Santiago Principles Self-Assessment

Palestine Investment Fund

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  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

Palestine Investment Fund (“PIF”) was established by a Presidential decree in 2000 as an independent entity and was formally registered in 2003 as a public shareholding company under the Palestinian corporate law. PIF shares are owned by Palestinian People.

PIF’s articles of association/ bylaws set the general objectives and governance structure for PIF.

PIF operations are overseen by an independent eleven members Board of directors, appointed by the President for a three years term. The Board is comprised of leading business figures, economists, and policymakers from across the region, and is responsible for setting PIF’s goals and objectives.

The General Assembly, which acts on behalf of the Palestinian people, is PIF’s highest supervisory and oversight body. The General Assembly provides strategic guidance to the Board of Directors, reviews PIF’s annual report, and ratifies the distribution of dividends to the Palestinian Treasury.

The PIF General Assembly is comprised of 30 individuals representing the various segments of Palestinian society, including the business community, regulatory agencies, and civil society. General assembly members are appointed by the President for three years term.

Information about PIF’s structure, governance and performance are published in PIF’s annual report and PIF’s website.

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

PIF’s governance manual sets the overall governance structure for PIF and provides clear roles and responsibilities for each level. It also provides a strict authority matrix for decision making process.

PIF’s governance structure is based on the following three pillars:

  1. A General Assembly comprises of 30 independent members representing PIF’s ultimate shareholder, the people of Palestine. General Assembly members are appointed by the President and representing the business community, academia, regulatory agencies and civil society. The General Assembly provides strategic guidance to the Board of Directors, approves annual reports and financial statements, appoints external auditor and approves the distribution of dividends to the Palestinian treasury.
  2. A Board of Directors comprises of 11 independent members appointed by the President from leading business figures, economists and policy makers. The Board is responsible for setting PIF’s goals and objectives, strategy, assets allocation, and overseeing PIF operations. The Board has the following committees; audit and governance committee, investment committee, and Human Resources committee.
  3. An executive management team responsible for implementing PIF’s strategy and overseeing daily operations. The management team reports to the Board of Directors.

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

PIF’s investment strategy is derived from PIF’s main objective of promoting sustainable economic growth and private sector development in Palestine.

PIF’s three years investment strategy is reviewed and approved by the Board of Directors. This strategy is reflected in the annual business plan which sets the priority for assets allocation as follows:

  1. Originating and investing in strategic projects in underdeveloped and vital sectors in Palestine, in partnership with the Palestinian private sector and international investors.
  2. Maintaining a foreign assets portfolio that composed of highly liquid capital markets investments, with the goal of maximizing return while minimizing risk, until adequate opportunities arise for deploying these funds in Palestine.

The use of leverage is limited to investments in private equity, mainly in the real estate sector.

PIF use of derivatives (Swaps and forwards) is limited for hedging currency positions.

PIF depends mainly on internal fund managers to manage its portfolios, the use of external fund managers is limited to investments in international capital markets. Fund managers activities, authorities and selection are governed by PIF’s Capital Markets Policies and Procedures manual.