The Bangko Sentral ng Pilipinas (BSP) underscored the potential of the Philippines as a hub for Islamic finance at the launch of an Asian Development Bank (ADB) report.
The BSP has been actively promoting Islamic finance, granting licenses to a rural bank in June 2023 and a commercial bank in July 2024, respectively. These licenses were for Islamic banking units (IBUs).
The ADB report highlighted several factors contributing to the Philippines’ potential in Islamic finance.
This includes the country’s economic growth, the government’s focus on financial inclusion, the untapped market in 29% of unbanked Philippine cities and towns, and the significant number of unbanked Filipinos.
It also emphasised the substantial financing needs of micro, small, and medium enterprises (MSMEs).
The report also noted the strong interest in Islamic financial services among businesses and individuals.
Regulatory reforms have been implemented to create a level playing field for Islamic and conventional banks.
These reforms include tax regulations that ensure neutrality between both types of finance by promoting tax neutrality of transactions.
The establishment of the Islamic Finance Coordination Forum and the Shari’ah Supervisory Board reflects the government’s efforts to support the development of the Islamic finance sector.
The forum ensures close coordination of government efforts, while the supervisory board provides Shari’ah compliance oversight for Islamic banking and finance.
The BSP and ADB have conducted roadshows in Malaysia and Indonesia in September 2024 to promote the Philippines as an attractive destination for investors interested in Islamic finance.
BSP Governor Eli M. Remolona, Jr. said,
“The Bangko Sentral ng Pilipinas, with support from the Asian Development Bank, has been fostering a regulatory environment conducive to the growth of the Islamic finance sector.”
Featured image credit: Edited from Freepik
