the Philippines

Institutionalizing Islamic banking practices

The Philippines's new Republic Act (RA) 11439 or the "Act Providing for the Regulation and Organization of Islamic Banks" allows the Bangko Sentral ng Pilipinas to follow its regulatory mandate for supervision over the operations of Islamic banks, and to issue the implementing rules and regulations on Islamic banking. Currently, the country has only one Islamic bank, Al Amanah Islamic Investment Bank of the Philippines. According to BSP Governor Benjamin E. Diokno, the BSP looks forward to seeing greater participation in Islamic financing by both domestic and foreign banks. This is expected to widen opportunities for Muslim Filipinos in accessing banking products and services.

#Philippines plans to allow banks to set up Islamic banking units

Bangko Sentral ng Pilipinas (BSP) is leaning toward allowing local lenders to set up Islamic banking subsidiaries, as it steps up efforts to promote Shariah-compliant finance in the country. According to the central bank's Deputy Governor Chuchi Fonacier, the BSP is pushing for an open approach where conventional banks can operate Islamic banking windows or to establish subsidiary Islamic banks. Operating fully fledged subsidiaries would allow lenders to offer a wider range of Shariah-compliant services than through a window, which remains part of the parent bank. Fonacier added that foreign Shariah-compliant banks would also be allowed to operate locally. The BSP wants to issue the implementing rules for the new law before the end of the year.

MICROCAPITAL BRIEF: The Philippines Passes Law to Encourage Islamic Finance

President Rodrigo Duterte of the Philippines recently signed a law mandating Bangko Sentral ng Pilipinas (BSP), the nation’s central bank, to provide for the regulation and supervision of Islamic banks. An Interagency Working Group on Islamic Banking and Finance will work to develop a regulatory framework, which is intended to expand the number of banks in the country that operate in accordance with Shariah principles.

Duterte signs law regulating Islamic banks in #Philippines

President Rodrigo Duterte has signed Republic Act (RA) 11439 that allows the establishment of Islamic banks in the Philippines. Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said R.A. No. 11439 would unlock the full potential of Islamic financing in fostering inclusive economic growth. RA 11439 mandates the Bangko Sentral ng Pilipinas (BSP) to exercise regulatory powers and supervision over the operations of Islamic banks. The Trade department earlier said that several banks have expressed interest to open their branches in the Philippines, once a law on Islamic banking is signed. The banks were identified as CIMB, Islamic Development Bank, Qatar Bank, Credit Investment Bank of Malaysia and a Saudi bank.

Islamic banking law to unlock financing potential, foster inclusive growth —BSP

The Bangko Sentral ng Pilipinas (BSP) welcomes the enactment of a law putting Islamic banks under its regulation and supervision. Republic Act No. 11439 or "Act Providing for the Regulation and Organization of Islamic Banks" was signed by President Rodrigo Duterte on August 22. In the Philippines, the potential market for Islamic banking products mainly comprises the Muslims which account for about 10% of the population. The BSP noted that Islamic banking can also be attractive to non-Muslims, particularly investors who may be looking for new asset classes, instruments and products to diversify their portfolios. An Interagency Working Group on Islamic Banking and Finance has been constituted to develop a regulatory framework for Islamic banking.

Why we need to embrace Islamic finance

In the Philippines the Senate approved a bill authorizing the expansion of the Islamic banking system, which shall be under the supervision of the Bangko Sentral Pilipinas and regulated by the Monetary Board. This measure can support families affected by humanitarian crises so that they may access formal banking systems and become more financially secure. Last May was the second anniversary of the Marawi siege; violence and conflict displaced 98% of the total population of the city. Recovery has been slow and full of challenges, particularly for those who could not access financial services. Agencies involved in the rehabilitation of Marawi conflict-affected communities can maximize assistance by considering an alternative financial system such as Islamic finance.

#Philippines to fast-track Islamic finance regulations – media

Philippines’ central bank will fast-track the issuance of Islamic finance regulations in the country as soon as the Islamic banking law is approved by the president. Philippines has been accelerating the growth of its Islamic economy sectors in the last couple of years. The country’s interest in Islamic finance is two-fold: to attract Shariah-sensitive foreign investments and capital from Islamic countries, as well as to provide its approximately 10 million domestic Muslim population with an Islamic banking option. The country also hopes to increase its exports to Muslim-majority countries and has been developing its halal infrastructure to support this goal. Its national halal certification scheme was launched last year and in February the Department of Science and Technology opened the Philippine National Halal Laboratory and Science Centre.

FINTQ to digitize Islamic #microfinance in Southern #Philippines

At the 7th Global Islamic Microfinance Summit, FINTQ Managing Director Lito Villanueva noted that there is a need to push for an enabling framework for Islamic microfinance in the Philippines. In the Philippines around 5.6% of the population are practicing Islam, with a geographic concentration in the Autonomous Region in Muslim Mindanao (ARMM). Villanueva says despite its resource-rich landscape, ARMM remains largely underdeveloped with less than 70% of the adult population either unbanked or underserved. There are only 20 banks and 28 ATMs servicing almost 4 million ARMM residents. Not a single bank there is Shari'ah compliant. For its part FINTQ launched a national initiative called KasamaKA, which provides greater access to financial services, such as micro savings via agent banking, lending, micro insurance, remittances, micro investments and payments to every Filipino via a bottom-up approach.

Issuance of P50-billion Marawi #bond proposed

The #Philippines House of Representatives has approved the government’s plan of tapping the bond market to finance the reconstruction of Marawi City. Ben P. Evardone said the Bureau of Treasury should pursue the issuance of a P50-billion 'Marawi Bond' considering the low interest rates prevailing in the market. By tapping the bond market to finance Marawi’s reconstruction, the lawmaker said this will free up a huge part of the regular budget for government’s other programs. According to Budget Secretary Benjamin E. Diokno, the government would allocate P15 billion to Marawi City in the next two years. He also added the tax settlement paid by Mighty Corp. and Philippine Airlines would be used to finance the rehabilitation of the war-torn city.

PHL infrastructure program to benefit from #Islamic #bond market —HSBC

According to the Hongkong and Shanghai Banking Corporation (HSBC), #Philippines infrastructure can benefit from the Islamic bond market. HSBC Philippines President Wick Veloso stated that Islamic finance can be a good infrastructure investment vehicle for developing economies such as the Philippines. Earlier this year, Finance Secretary Carlos Dominguez III said the government plans to venture into the panda bond market and Sukuk debt papers. The Philippines intends to spend over P8 trillion on infrastructure and the bulk will be financed through tax revenue. For its part, the cental bank is advocating for the Islamic Banking Act which will effectively allow Islamic Banks to function.

Amendment of Islamic financing bill pushed

The Mindanao Development Authority (MINDA) is currently pushing to fast track the institutionalization of the Islamic Financing Mechanism. MINDA assistant secretary Romeo Montenegro said they are proposing the amendment in order to have specific mechanisms for full implementation of the Islamic Finance Mechanism. He added the bill in the Senate is already in the committee level and are already waiting for the same version to be filed in the House of Representatives. Montenegro said they wish to have the Islamic Financing Mechanism to pilot at Marawi to help with the reconstruction efforts in the area. It is also targeted to be a channel for the Middle Eastern countries willing to shell out financial support for the victims of the Marawi siege.

ABAC backs development of Islamic Infra Investment

The #Philippine team of the APEC Business Advisory Council (ABAC) has expressed interest in developing the Islamic Infrastructure Investment Program (I3P), making it a priority for the country. ABAC Philippines said it would look into how the Philippines can tap into the available funds from the Islamic banks in the region. The advisory council has identified infrastructure investment, areas involving people and labor, and micro, small and medium enterprise development as key priority areas for the country. For people-to-people connectivity, ABAC Philippines agreed to continue advocating for labor mobility and working on the APEC Business Travel Card (ABTC). It will also work with the Department of Foreign Affairs on how to improve access to ABTC and to increase penetration of the travel card among Filipino business people.

Peza sets #investment roadshows next month

The #Philippine Economic Zone Authority (PEZA) has scheduled investment roadshows in the Middle East to attract investors to explore the Philippine market. According to Peza director general Charito Plaza, this will be in preparation for President Rodrigo Duterte’s plan to visit the Middle East on Feb. 26 to March 3. Plaza mentioned that the Department of Foreign Affairs, Department of Trade and Industry, Philippine Chamber of Commerce and Industry, local government officials, and economic zone developers would join the investment promotion agency in its roadshow in the Middle East. PEZA recently held a seminar on sukuk to help local companies understand doing business with Middle East-based firms. Plaza noted the government aimed to expand the presence of Islamic banks in the country to facilitate investments.

Panel okays Sharia banks

The #Philippines' House committee on banks and financial intermediaries has approved the measures that would pave the way for the expansion of Islamic banking in the country. The new House Bill amends the Philippine’s lone Islamic bank, the Al-Amanah Islamic Investment Bank to regulate and organize an expanded Islamic banking system in the Philippines. Former president Gloria Macapagal Arroyo said the enactment of the measure was very timely as this would help the country’ growth inclusive and sustainable. The consolidated proposal will make the Al-Amanah independent from the Development Bank of the Philippines, be a universal bank with initial paid up capitalization of P10 billion and will be the first in the country to fully engage in Islamic banking that can issue sukuk.

2 firms become Shariah compliant

In the #Philippines Golden Haven Memorial Park and Cemex Philippines are now among the Shariah-compliant securities listed locally. Golden Haven and Cemex were among the 56 listed securities that made it to the Shariah list. Chief Operating Officer of the Philippine Stock Exchange (PSE), Roel A. Refran, said the PSE continues to provide a list of Shariah-compliant securities to cater to the needs of Islamic investors. He noted that by highlighting listed firms that adhere to the standards of Shariah law, PSE hopes to open investment opportunities in the country to Islamic funds.

Lidasan: Strengthen Al Amanah Islamic Investment Bank

President of the #Philippines Rody Duterte announced the need to help the people of the Autonomous Region in Muslim Mindanao (ARMM). Al-Amanah Islamic Investment Bank of the Philippines (AAIIBP) is the only bank authorized to conduct Islamic Banking business in the country. The AAIIBP total Assets for the month of July 2016 is P785.66 million, a decrease from previous month’s total assets of P795.05 million. In comparison to the same period last year, there is an increase of P6.58 million in total assets largely due to higher deposit levels in 2016. According to lawyer Arifa Ala, there is a significant untapped market opportunity for banks in the Philippines, because only about 30% of Filipino adults have deposit accounts at a financial institution.

#Philippines may join Asian sovereigns testing #Sukuk market

Plans by the Philippines to sell Islamic bonds could open a new source of financing for the incoming government of Rodrigo Duterte. Governments across Asia are increasingly viewing sukuk as a viable funding option, with Hong Kong open to tap the market for a third time while Sri Lanka and the Maldives consider debuts. A sukuk from these debutante countries could widen the Asian market that is dominated by sovereign deals from Malaysia and Indonesia. The Duterte government would have to work on a legal framework to facilitate sukuk, which could prove difficult in a busy agenda. Ashraf Mohammed, Assistant General Counsel of Asian Development Bank, said despite the concerns, interest is growing in the region to use Sukuk for infrastructure financing.

Manila plans to raise debt via #sukuk, yuan borrowings

The #Philippines’ incoming finance minister is looking at raising debt via sukuk bonds and yuan borrowings in a bid to diversify its debt profile. The Philippines last went to the debt market in February selling $2bn of 25-year bonds. Minister Carlos Dominguez is also planning to impose new taxes on more unhealthy products to compensate for a planned cut in income taxes. He also said he would put casinos under an anti-money laundering legislation to avoid a repeat of the Bangladesh Bank heist. Dominguez is returning to the Cabinet after 27 years and will assume office on June 30.

PHL Islamic banking framework up to legislators

When asked about the plans of the central bank on Al-Amanah Bank, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said they found it best to leave it to the Legislative to decide how the government will go about the planned sale, as well as on how the state will accommodate Islamic-based banking activities. BSP has led the drafting of a law amending AIIB charter and creating an Islamic banking system. The bill thereon which has been filed in the House of Representatives aims to create an expanded Islamic banking system and address constraints including the issues on taxation. Currently, Al-Amanah Bank is the first and only Islamic bank authorized to practice Islamic banking in the country.

Lack of rules delays ‘sukuk’ bonds issuance

The Philippines first sukuk issuance may have to wait a while despite recent pronouncements from both the private and the public sectors of plans to tap Muslim investors. Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said rules did not exist yet to allow firms or government agencies to issue debt instruments that comply with Islamic shariah laws. Last month, state-run National Home Mortgage Finance Corp. (NHMFC) said it planned to issue P2 billion in Islamic bonds in behalf of a Mindanao-based firm. NHMFC would tap government banks Land Bank of the Philippines and Development Bank of the Philippines as underwriters for the debt issuance.

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