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British embassy, Muslim banker tackle merits of Islamic banking

March 8, 2012 6:31pm

The global financial crisis that weakened US and European economies actually presented emerging markets, like the Philippines, an opportunity to take a shot at $1trillion worth of Shariah-compliant assets, an Islamic banking expert and a British official said Thursday.
 
The way to tap into such a wealth of fund is to relax the tax and regulatory system by putting Islamic banking in the mainstream, they said.
 
The perception that Islamic banks are a conduit financial instrument of terrorist groups is an obstacle to the entry of investments and their accompanying growth, the experts noted.
 
Restrictive regulations and tax rules are also parts of the wall that keeps the Islamic banking system from pouring money into the Philippines, according to them. They added that such investments have fuelled growth in many countries like Britain and Malaysia.
 
By mainstreaming Islamic banking in the Philippines, growth and development in the provinces of Mindanao can be achieved, said British ambassador to the Philippines Stephen Lillie at the sidelines of the British embassy forum on “Enabling Islamic Finance in the Philippines” in Makati City’s Mandarin Hotel.
 
Many Filipino Muslims are excluded from Philippine financial activities, a situation that contributes a lot to making poverty worst in Mindanao, Lillie noted.

10% of Philippine population is  Muslim
 
"There is an increasing opportunity for Islamic banking in the network of international economic relations,” according to the ambassador.
 
“This is one way to tap liquidity from the Islamic world," he added.
 
Ten percent of the Philippine population is Muslim, according to Al-Amanah Islamic Investments Bank of the Philippines. The Zamboanga City-based bank, with nine branches across Mindanao and one in Makati, is the only Islamic bank in the country.
 
Established in 1990, Al-Amanah is now undergoing rehabilitation.
 
Maharlika Alonto, head of accounting and finance of Al-Amanah, said the lack of legal and regulatory framework for Islamic banking is a major block in mainstreaming Islamic banking in the Philippines.
 
She cited the case of the Autonomous Region in Muslim Mindanao (ARMM) — plagued with lingering poverty and Muslim extremism — to brush aside the perception that "Islamic finance system is… a means to Islamic extremism."
 
Philippine banking laws and regulation have to be harmonized with global measures to mainstream Islamic financial system before the momentum of liquidity in the Islamic economy can be gained, said Alonto.
 
So far, the Bangko Sentral ng Pilipinas has no detailed provision on Islamic banking system that could unveil the Islamic window for investments, she noted.
 
As such, Alonto said there is a need to establish a National Shariah Advisory Council in the Philippines, pushing for Islamic banking similar to Malaysia. — VS, GMA News
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