Market Edge: An Islamic finance expert urged government to launch an aggressive information drive for Filipino Muslims to gain awareness of Shariah-compliant products and investments in the country. Join ANC PRESTIGE to get access to perks: https://www.youtube.com/channel/UCvi6hEzLM-Z_unKPSuuzKvg/join For more ANC Interviews, click the link below: https://www.youtube.com/playlist?list=PLm34qRgqWBU4AT2G3LWF27_RErcz0GVd9 For more Market Edge videos, click the link below: https://www.youtube.com/playlist?list=PLm34qRgqWBU7VaY264uHZjj0gPNUXcw-q For more ANC Highlights videos, click the link below: https://www.youtube.com/playlist?list=PLm34qRgqWBU5gJ3Zls7EqjlC6dCw3aCji Subscribe to the ANC YouTube channel! https://www.youtube.com/user/ANCalerts Visit our website at https://news.abs-cbn.com/anc Facebook: https://www.facebook.com/ancalerts Twitter: https://twitter.com/ancalerts #MarketEdge #ANC #ABSCBNNews

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The first BSP-licensed Islamic Bank opened in BARMM this year.

The Philippine government last year successfully raised $1 billion from the sale of its Maidan Sukuk bond or Islamic bonds.

There's certainly been a whole lot of exciting developments in the Islamic finance space in the last few months, but are they enough?

Joining us this morning to talk about how else we can get more of our Muslim brothers and sisters banked

and able to take advantage of opportunities is Atty. Amer Hussein Mambuhay.

Atty. Mambuhay, thank you so much for taking our call. Happy Eid, sir.

Thank you very much for having me also and thank you for the greetings.

All right. There is an estimate here that we have, according to the National Commission on Muslim Filipinos,

that we have around 11 million Muslims out of the total Philippine population, about 11-12%.

We know that conventional, traditional banks have been slow to cover the BARMM region and it's not hard to see why.

Could you just set for us the landscape, set the record straight, how many of these 11 million Muslim Filipinos are actually banked

and how many are still unbanked as we speak?

Well, actually, there's a big percentage of Muslims who are actually banked, but most of them are in conventional banks.

And not in Islamic banking.

And, yes, basically the reason for that is that there's a very weak drive to engage in Islamic banking.

And so, some of the businesses also are located not in BARMM, but also in Metro Manila.

And so, there's not much option but to go to conventional banks.

And how does that work? Because conventional banks, we follow the contract.

We follow the concept of interest paid and received, which is not allowed in Islamic finance based on the Sharia law.

So, how does that work? Do many of these Muslim businessmen deal with conventional banks that have IBUs or Islamic banking units?

Or in the traditional banks that we all go to here?

Well, actually, when they go to conventional banks, they have to deal with these conventional banks and the products.

And so, they cannot avoid being engaged in.

Interest banking and but that is now the trend now is to go away from that type of banking and to engage in Islamic banking because as it is now, the Islamic bank is very aggressive and as you mentioned earlier, there's another conventional bank that opened an Islamic banking window.

So, there's already an option to go to these banks and it's now becoming more accessible to us Muslim Filipinos.

All right.

So, what is your outlook for Islamic finance in the Philippines now that, you know, there's already one that opened in Cotabato, the first BSP licensed Islamic bank that's card under card, right?

It's microfinance with Mr. Alip.

And then there's the Alamana Network, the very first one, which has been operating for, what, 40 years but really has not gained much traction.

The BSP is saying there's another one that's already expressed interest.

To set up a bank.

So, are you bullish?

Are you optimistic that more Muslims will be, you know, embraced into the fold of banking, Islamic finance here in the Philippines?

Well, yes.

I'm very optimistic.

In fact, there's a clarification.

There's a misconception that Islamic banking is just for Muslims.

It's not.

It's just turned Islamic banking but it is actually open to everybody.

And in fact, in other countries like Malaysia, 50% of the...

50% of the clients of these Islamic banks are actually non-Muslims.

And there's a very good reason for non-Muslims to avail themselves of Islamic banking because of the low risk there and the avoidance of interest.

And so, but going back to your question of the outlook here in the Philippines,

I am very optimistic especially because the BSP has allowed foreign banks to also come into the Philippines

and engage in Islamic banking.

And so, plus, these local banks can also open windows, Islamic banking units.

So, it's very possible that in the next 5 to 10 years, there will be more involved in more clients for these Islamic banks.

All right.

When you talk about banks, it's mostly about savings, you know, deposits and borrowings,

loans to take.

When you buy big-ticket items, what about investment vehicles?

The Philippine Stock Exchange have a list of so-called Sharia-compliant stocks.

Do you think our Muslim brothers and sisters are able to take advantage of programs like that from the Stock Exchange, for example?

They do have a list of stocks that are compliant to Sharia laws as well.

Well, yes.

In fact, they should avail themselves of these Sharia-compliant stocks.

And I think it says...

I think it's an issue of new marketing because most people, most Muslims don't know that these are already available in the Philippines.

And I strongly encourage them, I mean, my brothers, Filipino Muslims, to engage in these stocks, to invest in these stocks.

Are there any legislative reforms or policy frameworks from the Banco Central that you're pushing for today to help strengthen Islamic farming?

Actually, there is non-pending, but I would wish that the BSP would reduce the capital requirement for establishment of an Islamic bank.

Because as it is now, the only way that a local bank, totally local bank can open, for a Muslim to open a bank is to have a high capital of about 3 billion if there's just one head office,

and 6 billion if there are...

10 branches.

And for a bank, for a local Muslim investor in an Islamic bank to take, you know, it's very difficult to open an Islamic bank with this capitalization.

But if the BSP would reduce the capital requirement for these banks, then I think there will be chance to...

There's a high probability that more Muslim investors will probably open banks.

Under the BSP, right?

Revised circular.

And what about digital banking?

Is the community, is your community allowed to engage in digital banking transactions with e-wallets, for example?

Online banking?

Yes.

Well, Alamanda is actually a digital bank already.

So, in 2016, it was allowed by the BSP to engage in online banking.

And so, that has strengthened and widened its marketability because it can now reach areas where it doesn't have physical branches before.

And it's very convenient.

And hopefully, this trend will continue.

So that it will be more convenient for us Muslims, especially those in far-flung areas, to access Islamic banks.

In the future.

And you know, Atty. Mambuhay, it's really...

It's a great mystery why there is...

Why it's still wanting.

You know, efforts to push for Islamic finance remains wanting,

considering that Mindanao is a very resource-rich region.

You guys are a food basket for the Philippines.

You have very strong agricultural industries.

Mining is very strong.

Very mineralized.

You have so many businesses.

Operating in Mindanao.

I guess my final question is, what is your hope?

What do you hope to see in the next two to three years?

What can this government do for you to be able to, you know, make Islamic finance really boom?

Grow big time.

And help, you know, Muslims there invest and grow their wealth and do even more business.

Not just with other Filipino companies in the country, but with other Muslim countries where industries are really growing.

Not just with other Filipino companies in the country, but with other Muslim countries where industries are really growing.

Well, first is there should be a good information drive among Muslims.

As it is now, there is very little information drive being undertaken by Islamic banks and also by the BSP.

And so if there's an information drive to let these Muslims know that there's an alternative to conventional banks,

then maybe they will go to these banks.

And for...

For the international market, I think the country should, the government should invite these foreign banks,

especially Islamic ones, like Qatar National Bank, for example,

to open a branch in the Philippines and to cater to the needs of the Muslims.

And also, as I mentioned earlier, not just the Muslims, but also the non-Muslims who are doing business in the Philippines,

not just in Mindanao, actually.

Because, you know, whatever you can do.

In a conventional bank, actually, you can do that also in an Islamic bank,

except that there's no interest.

You don't pay interest.

You're just sharing the profit.

And the risk is sometimes borne not by you, but by the bank.

So if you're a borrower in an Islamic bank institution, Islamic banking,

then your risk is really minimum compared to if you're a borrower in a conventional bank.

So again, as I said, this should be...

There should be a strong educational information drive so that not just the Muslims,

but the non-Muslims also will know the advantages of engaging in an Islamic bank.

All right.

On that note, Atty. Mambuay, thank you so much for joining us

and for setting the record straight for Islamic finance in the Philippines.

We wish you well.

Good luck in the reforms that you're pushing for to make this actually work.

See you soon, sir.

Thank you very much.

Thank you.