The Bangko Sentral ng Pilipinas (BSP)-led Islamic Finance Coordination Forum (IFCF) said it plans to conduct a comprehensive market demand study of Islamic banking and finance in the country soon to fast-track its acceptance and development.
IFCF also plans to hold more roadshows to promote Islamic banking and finance not just here but also outside of the Philippines.
“The BSP values the strong commitment of each IFCF-member-agency/institution in undertaking, prioritizing, and coordinating relevant initiatives that complement the BSP’s prudential regulatory reforms and initiatives on Islamic banking and finance,” said BSP Assistant Governor Arifa A. Ala, the lead advocate on Islamic banking and finance, and the IFCF chairperson.
The BSP said that to accelerate the promotion and development of Islamic banking and finance in the Philippines, the IFCF will do the market demand study and “possible roadshows to show prospective local and international stakeholders, investors, and players the viability of the Philippine Islamic finance market.”
The IFCF is also finalizing preparations for a maiden sovereign sukuk issuance and formulating and implementing Islamic finance-related programs, activities, and projects in the Bangsamoro Autonomous Region in Muslim Mindanao or BARMM.
The BSP said that “market conditions permitting” the targeted date for the country’s first sukuk issuance is the last quarter of 2023.
The IFCF, created even before the Islamic Banking Law in 2019, is tasked to facilitate discussions, collaboration, and cooperation among members on all matters related to the promotion and development of Islamic banking and finance. This includes coordination on regulatory and prudential policies and initiatives.
The forum is currently composed of 12 member-agencies/institutions, namely: the BSP; Asian Development Bank; Auditing and Assurance Standards Council; Bangsamoro Government; Bureau of Internal Revenue; Bureau of the Treasury; Department of Trade and Industry; Insurance Commission; National Commission on Muslim Filipinos; Philippine Deposit Insurance Corporation; Philippine Financial and Sustainability Reporting Standards Council; and Securities and Exchange Commission.
Ala said the collaboration and strong cooperation under the IFCF has led to the achievement of significant milestones, such as: the establishment of the Shari’ah Supervisory Board BARMM; the issuance of BIR regulations to implement tax neutrality; and the issuance by the IC of baseline regulations on takaful (Islamic insurance).
“These jumpstart the growth of the Philippine Islamic capital market and takaful; and make our country ready for the entry of Islamic finance players and investors,” she said.
This year, the BSP promoted the country's Islamic banking and finance in Saudi Arabia and United Arab Emirates, as part of the economic team's investor briefings.
Last August, the BSP announced the approval of the Philippines’ first Islamic banking unit (IBU) since Republic Act No. 11439 or the Islamic banking law was enacted four years ago. The BSP issued the IBU license to a conventional or non-Muslim bank.
At the moment, there are at least five foreign banks that are currently exploring the establishment of either a stand-alone Islamic bank or an IBU.
Before the first IBU license, the Philippines only has one Islamic bank which is the state-owned Al Amanah Islamic Investment Bank. It is a subsidiary of the Development Bank of the Philippines and created by a presidential decree in 1973.
The country’s Islamic banking and finance market is expected to attract more investors from Muslim nations in the Riyadh-based Gulf Cooperation Council region and also non-Muslim countries looking for diversified investments.