A measure strengthening the Islamic banking in the Philippines has been recently filed at the House of Representatives.
In House Bill (HB) 5989, Party-list Rep. Sitti Djalia Turabin-Hataman of Anak Mindanao is pushing for an increase in the number of Islamic and conventional banks that can operate Islamic banking windows “to achieve a genuine and productive economic activity in the country.”
The measure seeks to amend Republic Act 6848, or the Charter of Al Amanah Islamic Investment Bank of the Philippines, and providing for the regulation and organization of an expanded Islamic banking system in the Philippines.
“There is a need to review and amend the said law for the country to significantly participate in the recent global developments in Islamic banking and provide appropriate regulatory frameworks and policies for local banks and financial institutions to engage in Islamic banking,” the lawmaker said.
According to Hataman, the measure provides the necessary framework and infrastructure for the country to engage in this rising global phenomenon; develop competencies among Filipinos; and popularize the concept of Islamic banking in the country.
The Al-Amanah Islamic Investment Bank, which was established in 1974, is one of the oldest Islamic banks in the world, making the Philippines a pioneer in Islamic banking.
Currently there are at least 700 Islamic financial institutions operating across more than 70 countries, with the industry registering an annual growth rate of 16.94 percent from 2009 to 2013.
Hataman said that the key stakeholders in the government and private sector must work together to increase financial facilities in the country for financial inclusion and encourage more inflows from foreign investors.
“Islamic banks, both local and foreign banks, can operate in the Philippines provided they are universal banks. Existing local banks can also operate Islamic- banking units,” she said.
Hataman, citing the Bangko Sentral ng Pilipinas’s guidelines on universal banks, said that setting up a new Islamic bank requires capitalization of P5 billion.
“We’d like to invite everyone, Muslim and non-Muslims, to take a closer look at Islamic banking as an alternative-financing modality, instrument and facility. This is very good for the economy, considering the enormous potentials of the halal industry. As we enter the Asean integration, we need to attain financial inclusion for the Muslims in the country,” she said.
Meanwhile Senior State Solicitor Maisara Dandamun Latiph, lead convener of the technical working group that drafted the measure, said, “This bill is a product of convergence of different agencies and sectors. We look forward to its passage to strengthen ethical banking in the country through socially responsible funds and investments. It aims to allow the growth of Islamic banks, paving the way for other investors, both local and international.”
Dr. Nataliya Mylenko, World Bank senior financial sector specialist, also reiterated the significance of Islamic banking in light of the Asean integration.
Mylenko added the potential of Islamic banking and finance in the areas of microfinance and available financing products for small and medium enterprise.
Dr. Zamir Iqbal, head of the World Bank Global Islamic Finance Development Center, emphasized that Islamic banking is not exclusive to Muslims and is, in fact, a growing global industry even in non-Muslim countries, like the United Kingdom, Germany, France and Africa.
“From a mere $150-billion industry in the mid- 1990s, Islamic finance is now worth $1.8 trillion, with presence not just in the Gulf areas, but even in Europe, Africa and Southeast Asia,” Zamir said.
“Islamic banking may also be termed structured financing, participation banking, partnership finance. Most people think it is only about being interest-free but that is less than half of what it is all about,” he said.