MINDANAO Development Authority (Minda) public relations head Adrian M. Tamayo said institutionalizing Islamic financing as a national law will help boost future investments in Mindanao.
“As of the moment, Minda is working on making a policy making islamic financing as a national law. Because if that will come, then the bottle-neck of Islamic financing or the mode of that investment would come in,” Tamayo said Tuesday, January 15, in a media forum, adding they lobbied for the passing of the bill last year in the Senate.
Based on Corporate Finance Institute (CFI), an online financial analyst platform, Islamic financing is a finance activity which complies with Sharia or the Islamic Law.
Under Sharia, the following are prohibited: paying or charging an interest; investing in business involved in prohibited activities or haram; maisir or gambling; and participation in contracts with uncertainty and risk (gharar).
“Islamic finance is based on two other crucial principles: material finality of the transaction which each transaction must be related to a real underlying economic transaction; and profit/loss sharing which parties entering into the contracts in Islamic finance share profit/loss and risks associated with the transaction. No one can benefit from the transaction more than the other,” CFI stated on its website.
Tamayo added that there are already interested investors from Middle Eastern countries that expressed to fund projects through Islamic financing.
Meanwhile, Tamayo said with Islamic financing as an alternative source of funding, the money allocated can also help increase agricultural productivity because more agricultural facilities can now be funded.