Vision of the MIC:  A Philippine economy with world class infrastructures in transport, information technology and communications, renewable energy and large-scale agribusiness ventures.  Mission of the MIC:  to attract large amounts of Foreign Direct Investment (FDIs) into these sectors.  Now, we are ready to strategize.  We have complied with the advice of a report of think tank Milken Institute which recommended that the Philippines should look at other Sovereign Wealth Funds examples on “how to structure the MIC in a robust, independent, efficient and effective national treasure….The Philippines could use its SWF to attract foreign direct investments, reducing the state’s burden to finance infrastructures through taxes and debt.” 

            First, we must perform the usual SWOT analysis before we can formulate the appropriate strategies to attain our Vision-Mission statement.  What are the strengths, weaknesses, opportunities and threats faced by the Philippines in the coming five years that are pertinent to the attainment of our stated Vision-Mission. First, it is recognized by leading think tanks and international organizations that the Philippine economy will be one of the fastest growing economies in the Indo-Pacific region in the coming five years.  As many of our peers in the region (including China and Vietnam) are slowing down to GDP growth rates of 3 to 4 %, the Philippine economy can realistically grow at least at 5 to 6%, replicating what it had already achieved during the pre-pandemic years of 2011 to 2019.  In fact, if the Vision of the MIC is actualized, Philippine GDP growth rates can even be improved to 8  to 10% precisely by attracting significant amount of  foreign long-term capital in vital infrastructures and large-scale agribusiness projects.  This strength of the Philippine economy is, in turn, due to strong economic institutions and enlightened economic policies that have been the results of more than thirty years of policy reforms and institution building.  Despite the sometimes-questionable quality of the political leadership of the last three decades, the best and brightest had always been appointed to the top positions of government agencies and departments that are directly related to the management of the national economy.

 A recent demonstration of this healthy practice is the appointment of Dr. Eli Remolona as Governor of the Central Bank.  Having worked as a top manager for the Bank of International Settlements for almost 20 years and for the Federal Reserve Bank of New York, he does not only have the theoretical knowledge he acquired from his doctoral program at Stanford University but the actual experience in the regulation of banks.  He has also been exposed to private banking practice when he served, prior to his being appointed to the Monetary Board, as an independent director of one the leading Philippine banks, the Bank of the Philippine Islands.

            Coupled with strong economic institutions and sound economic policies, though still requiring further strengthening and reform,  are our natural endowments of physical  and human resources.  We have abundant agricultural aquaculture,  mineral  and human resources.  We are among the few emerging markets in the East Asian region that still enjoy a young and growing population.  We also enjoy a competitive advantage in the IT-BPO sector by having an English speaking population.  This linguistic advantage, together with the soft skills of our workers, helps the country to earn close to $40 billion in remittances from our Overseas Filipino Workers (OFWs) which unfailingly grow at 3 to 5% yearly, come hell or high waters in the global economy.  Our not so secret weapon to attract significant amounts of FDIs is the large domestic market that results from a growing population (already above 115 million as of 2023) combined with ever growing remittances or earnings from OFWs and the BPO-IT sector.  Also an allurement to potential foreign investors in airports, railways, bridges and roads is our great potential for being a major tourism destination in the Indo-Pacific region, with the Philippines being considered as the best beach destination in the world and our Palawan province being considered as the best island resort in the world.  

            On top of the list of our major weaknesses in almost every global competitiveness report are our poor infrastructures (especially transport, telecom, and energy) and the very low productivity of our agricultural sector, especially compared to our ASEAN neighbors like Thailand, Vietnam and Malaysia. It does not require profound strategic thinking to convert these weaknesses into opportunities.  Staring at the faces of potential foreign investors are all the opportunities to improve our airports, seaports, railways, subways, tollways and other transport facilities.  Fortunately, they can now own 100 % of these facilities if they so desire.  In fact, NEDA has come out with a list of 3,600 potential infrastructure projects worth as much as $370 billion for implementation from 2023 to 2028.

            Among these infrastructure projects are 194 Infrastructure Flagship Projects (IFPs) which amount to $170 billion.  Of these 194, 48 will be funded via Public-Private Partnerships (PPPs); 81 will be funded via Official Development Assistance (ODA), 63 to be fully funded by the National Government.  Transport infrastructures account for 35; road networks for 32; and airports, 4.  We are not counting among the airports the many regional airports like those in Iloilo, Langdingan, Bacolod, Panglao, Coron, Puerto Princesa, San Vicente, Laoag, Legaspi, Dumaguete, Tacloban, and many other regional airports that can be significantly upgraded to the level of the Mactan airport through FDIs, especially from the leading infrastructure companies from such First World countries as Spain, Japan, South Korea, the United States, Germany and others.

            As regards the renewable energy sector, in a road show in Spain, Mr. Guido Delgado, former President of the National Power Corporation and one of the most knowledgeable top executives in the energy sector, presented, tongue in cheek, a very revealing set of information about the backwardness of the Philippine energy sector.   He presented comparable data about energy consumption of New Zealand and the Philippines.  The total power per capita consumption of New Zealand is 8,372 kWh with a population of 5 million people (and 30 million sheep!)  In contrast, the Philippines has 110 million people (and counting) with a per capita energy consumption of 863 kWh ( and practically no sheep!)  The Philippines clearly has blue sky potential for foreigners who want to invest in renewable energy. 

The over-all presentation of Mr. Delgado on the Philippine energy scenario was supplemented by a top executive of WeEnergy, a Singaporean company building solar  energy modular plants in the Philippines, especially in remote areas that are off-grid.  According to Mr. Quintin Pastrana, the Philippines could be the next rising star in renewable energy.  Along with its immense solar potential and Southeast Asia’s most thriving battery market, it could also be one of the region’s largest offshore wind markets.  It has already attracted developers to its shores, especially in the north of Luzon, the biggest island in the Archipelago.    Solar and wind capacity is expected to surge to 15 GW in 2030 from 1.9 GW in 2021.  Appropriate partnership between the Government and the private sector—greatly facilitated by the recent amendment of the Public Service Act that allows as much as 100% foreign ownership of renewable energy projects—can dramatically reduce the country’s emissions, while attracting foreign investment and reducing the import bill of fossil fuels.  In fact, large energy corporations from countries in Northern Europe like Denmark and Norway have already signified serious intentions of investing billions of dollars into renewable energy projects in the Philippines.

The third sector in my list on which the MIC should focus, considering its Vision-Mission statement, is large-scale agribusiness projects, especially in the coconut industry and a number of high-value fruits like coffee, cacao, mangoes, avocado, durian, and a few others that can be exported especially to such big markets as China.  This would require the reconsolidation of the millions of hectares of farm lands that were fragmented under a well-intentioned Agrarian Reform Program that unfortunately failed to improve the lot of the small farmers because of the inability of the Government to deliver the necessary infrastructures such as farm-to-market roads, irrigation systems, post-harvest facilities, agricultural extension services and other resources that the farmers needed to make the farms they own productive.

It will take an investment company like the Maharlika Investment Corporation to address the financing needs of the private companies that will venture into large-scale corporate farming.  Whatever the National and local governments can budget for agriculture should continue focusing on providing the small farmers in such crops as rice, corn, and vegetables as well as fisherfolks with the improved infrastructures and agricultural extension services they need to make their small farms  or fishing enterprises productive.  The MIC can help raise both domestic investments and FDIs to fund the large amounts needed in the reconsolidation process needed for large-scale corporate farming.   For example, there is an ambitious plan being presented to the President to replicate a successful coconut farm reconsolidation effort of Lionheart Farms in Rizal, Palawan in five other coconut regions.  The plan consists in upscaling the 3,000-hectare project of Lionheart Farms to 20,000 hectares per region.  As Lionheart Farms founder, Christian Moeller estimated, the total funding requirement (debt and equity) for 20,000 hectares of coconut farms with 7 million palms is PHP 6 billion ($ 107 million) through to free cash flow without any assumption on income from Carbon Credits and other auxiliary income opportunities, which form part of the Lionheart Farm model. Free cash flow is reached in ten years, clearly implying that long-term capital is absolutely needed.  It can be assumed that similar huge amounts of long-term capital will be needed for similar corporate farming projects in cacao, coffee, mangoes, avocado, etc.  Only a long-term investment fund like the Maharlika Investment Corporation will have the financial resources to address this most important step towards attaining food security.  For comments, my email address is bernardo.villegas@uap.asia.