DAVAO CITY -- The Mindanao Development Authority (MinDA) is eyeing Islamic financial institutions as a good source of funds to develop agricultural industries in Mindanao.
Adrian Tamayo, MinDA’s Public Affairs Division chief, said Islamic financing has never been given due attention in the country and still needs a regular framework for it to be fully utilized.
“There is an expression of interest from Islamic financial institutions to help particularly the agriculture sector and the halal industry which is a growing sector in Mindanao,” Tamayo told reporters during Wednesday’s Armed Forces of the Philippines-Philippine National Police press corps briefing at the Royal Mandaya Hotel.
He said Islamic institutions have seen the big potential of Mindanao’s agriculture and halal sectors.
The halal industry alone, Tamayo said, is a growing market in the world with a value of around USD3 trillion, which Mindanao would like to have a share of.
Other potential areas that can be funded by Islamic institutions are logistics and connectivity.
Tamayo said there are already moves to make Islamic institutions as one mode of financing through Sukuk, an Islamic financial certificate that provides investors with underlying asset. It is referred to as bonds which are compliant with Sharia (Islamic law).
Tamayo said presently only the Amanah Islamic Bank is the only institution allowed to do Islamic banking in the country.
Amanah Bank is a wholly-owned subsidiary of the Development Bank of the Philippines (DBP), which acquired 99.9 percent ownership of the bank in 2008.
Tamayo said there are other Islamic institutions from the Middle East and Indonesia that wanted to see peace in Mindanao after the passage of the Bangsamoro Organic Law (BOL).
Currently, the bill which seeks to organize and regulate Islamic banks in the country passed the committee level at the House of Representatives in August last year.
If approved by Congress, this will complement the BOL. Under the bill, the Bangko Sentral ng Pilipinas' (BSP) Monetary Board may authorize the establishment of Islamic banks.
It may also authorize conventional banks to engage in Islamic banking arrangements, including structures and transactions, through a designated Islamic banking unit within the bank.
Foreign Islamic banks may also be authorized to establish banking operations in the Philippines under any of the modes of entry provided under Republic Act 7721 or "An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and for Other Purposes".