The government is planning to tap Islamic financing called “Sukuk” to fund big-ticket projects in Mindanao through the state-owned Al Amanah Islamic Bank, an official of the Mindanao Development Authority (MinDA) said.
MinDA executive deputy director Romeo Montenegro told “Wednesdays at Habi at Kape” that they requested President Rodrigo Duterte to direct his economic managers to study the viability of using Sukuk funds for infrastructures and other private-led projects in Mindanao.
“The issuance of Sukuk funds, a funding mechanism employing Islamic finance where that’s the basis by which many funding institutions like banks in Middle East or other Islamic countries could course through funding a particular project,” he said.
A proposed bill to revitalize the country’s Islamic bank has been pushed in Congress to allow access to Sukuk because “you need an Islamic finance-abled banking institution” through which the external funds, including the government’s, would be channeled for the government projects in Mindanao, he said.
“We would like to strengthen our proposal for the government to eventually look at employing Islamic finance for many projects in Mindanao,” he said.
One of the biggest Sukuk funds issuer in the world is Malaysia and Petronas Towers in Malaysia and Hong Kong International Airport are among iconic infrastructures constructed with Sukuk, according to Montenegro.
In a press release, Finance Secretary Carlos Dominguez III underscored the crucial role played by the Al Amanah Islamic Investment Bank of the Philippines in rebuilding Marawi City after being destroyed by five months of armed conflict between government and Islamic State-inspired militants.
The Al Amanah Bank, a subsidiary of the Development Bank of the Philippines, is vital in assisting businesses returning to Marawi as well as in providing microfinance services to people determined to rebuild their lives in this city, Dominguez said.
The official said Al Amanah Bank, whose key officers had trained at Deutsche Bank, a German investment institution, is fully compliant with Islamic banking practices.
He explained the Sukuk is different from conventional financial system because it would be “haram” (forbidden) to require interest for loans, and the funds from countries employing such financing scheme would only be coursed through an Islamic financial institution.
He said Mindanao needs this kind of financing scheme as most conventional banking institutions would not go to areas in Mindanao that need funding, citing security issues, financial viability, and market size.
“The conventional players would focus on Metro Manila to fund big ticket projects. Now, if we tap into Sukuk, then definitely money from Islamic coutnries would come in,” he added. (Antonio L. Colina IV/MindaNews)