Page last updated at 02:01 UTC, Wednesday, 09 August 2023 PH
From what we have written so far, it is clear that the Maharlika Investment Corporation (MIC) can be a very effective instrument of the Government—in partnership with the academic, NGO and business sectors—to attract large amounts of FDIs into such high-priority investment sectors as infrastructures, renewable energy and large-scale agribusiness ventures. A quantitative target for FDIs should be between $10 to $15 billion yearly in 2024 and 2025 and $15 to $20 billion yearly from 2026 to 2028. We already reached $12 billion in 2021. Vietnam has managed to attract $15 billion yearly for some years now. The idea is for MIC to offer to foreign direct investors who want to invest in these sectors to invite MIC as a minority equity holder (say 10 to 20 percent) of their investments in such projects as airports, train systems, subways, tollways, solar or wind power plants and large-scale commercial farms in such crops as coconut, cacao, coffee, palm oil, etc. Although foreigners are now allowed to own 100 percent equity in these projects upon amendment of the Public Service Act, most foreign companies would feel more comfortable having a Filipino partner who would help them navigate the difficult legal, social, political and bureaucratic environments of the Philippines.
What better partner to address these challenges of the business environment than a long-term investment fund owned by the State. MIC can provide direct access to various government agencies involved in the establishment and the ongoing operations of the business of the foreign investor. The profit motive that is inherent to the MIC will be added motivation for it to facilitate the establishment and operation of its partner FDI. From feedback I have gotten from foreign investors who have ventured in investing in these three sectors, the frequent complaints have to do with so much red tape and as regards construction projects, the very long period it takes to address the right-of-way obstacles. Hopefully, the MIC can have direct access to the leadership of the Anti-Red Tape Authority (ARTA) and to whatever government agencies have to do with resolving right-of-way conflicts.
The MIC management and board of directors should immediately go for the jugular: try to sell to foreign investors some of the big-ticket infrastructure projects approved by the Investment Coordination Committee (ICC) of the NEDA Board under the last Administration. On top of the list of these approved projects ( total investment costs of at least $400 to $500 million each ) are the Mindanao Railway Project: Tagum to Davao to Digos ; Improving Growth Corridors in Mindanao Road Sector Project; Expansion of the Philippine Rural Development Project; Safe Philippines Project; Metro Manila Bus Rapid Transit (BRT); Malolos-Clark Railway Project; PNR South Long Haul Project; Metro Manila Subway Project; Subic-Clark Railway Project; Ambal-Simuay River and Rio Grande de Mindanao River Flood Control Projects; Pasig-Marikina River and Manggahan Floodway and Bridges Construction Project; Metro Rail Transit (MRT) Line 3 Rehabilitation Project; Re-evaluation of the Davao City Bypass Construction Project; Pasig-Marikina River Channel Improvement Project Phase IV; North-South Commuter Railway System Phase 1 (Malolos-Tutuban); Samal Island-Davao Connector Project; Mass Rapid Transit (MRT) 4 Project; Bataan-Cavite Interlink Bridge Project; Cebu-Mactan Bridge and Coastal Road Construction Project; Davao City Coastal Bypass Road including Bucana Bridge Project; and Panay-Guimaras-Negros Island Bridges Project.
I know for a fact, for example, that some Spanish infrastructure companies have already expressed interest in investing in the Bataan-Cavite Interlink Bridge project. The future management of the MIC should waste no time in approaching the economic sections of the embassies of the countries that are most likely to take interest in investing in infrastructures, renewable energy and agribusiness ventures in the Philippines. The obvious candidates are Japan, South Korea, Spain, Taiwan, the United States, Germany and some North European countries. For example, as I already reported in a series of articles for a Philippine business daily, I participated in a road show held by some 20 Philippine corporations last April in Madrid and Barcelona. Some of the large Spanish infrastructure companies who had more than a passing interest in investing in the Philippines are Acciona, Indra, ACS, OHLA, Iberderola, Terranova, IPSA, Cobra, Globaltec Inginieria, Elecnor, Abengoa , Ferrovial, FCC, and Aqualia. These companies should be on top of the list of the “sales” department of the MIC. Among the Japanese companies who should be approached as early as possible are Marubeni, Tokyo Gas, Hitachi Asia Ltd., Sumitomo, Kaima, Daitu Kogyo, Taokai Kogyo, and Taisei Corp.
Among the Korean companies who should be on top of the list of prospective investors in infrastructures in the Philippines with whom MIC can partner are: KEPCO, Net Gate Korea Corp (telecom), Hanjin Heavy Industries and Construction Co., Seohyun Energy, CNNET Co, Ltd., Aji Corp, G-S E & C, K-Water, Daelim Engineering & Construction, Suosung Engineering Co, and CJ Hunan Tech Co, Ltd. There should also be some Taiwanese companies who should be approached. They are Tiger Infrastructure Philippines, Continental Engineering, CSBS Corp. and DB Tel. There should also be a thorough search for Taiwanese agribusiness enterprises that can partner with Philippine companies venturing into large-scale investments in fruits and vegetables as well as in livestock. Already, one of the largest Taiwanese companies in high-value seeds called Known You Seeds has a long-time partnership with a Philippine corporation called Harbest Philippines that has done much to propagate the growing of high-value vegetables and fruits among Filipino farmers.
The future management of MIC may also want to explore partnering with some North European corporations who have already announced their intention to invest in the important area of renewable energy. In an investment forum in Puerto Princesa, I heard the Danish Ambassador to the Philippines, His Excellency Franz-Michael Mellbin announcing that Seaborg, a Danish nuclear technology company, is planning to bring to the Philippines its know-how in small modular nuclear reactors as Philippine energy experts led by Dr. Carlos Arcilla, Director of the Philippine Nuclear Research Institute, are already exploring adding nuclear power to our energy mix. Although this may take 3 to 5 years to actually implement, it would be good if MIC can already be among the pioneers in co-investing in such a technology. Then there is the possibility of partnering with the Copenhagen Infrastructure New Market Funds (CINMF), an affiliate of Danish Infrastructure Partners (CIP) that is undertaking $5 billion worth of offshore wind projects in the Philippines. Although CIP is willing to be the 100% owner of the investment, it may be persuaded to allow the MIC to be a minority owner to facilitate its acclimatization to the local investment environment. I am sure that if the MIC undertakes a thorough search of investment plans in infrastructures, renewable energy and agribusiness ventures among some of the other embassies, they will discover similar investment plans that are about to be implemented in the next two to three years.
As a parting advice to the future management and board of directors of MIC, to minimize continuing criticisms from some sectors of Philippine society, especially from the academe and civil society, there should be a de-emphasis on the name “Maharlika” because of the negative political vibes. There is no need to remove or change the name since it is already part of what has been legislated. There just has to be an effort to refer to the organization habitually with the initials MIC very much along the lines of well known acronyms like NEDA, PNB, or TESDA in the public sector or SMC, DMCI, or RCBC In the private sector. There is also no need to refer to it as a Sovereign Wealth Fund because it is clear the country is not oozing with extra funds to invest. In fact, just to get the members of Congress to agree to have DBP and Land Bank to contribute to the initial funding was like getting blood out of a turnip. Not even super rich Saudi Arabia uses the nomenclature sovereign wealth fund but refers to it as the Public Investment Fund (PIF), one of the biggest sovereign wealth funds in the world with $650 billion. To me, the MIC will always be a Philippine Long-Term Investment Fund. For comments, my email address is email@example.com.