The Bangko Sentral ng Pilipinas (BSP) highlighted the Philippines’ potential as an investment destination for Islamic finance, citing the country's growing economy and the government’s push for financial inclusion.
In a statement on Monday, Dec. 2, BSP Governor Eli M. Remolona, Jr. said that the central bank, with support from the Asian Development Bank (ADB), has been fostering a regulatory environment conducive to the growth of the Islamic finance sector.
In June 2023, the BSP granted the first Islamic banking unit (IBU) license to a rural bank. This was followed by another license issued to a commercial bank in July 2024. The IBUs of both banks were inaugurated this year.
BSP Deputy Governor Chuchi G. Fonacier noted, “Together, let us leverage on the vast opportunities offered by Philippine Islamic finance and transform it as a cornerstone for an inclusive financial system that leaves no Filipino behind.”
The ADB report, titled “Unlocking the Potential of Islamic Finance in the Philippines: A Market Analysis and Landscape Report,” identified several factors contributing to the potential of Islamic finance in the Philippines.
These include the country’s growing economy; the government’s focus on financial inclusion; the market from 29 percent of unbanked Philippine cities and towns; substantial financing needs of micro, small, and medium enterprises; and the strong interest of Filipino businessmen and retail clients in using Islamic financial services.
The report highlighted regulatory reforms that ensure a level playing field for Islamic and conventional banks.
These reforms include tax regulations that promote tax neutrality of transactions between Islamic and conventional finance players.
The creation of the Islamic Finance Coordination forum and the operationalization of the Shari’ah Supervisory Board in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) reinforce these reforms.
ADB Co-Team Leader of the Islamic Finance for the Philippines Technical Assistance Asghar Ali Sayed said, “We invite you to explore the insights and recommendations that this report offers, particularly on the compelling investment opportunities that are available. By doing so, you may find a promising path to contribute to the country's economic development while providing ethical and socially responsible financial solutions to its diverse population.”