Philippines seeks Islamic funding todevelop halal industry in Mindanao

The Philippines is pushing ahead with moredevelopment plans for the Muslim-minority south of the archipelago, namely theMindanao region, which is in need for a variety of economic impulses.

Apart from earlier plans to use Islamicbonds, or sukuk, to fund infrastructure projects ? as part of PhilippinePresident Rodrigo Duterte’s massive “Build.Build.Build” programme ? in theregion where about one fifth of the 25.5mn-population belong to the Muslimfaith, the Mindanao Development Authority (MinDA) is now eyeing Islamicfinancial institutions as a source of funds to develop agricultural and otherhalal industries in the southernmost provinces.

“There is interest from Islamic financialinstitutions to support particularly the agriculture sector in Mindanao, aswell as the halal industry which is seen as a growing sector here,” MinDA’spublic affairs division chief Adrian Tamayo told reporters at a pressconference held in Davao City on January 9.

However, the funding by Islamic institutionsall depends on a proper legislation for the sector in the Philippines, forwhich many stakeholders are still waiting. To release core Islamic financingvehicles such as sukuk and utilise other Islamic funding structures, a reliableand sustainable legal and regulatory framework has to be put in place first.

In fact, a respective bill which seeks toorganise and regulate Islamic banks in the Philippines passed the committeelevel at the house of representatives in August last year but is still waitingfor congressional approval.

“If approved by Congress, the monetaryboard of the Philippine central bank may eventually authorise the establishmentof Islamic banks,” Tamayo said.

“It may also authorise conventional banksto engage in Islamic banking arrangements, including structures andtransactions, through a designated Islamic banking unit within a bank,” headded.

He also noted that there were Islamicinstitutions from the Middle East and Indonesia that wanted to enter Mindanaoafter peace has been reached with the passage of the Bangsamoro Organic Law, afederal law enacted in July 2018 providing for the establishment of anautonomous political entity known as the Bangsamoro Autonomous Region,replacing the Autonomous Region in Muslim Mindanao.

A legal framework for Islamic finance wouldcomplement the Bangsamoro Organic Law and encourage foreign Islamicinstitutions to look for business in Mindanao. Foreign Islamic banks may alsobe authorised to establish banking operations in the Philippines in accordancewith a 1994 law which opened the Philippine banking sector for foreign banksand financial institutions, but so far did not attract Islamic banks owing tothe absence of clear Islamic finance regulation and the decade-long monopoly ofstate-owned Al-Amanah Islamic Bank, the only Islamic bank in the Philippinesand a self-regulated entity.

Another point for the overdue Islamicbanking regulations is that foreign conventional banking institutions normallyfocus on Metro Manila to fund big-ticket projects, and most of them would notgo to areas in Mindanao that need funding, citing security issues, financialviability and small market size. With an Islamic banking framework in place,money from Islamic countries and foreign Islamic investors and banks woulddefinitely come in.

Reportedly, banks and investors from Bruneihave already expressed definite interest as have various Middle East countriesincluding Qatar.

Generally, Mindanao is pinning much hope onthe development of its halal industry as it certainly has the potential ofimproving economic conditions in the region. Activities are currently focusedon Zamboanga Special Economic Zone, where an “Asian Halal Center” as a halalmanufacturing and processing zone is currently being set up and promoted forforeign investors, while Cotabato City is being developed into a halal food hubwithin Mindanao.

The Muslim Mindanao Halal CertificationBoard as the sole authorised and accredited halal certifier in the region isauditing and supervising Shariah-compliance of all halal products and servicesin Mindanao.

Link-> https://m.gulf-times.com/story/619296/Philippines-seeks-Islamic-funding-to-develop-halal