Changed intentions

Here’s the annoying thing about not speaking plainly about evolving policy intentions — we’re puzzled as to what the policy is and where it’s presently at.

That’s the sense we’re getting with what’s going on with the controversial Maharlika Investment Fund, to our consternation.

Up to now, MIF supporters are so enthused about it while heaping scorn on skeptics who believe it’s a Frankenstein.

But they still don’t tell us clearly what kind of creature the MIF has evolved into.

So, what’s the real score with the MIF? Now that there’s a change in its intentions?

First, however, we need to go back to the MIF’s original intentions.

Establishing the MIF is this administration’s serious attempt to join a long list of countries having sovereign wealth funds.

Generally, the MIF’s purpose — as nebulously set out in the explanatory note of the MIF bill railroaded through the Lower House — is “for the achievement of the country’s economic goals.”

How the MIF will exactly achieve those economic goals remains unclear, giving wide enough latitude to turn many into wild-eyed speculators.

At the start, for instance, many

MIF skeptics speculated it may follow in the scandalous footsteps of Malaysia’s SWF, referring to the multi-billion-dollar chicanery where taxpayer money ended up in oligarchs’ pockets with the help of multinational investment banks and tax havens.

Stung by such criticism and subsequent questions on how it would initially be funded, the MIF was “reengineered” over the holidays.

Consequently, the MIF is now touted not as an uncharted financial adventure of a country with no huge windfall from resources or exports for investing. Instead, the MIF has been “reengineered” into what essentially it is now — a new investment institution for attracting local and foreign investors.

Such reengineering, however, doesn’t mean the MIF isn’t an SWF.

It still is. Only now it isn’t about investing extra money elsewhere — which we clearly don’t have — but all about attracting money from elsewhere for domestic development projects.

Mr. Marcos Jr. himself already sees the MIF this way.

Last week, while assuaging fears the MIF could end up as a money laundering vehicle, he significantly said,

“Even on our end, we will only deploy funds when there is a very specific project to be paid for. So money laundering just won’t come into it.”

The key phrase here isn’t money laundering but about the MIF deploying funds for “very specific projects.”

And that clearly tells us the MIF is about instituting a new investment facility. This is probably the new MIF version which Mr. Marcos Jr. pitched to foreign investors at the World Economic Forum.

While Mr. Marcos Jr. and his allies have yet to candidly tell us the exact details of how the MIF will attract local and foreign investors, I have a feeling they’ve already followed closely Indonesia’s SWF model. It’s probably where the MIF is going next.

In Indonesia’s case, its Indonesia Investment Authority or INA is essentially searching for external co-investors for funding, for instance, public infrastructure which Indonesia couldn’t afford on its own.

The Indonesian government hopes that “global investors will see INA as a strategic partner that is characterized by firm government backing, a strong legal and institutional basis, and professionalism, establishing it as a trustworthy intermediary through which they can hedge their financial risks when investing in Indonesia.”

As an “intermediary” partner, Indonesia’s INA touts many attractive ways for attracting foreign investors, too long to detail here, but the crucial point about those attractions is that they will enable foreign investors to hedge their financial and political risks.

Will the final MIF version similarly have hedging mechanisms to entice foreign investors?

In the meantime, this also leads us to another tantalizing speculation: If the government-sponsored MIF becomes an “intermediary” facility isn’t that an ingenious facility for skirting around the constitutional ban on foreigners wholly owning Filipino enterprises?

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If the governmentsponsored MIF becomes an ‘intermediary’ facility isn’t that an ingenious facility for skirting around the constitutional ban on foreigners wholly owning Filipino enterprises? “

How the MIF will exactly achieve those economic goals remains unclear, giving wide enough latitude to turn many into wild-eyed speculators.