The Bangko Sentral ng Pilipinas (BSP) emphasized the Philippines’ potential as a hub for Islamic finance during the launch of an Asian Development Bank (ADB) report in Makati City on November 26, 2024.
BSP Governor Eli M. Remolona, Jr. highlighted efforts to create a regulatory framework that supports the growth of the Islamic finance sector.
“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,” he said.
To boost the industry, the BSP issued its first Islamic banking unit (IBU) license to a rural bank in June 2023, followed by a commercial bank in July 2024. Both banks inaugurated their IBUs this year, marking a significant milestone for the Philippine Islamic banking sector.
BSP Deputy Governor Chuchi G. Fonacier called for collaboration to unlock the sector’s potential, stating, “Together, let us leverage on the vast opportunities offered by Philippine Islamic finance and transform it as a cornerstone for an inclusive financial system that leaves no Filipino behind.”
The ADB report, titled “Unlocking the Potential of Islamic Finance in the Philippines: A Market Analysis and Landscape Report,” identified several growth drivers for the industry, including the country’s expanding economy, the government’s push for financial inclusion, and the financing needs of micro, small, and medium enterprises (MSMEs). It also noted untapped markets in 29% of unbanked Philippine cities and towns and strong interest from Filipino entrepreneurs and retail clients in Islamic financial services.
In her closing remarks, BSP Assistant Governor Arifa A. Ala expressed optimism about the future of Islamic finance in the Philippines. “May this event inspire confidence to stakeholders, especially market players and investors, that the presented opportunities in Islamic finance will soon become realities for a more inclusive and prosperous future for the Philippines,” she said.
The report also highlighted regulatory reforms that promote fairness between Islamic and conventional banks, including tax measures to ensure neutrality in transactions. These efforts are further supported by the Islamic Finance Coordination Forum and the Shari’ah Supervisory Board in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), which oversee the industry’s development and ensure Shari’ah compliance.
The BSP’s initiatives align with its broader goal of fostering an inclusive financial system that drives sustainable economic growth.
