Five foreign financial institutions have indicated interest in the Philippines Islamic banking sector and foreign government agencies and embassies have offered to help in encouraging new players, a Bangko Sentral ng Pilipinas (BSP) official said. BSP Deputy Governor Francisco Dakila Jr., during the Davao City-leg of the Philippine Economic Briefing on Wednesday, said the central bank has conducted briefings and informative sessions to increase awareness about Islamic banking in the country. ‘And this has resulted in engagements with potential new players, notable of which, aside from conventional banks, we have seen interests from five foreign banks, foreign government institutions, and foreign embassies who volunteered support in tapping new Islamic banking players,’ he said. Dakila said the central bank’s policy-making Monetary Board (MB) has approved the Islamic banking unit license application of a conventional bank, although he did not elaborate. ‘This has brought the number of Islamic banking players in the country to two. We anticipate more applicants as we continue our initiatives to promote Islamic banking and finance,’ he said. Republic Act (RA) 11439, otherwise known as the Islamic Banking Act, was signed into law on Aug. 22, 2019. Before the approval of the Islamic banking unit license, the country had a lone player – the government-owned Al Amanah Islamic Investment Bank of the Philippines, which was created as Amanah Islamic Bank through Presidential Decree No. 264 issued in 1973. It has initial operations in Palawan and in Muslim-dominated provinces in Mindanao. The financial institution became a universal bank in 1990 through the enactment of Republic Act No. 6848, or the Charter of Al-Amanah Islamic Investment Bank of the Philippines, with an authorized capital stock of PHP1 billion. It became a subsidiary of another government financial institution – the Development Bank of the Philippines (DBP) – in 2008 after the latter bought 99.9 percent of its capital stock. The BSP has been promoting Islamic banking to ensure financial inclusion around the country. Dakila said following the enactment of the Islamic banking law, the government has done numerous initiatives to promote not only Islamic banking but also Islamic finance, and this ‘has sparked a notable surge in market interest from both local and foreign investors.’ ‘This is a very important whole-of-government approach in developing the Islamic banking and finance ecosystem. This is concentrated in capacity building nationwide and also an awareness campaign,’ he said. He said the ‘market interest on Islamic banking is primarily attributed to its business model that emphasizes risk-sharing, (and) ethical and sustainable finance.’ ‘The progressive approach in improving the prudential regulatory reforms, aimed at ensuring a level playing field, is one key factor behind these developments,’ he said. He said there are many opportunities for investments in this area, noting for one the expansion of the government’s ‘financial inclusion agenda particularly in the BARMM (Bangsamoro Autonomous Region in Muslim Mindanao), which is the most unbanked region in the country.’ ‘Initiatives are seen to attract investors from Muslim (regions) including the Gulf Cooperation Council region, and also non-Muslim countries looking for diversified investments that equally value the global sustainable framework,’ he said. He also pointed out that the planned issuance by the government of about USD1 billion Sukuk bond, or Islamic bond, ‘will mark the country in the global Islamic finance industry.’ ‘And this will also generate more prospects and expand our engagement with the global Islamic financial market,’ he added

Source: Philippines News Agency