The economic team of the Marcos Jr. administration has emphasized the potential benefits of investing in the proposed Maharlika Investment Corp. (MIC), noting that government financial institutions could potentially achieve medium- to long-term returns surpassing their 10-year average return.
In a joint statement, the Departments of Budget and Management and Finance and the National Economic and Development Authority and the Bangko Sentral ng Pilipinas cited the Land Bank of the Philippines (LBP) with a 10-year average return on investment (ROI) of 4.23 percent and the Development Bank of the Philippines (DBP) with a 10-year average ROI of 3.59 percent.
“Meanwhile, the expected return of Maharlika is estimated to be around 8.6 percent on average, much higher than their cost of capital and the return in their current investment places,” the statement said.
“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,” it added.
“The public can remain confident in the stability of the LBP and the DBP even given their investment in the MIC. Limitations have also been established, i.e. investments should not exceed 25 percent of their net worth,” the economic team said.
“Relatedly, as the achievement of upper-middle income status – a goal under the Medium-Term Fiscal Framework – will render the country ineligible to avail of the low-interest loans and grants that are offered to low-income and lower-middle-income economies, the Maharlika Investment Fund (MIF) can serve as an alternative funding source to relieve the country from relatively higher interest rates imposed by alternative sources of financing,” it added.