MANILA, Philippines - The government is speeding up work on the draft legal framework for Islamic banking in the country to further spur economic growth.
Islamic banking offers the same services as conventional banking system except that it strictly adheres to the rules and values set by Islamic Shariah. It is also known as interest-free banking system as the Shariah disallows the acceptance of interest rate for the accepting and lending of money.
Finance Undersecretary Jose Emmanuel Reverente said the Aquino administration remains committed to promoting and nurturing Islamic financing in the country.
Reverente said Malaysia remains keen on assisting the Philippines in developing its Islamic banking and finance sector as well as promoting halal products between the two countries.
“There is strong interest from Malaysians to promote Islamic banking in the Philippines. The government is working closely with them. I believe President Aquino and Malaysian Prime Minister Najib Razak discussed that during the Prime Minister’s visit to Manila last month,†Reverente said.
The Philippines is struggling to develop Islamic banking, which has been growing at around 10 to 15 percent annually across the globe.
There is approximately $700 billion to P1 trillion worth of funds within the Islamic finance system, attracting some of the largest capital markets in the world such as London and Singapore to develop financial products and services to take a slice of this lucrative market.
Al-Amanah Islamic Investment Bank of the Philippines, the country’s first and only Islamic bank, is operating on a limited scale because of limited capitalization, thus needing a new investor group with financial muscle and technical expertise.
According to World Islamic Banking Competitiveness Report 2013 of Ernst & Young, global Islamic banking assets jumped from $1.3 trillion in 2011 to $1.8 trillion with the top 20 Islamic banks posting a growth of 16 percent in the last three years.
There are 1.8 billion Muslims worldwide, accounting for more than 20 percent of the global population. They are expected to rise at 1.8 percent a year.