Minda to enhance Shari'ah Advisory Council

THE Mindanao Development Authority (Minda) is pushing for a strong Islamic financial system in Mindanao by enhancing the Shari'ah Board, or the Shari'ah Advisory Council as the super body that would provide standards and guidelines relating to Islamic Financing.

Minda chairman Secretary Datu Hadji Abul Khayr Alonto said in statement during the House Committee on Banks and Financial Intermediaries that Islamic financial system should be strong in the island-region particularly in the Autonomous Region in Muslim Mindanao (Armm) and the rest of the Bangsamoro areas where 89 percent of the Bangsamoro population are unbanked.

“Once a strong Islamic financial system is in place, it will trigger inflow of investments that will benefit not just Muslims but non-Muslims as well who intend to adhere to its basic principles,” he said, adding that he supports the move to amend Republic Act 6848 or the Charter of the Al-Amanah Islamic Investment Bank of the Philippines.

He added that the council would then certify and attest whether such standards and guidelines have been met.

Currently, there are more than 270 Islamic financial institutions located in 75 countries globally with US$1.8 trillion industry. The industry value is projected to increase in multiple folds to US$4 trillion by 2020.

Alonto said Islamic financing will pave way for financial inclusion in Mindanao, support peace and development programs and will provide Mindanao’s Small and Medium Enterprises or SMEs access to micro finance.

“Hopefully Armm will eventually be utilizing the Al Amanah Bank as the official bank for government-related transactions soon,” Alonto said.

Islamic financing, Alonto said, also complements to government’s efforts to push Mindanao as the country’s halal center by encouraging investors to be part of the market.

“There are potential investors from Islamic countries that are looking at Mindanao as viable investment destination. Many of these investors are keen on ensuring that financial investment through halal is compliant to the Shari'ah principles,” he said.

Alonto underscored that a healthy Islamic financial system will facilitate for the development of sukuk for Mindanao or known as Islamic bonds that are structured in such way that will generate returns to investors without infringing Shari'ah principles.

Sukuk, he said, could be promoted as means of raising capital for infrastructure projects. The sukuk market is being dominated by our neighboring countries: Malaysia, Indonesia and Brunei.

Islamic financing will also provide an alternative to conventional banking for non-Muslims. Alonto also said that learning from the lessons of the past global financial crisis, investors are now looking towards alternative financial systems that are sustainable and ethical while having the capacity to deliver high impact investments.

Moving onward

In the legal aspect, Alonto said they hope to execute existing laws enabling Islamic Financing such as R.A. 6848 and the Organic Act of the Armm, as amended.

A massive information dissemination and promotion of Islamic financing to lessen pre-conceived biases against the practice of Islamic financing shall also be pushed.

“With all these, Minda believe that there should be a sense of urgency among both Muslim and non-Muslim Filipinos in the full implementation of Islamic financing in Mindanao,” he said.

With the growing global Islamic finance and banking industry, Alonto urged Muslims to be enlightened that Islam is not just about devotional acts, but is also about economic development and progress.