Malaysia, lead global player in Shariah lending, is extending a helping hand to the Philippines whose only Islamic banking institution in existence has failed to live up to its mandate.
According to the Halal Islamic Chamber of Commerce and Industry in the Philippines (HICCIP), the Al Amanah Islamic Investment Bank in Manila has failed to meet its mandate of meeting the financial services requirements of up to 15 million Filipinos who are Muslims and may not avail themselves of services delivered by the country’s regular commercial lenders.
The failure of delivery of Shariah-compliant financial services to the country’s Muslim brothers may be traced to the public or government nature of Al Amanah Bank’s equity structure, the influential Malaysian trade organization said.
This failure was not lost on Malaysian Minister of Trade and Industry Dato’ Sri Mustapa Mohamed, who quickly extended his country’s hand in helping authorities build a strong Islam-oriented lending institution in the Philippines.
The Malaysian trade minister said his government and its private-sector partners were willing to “share experience in Islamic banking” to strengthen what has already been started in Manila by the Al Amanah Islamic Investment Bank.
“Malaysia is a leading global player in Islamic banking and finance. About two-thirds of Sukuks [bonds] globally is initiated in Malaysia. We are recognized because of all the ecosystems, the registered experts, the Shariah Council, the human capital development. And so Malaysians have been doing very well in sharing experience on Islamic banking,” he said.
According to the Malaysian official, global Islamic finance assets were seen surpassing the $2-trillion mark in 2014 and will continue to chart positive growth across all sectors.
According to Matrade Manila, the trade office of the Malaysian Embassy in Manila, officials from the Department of Finance plan to explore Malaysia for opportunities that could benefit Islamic banking back in Manila. The officials were keen on meeting the lenders, Maybank and CIMB executives.
Mohamed said “people have been talking to some Filipino parties and a number of Malaysians and certain companies, as well. The government and the central bank is prepared to work and share experience with anyone,” he said.
“There are a number of companies led by Malaysia that are very active in assisting them in developing capabilities in the area of Islamic banking,” he added.
Malaysia has successfully produced two homegrown Islamic banks with capital base of more than $1 billion—the Maybank Islamic and Bank Islam.
He said based on The Banker Top Islamic Financial Institutions for 2013, 24 Malaysian Islamic financial institutions are ranked among the top 100 largest Islamic financial institutions in the world based on the size of their Shariah-compliant assets.
Islamic banking is very promising, given the potentials of growing the global halal industry.
The halal industry is worth more than the $2.3 trillion worldwide.
“Malaysia is the forerunner in Sukuk [bond] sales. It is the champion in Islamic capital markets. Muslim or not, we have a piece [of the action] in the halal Industry,” according to Matrade Deputy Director of Special Project 1/Malaysia Kitchen Unit Trade and Services Promotion Division 1 Wan Azhamuddin Hj. Jusoh.
There are 1.8 billion Muslims worldwide, which account for 23 percent of the global population and estimated to increase at a rate of 1.8 percent annually.
HICCIP Chairman Carim Panumpang said the Filipino Muslim population is estimated at 10 million to 15 million. He said these people need prompt and efficient Islamic banking services. The latest available regional output data (2012) puts the real gross domestic product growth in the Autonomous Region in Muslim Mindanao (ARMM) at only 1.2 percent. The Bangko Sentral ng Pilipinas said if one considers broader Mindanao, the number could rise to 8.2 percent, which proves the enormous potential of the Mindanao region in general, and the ARMM in particular.
source: Business Mirror