Finance Secretary Carlos Dominguez III has said that a strong and vibrant Islamic banking system in the country will help attract investments to the Southern Philippines and complement the ongoing government efforts to develop the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) as a “dynamic and integral part of the national economy.”
Dominguez said that under the Duterte administration, the government has taken bold steps catering to the specific banking and financing needs of Filipinos who adhere to the Islamic faith.
These include the enactment of Republic Act (RA) No. 11439 or the Islamic Banking Act in 2019 to pave the way for the organization and regulation of Islamic banks in the Philippines, and the training of bankers in the nuances of Sharia-compliant finance to help widen opportunities for Islamic Filipinos in accessing banking products and services, Dominguez said.
The awarding on Friday (Aug. 6, Manila time) of the technical assistance grant to the Al-Amanah Islamic Investment Bank of the Philippines (Amanah Islamic Bank) by the Asian Development Bank (ADB) is the latest step being undertaken to strengthen the Islamic banking system in the country and bring Islamic communities closer to the mainstream of the economy, Dominguez said.
Under the grant, the Islamic Finance Advisory & Assurance Services (IFAAS) will assist the Amanah Islamic Bank in, among others, developing a suite of Shariah-compliant products, establishing a full Shariah Governance Framework and sharpening the skills of a corps of specialists in Shariah-compliant banking services and products.
“We recognize that Islamic finance is a rapidly growing segment of international finance. A respected Islamic bank can help the Philippines attract funds from Islamic investors looking for opportunities to support social and infrastructure requirements, particularly in Mindanao. This will supplement our own efforts to develop the Bangsamoro Autonomous Region in Muslim Mindanao as a dynamic and integral part of the national economy,” Dominguez said in his message at the virtual ceremony for the awarding of the ADB grant.
Dominguez co-chairs with BARMM Education Minister Mohagher Iqbal the Intergovernmental Relations Body (IGRB), which is mandated to coordinate and resolve issues on intergovernmental relations between the national government and BARMM through regular consultations and continuing non-adversarial negotiations; and the Intergovernmental Fiscal Policy Board (IFPB) with BARMM Chief Minister Ahod Ebrahim, which is tasked to deal with revenue imbalances and fluctuations in the regional financial needs and revenue-raising capacity of the Bangsamoro region.
Dominguez thanked the ADB for supporting the Duterte administration’s initiatives to develop the Islamic financing industry in the Philippines as this will go a long way in realizing the President’s goal of financial inclusion for the Filipino people.
“The road to peace, inclusive growth, and prosperity in Mindanao becomes wider with support packages such as this one,” Dominguez said.
Given that Islamic financing is not a widely known banking concept in the country, Dominguez said it has effectively excluded Islamic Filipinos from the mainstream of the financial system.
While the Amanah Islamic Bank was an attempt to address this concern, it was not well-capitalized, he recalled.
“This will now change,” Dominguez said as he underscored the Duterte administration’s support for the development of a “strong and vibrant” Islamic banking system in the country.
Under IFAAS’ Islamic Finance Capacity Building Project, the Amanah Islamic Bank will benefit from a hands-on approach in receiving training, coaching and supervision from the advisory firm.
According to IFAAS, “this approach aims to ensure self-sufficiency of the Bank in product development and Shariah governance areas, enabling the staff to continue with their business in an independent way after the completion of the project, achieving the ultimate objective of the Bank’s sustainability.”
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