Financial institutions based in the United Kingdom on Thursay called on the Philippine government to enact laws and rules that would allow Islamic finance (IF), explaining that the country stands to gain from over $1 trillion in global funds on tap.
According to British Ambassador Stephen Lillie, Islamic finance is very much relevant to the Philippines and that there “is potentially a big opportunity.”
Lillie spoke at a forum Thursday organized in cooperation with KMPG group and its local partners Manabat Sanagustin & Co. (MS&C).
He said the country should adopt the Islamic system of finance because of the Philippines’ existing web of trade and investments, as well as people-to-people links, with the Middle East.
“As the country seeks to capitalize on, and expand, these links, Islamic financial instruments may have a valuable role to play,” Lillie added. “As you seek to attract much-needed foreign investment from a wide range of sources, (Islamic financial instruments) would be crucial.”
The ambassador said the United Kingdom, considered the most successful non-Islamic country to engage in Islamic banking, provides a good example.
He said that the UK—home of the common law system instead of Shariah law that governs Islamic finance—has successfully developed IF institutions and products within the framework of legislation and regulations.
Experts from HSBC, PruLife UK and Standard Chartered also provided inputs on why Islamic finance would make sense for the Philippines.
Although the global market for Islamic finance remains at an early stage of development, even for countries where the population is predominantly Muslim, it still presents strong opportunities through product innovations, the experts said.
During the decade ending in 2010, the issuance of “Sukuk,” or Shariah-compliant debt and equity paper, grew 50 times amid slow global growth in the aftermath of the 2008 financial crisis.
The broadening geographical customer base and continued market developments in the banking sector is expected to boost the potential of Islamic finance to sustain a growth rate of up to 15 percent a year.
“One driver of Islamic finance is Muslim population,” Lillie said, explaining that Muslims represent a market for funds that need to be served.