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SHARIAH-compliant
banking products and activities are seen to rise in the
coming years in the Philippines, according to the
Development Bank of the Philippines (DBP).
In a
recent discussion over progress of the sale of
state-owned Al Amanah Bank, DBP president Reynaldo G.
David said the difficulties in pushing the sale through
may prove temporary and that over time its importance
will manifest itself.
“There
will come a need for shariah banking, and that is why I
feel there is value in Al Amanah Bank,” David told
reporters.
Not one
buyer showed interest in government’s 90-percent stake
in Al Amanah in May when the Privatization Management
Office (PMO) put it on the auction block for a minimum
price of P900 million.
Already
the bank has capital deficiency a decade long, and every
year the need rises, totaling P455.12 million as at
end-2005.
It spent
P62.2 million in 2006 when its revenue flows totaled
only P9.51 million, resulting to a net loss
of P53.16 million.
In the
entire Autonomous Region of Muslim Mindanao not one bank
can be found, and yet more people than ever in the area
require banking services that they get just the same
from the more orthodox lenders.
According to Bangko Sentral ng Pilipinas data, an
average 5,778 more people in the autonomous region were
served by one bank branch in the three months to June
this year, totaling 131,308.
In
contrast, a bank branch serves fewer people in the
National Capital Region, or only 4,199.
Clearly,
DBP chief Rey David has seen a need that no one bothers
to address at the moment.
“We’re
watching Al Amanah, how it generates revenue flow. The
PMO is cleaning it up and [will] bid it out again,” he
said.
Globally, only around 300 institutions offer Shariah-compliant
banking services, but the market is considered one of
the fastest-growing, providing investors with an upside
from a market with estimated assets of some P500
billion. |
