accountability need to be paramount – yet these are precisely what the law creating the fund specifically discards.

The so-called safeguards now claimed are also dubious – especially placing the president at the helm of the Maharlika fund which is created by a law authored by his cousin, cousin’s wife, and son. The law should not have exempted the MWF from safeguards under existing laws and, if anything, should have even strengthened or added to these.

There needs to be more transparency with a provision to have representation from pensioners or government employees in its Board. There also needs to be full disclosure of decisions, holdings and investment strategies. These still do not completely assure regularity but will go a long way in that direction.


The Maharlika fund is pretentious because claiming the country is “the Rising Star of Asia” and “a real economic leader in the Asia Pacific,” as the law’s explanatory note says, has no basis in fact. The Philippines has among the worst poverty, unemployment and inflation in the region and has barely even rebounded to its pre-pandemic level, unlike most of our neighbors who did not have pandemic lockdowns as long and as harsh. It is wealth fund for a country that is not by any means wealthy.

Besides, if the government really has excess fiscal and foreign exchange resources, these are much better spent on more urgent ayuda, wage subsidies, small business support, and public schools and hospitals. These will give more concrete and immediate social benefit than an explicitly profit- and return-seeking investment fund. These supposed returns are actually even uncertain especially amid current domestic and global economic conditions.

Removing regulatory restrictions on pension funds clearly exposes them to unnecessary peril. The proposal in effect lifts restrictions on putting pension funds in riskier investments. While the argument is that this potentially increases returns and profitability, it makes these pension funds subject to volatility and even losses. The list of allowable investments includes, for instance, risky unlisted equities and financial derivatives aside from the ambiguous “other investments as may be approved” (Article IV, Section 11).

Most of the country’s millions of Filipino pensioners do not come from well-off families. Their well-being should be protected and not be made subject to the vagaries of financial adventurism seeking “the best absolute return,” as the MIF’s objectives explicitly state (Article II, Section 6).

There are currently over 100 SWFs worldwide of around 65 governments worth some US$10 trillion. By number and by value, most of these are financed from natural resource earnings – especially of energy commodities like oil, coal and natural gas but also minerals – followed by pension funds.

Five Southeast Asian countries have six SWFs. The two biggest are from Singapore which accumulated massive foreign exchange reserves from being a major financial and commercial center. Brunei, Timor-Leste, Indonesia and Vietnam also have SWFs. If it pushes through the Maharlika fund will be the sixth biggest SWF, possibly becoming the fifth biggest if our estimates of additional contributions in the second year are correct.


The Maharlika fund is also self-serving because its Board and personnel are given too much license to give themselves compensation even if the fund fails. The law explicitly seeks exemptions from the Salary Standardization Act and Civil Service Law (Article VII, Section 27). This has the effect of giving the fund managers excessive leeway in giving themselves and their personnel honoraria, allowance, per diem and bonuses. As it is, the presidents of the GFIs who will sit on the Board already earn as much as Php12 million (DBP) and Php16 million annually (GSIS).

Even the administration’s oligarchic supporters can gain from the fund being allowed to invest in domestic corporate bonds, listed or unlisted equities, joint ventures and co-investments, and commercial real estate and infrastructure projects (Article IV, Section 11).

It should be conspicuous that three of the country’s richest Filipinos are also behind three of the country’s five largest political parties – controlling one-third of the Senate, HOR and governorships – and are heavily invested in real estate and construction. They have already gained substantially from the Duterte administration’s infrastructure program and will keep doing so under the Marcos Jr. administration. It is difficult to imagine that they will not try to gain from the opaque Maharlika fund as well.

As if to make sure that the fund has as much resources as it can for its shadowy purposes, it is “exempt from any and all forms and kinds of direct or indirect taxes” and “no tax measure of whatever nature enacted shall apply” (Article VII, Section 25). This is an unintended allusion to the pre-colonial Maharlika who likewise did not pay taxes.

The law makes the common mistake of equating financial earnings with social impact or economic development. The fund’s objective is to “obtain the best absolute return” and “ensure profitability” (Article II, Section 6). Such an objective creates the possibility of funds going abroad if these are where the returns and profitability are to be had.

If ever, that would raise the question of why a capital-scarce economy like the Philippines is not using the fund’s hundreds of billions of pesos to support domestic sustainable agriculture or Filipino MSMEs and industrialization. Vietnam, for instance, uses its SWF with a strategic view of economic development beyond immediate returns and profit. Its State Capital and Investment Corporation (SCIC) is actively used to foster state-owned industrial enterprises even if there might be greater short-term returns from other investments.


The Maharlika fund is a brazen attempt to exploit the government’s legitimate need for resources to justify giving control over hundreds of billions in public funds to a shady politicized cabal. This will only concentrate wealth and power in the hands of a few and make the country even more undemocratic.

If the government really is so serious to raise revenues, a billionaire wealth tax or windfall real estate land value tax on just the few thousand richest Filipinos and few hundred largest firms are much more logical alternatives. Not to mention the hundreds of billions in unpaid estate taxes and the many hundreds of billions more in ill-gotten wealth that the president’s family can voluntarily contribute to the state’s revenues.

The misprioritization of public resources, poor social and development returns, and strong possibility of misuse and abuse are more than enough reason to reject the Maharlika fund proposal. This is aside from how it is suspiciously being railroaded by the most powerful — if not also the biggest and most corrupt — political dynasty in the country today.