The Bangko Sentral ng Pilipinas sees great potential for Islamic banks in the Philippines, especially in the Autonomous Region in Muslim Mindanao, which only has 20 banks across five provinces.
ARMM is a top source of fish and marine products and has large mineral deposits but conventional banking has been slow in coming to the region.
"This is an unfortunate state of affairs, considering that the ARMM is a resource-rich area with vast potential," BSP Governor Amando Tetangco Jr. said in his speech at the recent Islamic Banking Finance Workshop at the BSP.
"The latest available regional GDP data  puts the real GDP growth in the ARMM at only 1.2 percent. But when we consider broader Mindanao, the number rises about sevenfold to 8.2 percent. This tells us that there is an enormous potential in the Mindanao region in general, and the ARMM in particular," he said.
Tetangco said although Islamic banking can also meet the banking needs of non-Muslim depositors, banks must also look at the market needs and opportunities in the millions of Muslims in the country.
He said the public must be provided with appropriate choices to suit their risk appetite and financial needs.
He said the regulatory and supervisory framework must bring about a level playing field for the Islamic banking system.
"In other words, the privileges that are available for conventional banks must also be available to Islamic banks. In the same vein, the prudential requirements that cover conventional banks, must also apply to Islamic banks. The design and implementation of standards, of course, would need to take into account, the particular characteristics of Islamic finance," he said.
He also said that the regulatory environment should encourage banks to come out with products and services to address the distinctive needs of Islamic finance. He said Islamic financial players should be encouraged to introduce Islamic finance products.
Tetangco also said that since the BSP wants to promote more Islamic banks to operate alongside conventional banks, it is also looking at an open approach that will allow conventional banks to operate Islamic banking windows.
(GMA News Online / 16 March 2014)---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com