THE Davao City Chamber of Commerce and Industry Inc. (DCCCII) is pushing to revive or create another Islamic financing institution that caters to the needs of Muslims.
DCCCII President Antonio dela Cruz said micro, small, and medium enterprises are looking for cheap source of financing and that Islamic banking is a good source of financing for them.
“The government is looking into it [Islamic financing] because it’s a good source of financing. We already have the Al Amanah Islamic Investment Bank of the Philippines but, it just needs to revive or improve,” he told the BusinessMirror.
Cruz added that there are foreign banks already interested in offering Islamic banking in the Philippines. “The Saudi government is interested, as well as other Malaysian banks. We heard there are interested investors in Al Amanah. We’re very happy that all sectors were doing something for Mindanao,” he added.
He said Malaysia’s Maybank is doing good business here in the Philippines and that they have good product loans being offered.
We just need to improve the existing Islamic bank to become more competitive to cater to our brother Muslim and also Christian, Cruz said.
“Al Amanah is managed by Development Bank of the Philippines. It boils down to the one managing it,” he said.
Cruz also said the chamber is looking forward to Islamic banking and that the Monetary Board can decide on what needs to be done. “We believe that the Monetary Board is looking into this.”
“It [Islamic banking] will be part of the Bangsamoro basic law and it’s up to Congress [to pass the law]. We will wait for law and I hope it will be passed and we praise Allah. We are optimistic that it will happen,” he said.
Early this year, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. discussed the opportunities and challenges in Islamic banking and finance in the country.
He said the foundation of Islamic finance is the principle of risk sharing. “Risk sharing is the justification for the fundamental requirements of profit and loss sharing,” Tetangco said.
The guarantees or assurances of return of capital and return on capital, rewards without commensurate risk and preferential awards are all not permissible in Islamic finance.
“Trading and partnership or joint-venture arrangements are thus the appropriate risk-reward paradigms,” he added.
Another feature of Islamic finance is the tenet that financial transactions should be supported by genuine productive economic activity that subscribes to the ethics of the Islamic faith.
“This principle can serve to reinforce links between finance and the real sector, reducing the perils of unbridled innovation excessive and risk taking. In this context, it contributes to financial stability in the system,” Tetangco said.