The Philippine shares, in religious context, a lot of religions from all over the country. In fact, Islam is academically known to be the oldest religion in the country.
Just recently, our dear President Rodrigo Duterte signed into law the measure that would create and establish a legal and regulatory framework and structure for the known Islamic banks in the country.
What did President Duterte sign?
Back on August 22, 2019, President Rodrigo Duterte signed the Republic Act (R.A.) 11439. It’s a copy of which was just shared with the media last Friday, the 30th of August 2019.
This new law refers to the creation and establishment of Islamic banks in the Philippines.
As per the law, these Islamic banks’ operations will and shall not involve interest ( it is prohibited under the Shari’ah law) and will conduct all of its business transactions in accordance and in line with the Shari’ah principles.
What would this measure enact?
As per the measure, it is expected to widen the access to all banking services for all Filipino Muslims. According to Benjamin Diokno, Bangko Sentral ng Pilipinas (Governor), this would include those from the Bangsamoro region.
He continued that with a framework currently in place, the BSP is looking forward to observing the Islamic trademark to be included in all transactions.
With a well-defined regulatory framework now in place, the BSP looks forward to seeing greater participation in Islamic financing by both domestic and foreign banks.”
What is the Shari’ah?
Shari’ah, in Islamic context, refers to “the practical divine law deduced from its legitimate sources: the Qur’an, Sunnah, consensus of Muslim scholars, analogical deduction, and other approved sources of Islamic law.”
In simpler terms, Shari’ah is known to be the Islamic Law which dictates how Islamic transactions and behavior should be.
It governs all of the Islamic actions done by Islamic people in the country. So, it is said that with the establishment of Islamic banks in the country, all transactions are to be in line with the practices of Islams in Shari’ah.
Literally, the word Shari’ah means “the way,” and it is why Islamic people rely on it as their way of knowing the “truth from the lie.”
Engagement with Islamic Banks
As mentioned above, R.A. 11439 also allows the Monetary Board (MB) to authorize the establishment and the creation of Islamic banks in the country, which is mostly dominated by the Christian religion.
More so, the newly-approved law authorizes all conventional banks to engage and interact with banking arrangements that involve Islamic banks.
Furthermore, R.A. 11439 also authorizes Islamic banks abroad to establish and have operations in the country with the Monetary Board (MB) regulating and watching over the number of participants in the Islamic Banking system.
To top it up, the BSP is mandated and expected to exercise regulatory powers and management and supervision over Islamic Banks’ operations. They will also be tasked to issue the implementing rules and regulations (IRR) of Islamic banking before it is fully established in the country.
Two (2) months back, legislative efforts have been made to push a bill, which is now what we know of as R.A. 11439, to inculcate and establish Islamic banking in the country.
Now, it’s become a reality, with our dear President Duterte signing this into law allowing both local and foreign Islamic banks to operate, execute, and establish transactions under their own Islamic Law.
What do you think of Duterte’s decision in approving the establishment of Islamic banks in the Philippines? Could this be of drastic help to the economic situation our country is currently in? Could this attract investors from all over the Globe to finance some of the small-and-medium enterprises (SMEs) the Philippines has?