Promoting Islamic banking and finance in the country is met with challenges, but the Bangko Sentral ng Pilipinas (BSP) remains up to the task given its commitment to the financial inclusion agenda.
Financial inclusion is a state where there is effective access to a wide range of financial products and services by all.
In the case of the Philippines, currently, there is only one operational Islamic bank that offers Shari’ah-compliant financial products. To add, the development of Islamic banking and finance in the country is still in its infancy stage. Thus, the low awareness on Islamic banking and finance and relevant regulations among investors and other stakeholders. Potential customers may also have no or little knowledge on what an Islamic bank is and how it can service their needs.
ΩAdvocating Islamic finance may be challenging, but the BSP ambassador for Islamic banking and finance, Assistant Governor Arifa A. Ala, who herself is from the Muslim community, is up to the task.
“The promotion of Islamic banking and finance is paramount because it can provide access to alternative financial products and services to all Filipinos. Given the enabling regulations and initiatives that the BSP has put in place, I am excited about the future and confident that the time will come when Islamic banking and finance is a thriving industry in the Philippines.”
In charge of the BSP’s Financial Supervision Sub-Sector III, Assistant Governor Ala is backed by strong credentials that are fit for her role. She is a certified public accountant, a lawyer, and a career central banker with extensive technical experience in banking supervision and regulation.
As the BSP’s point person for Islamic banking and finance, Assistant Governor Ala is heavily invested in the development of enabling policies for the industry. She also takes the lead in stakeholder engagements, such as forging partnerships and collaborations. For instance, the BSP signed a Memorandum of Understanding with the Philippine Economic Zone Authority on encouraging investments in Islamic banking and finance in the country. Assistant Governor Ala has also appeared in several media interviews with the goal of raising awareness of Islamic banking and finance in the Philippines.
The BSP official chairs the Islamic Finance Coordination Forum (IFCF), which facilitates collaboration and coordination among government agencies on the promotion of Islamic banking and finance.
Other members of the BSP-led IFCF are Securities and Exchange Commission (vice chair); Bureau of the Treasury; Philippine Deposit Insurance Corporation; Department of Trade and Industry (DTI); Bureau of Internal Revenue; Insurance Commission; Financial Reporting Standards Council; National Commission on Muslim Filipinos (NCMF); Bangsamoro Government; Auditing and Assurance Standard Council; and Asian Development Bank.
Assistant Governor Ala also sits in the Philippine Halal Export Development and Promotion Board (Halal Board) as an alternate representative of the BSP Governor. The Board aims to promote the growth and ensure the integrity and quality of Philippine Halal exports. The Halal Board is composed of the heads of the following agencies: DTI (chair); NCMF (vice chair); Department of Health; Department of Agriculture; Department of Science and Technology; Department of Foreign Affairs; Department of Tourism; BSP; Mindanao Development Authority; and two Muslim professionals from the academe, law, industry, or food science who have experience in Halal industry development as appointed by the President.
In her public engagements, the Assistant Governor stresses the BSP’s promotion of a level playing field across the banking industry, where Islamic banks are generally subject to the same regulations as conventional banks, as applicable. This will allow Islamic banks to viably operate alongside their traditional counterparts as well as encourage the establishment of similar institutions in the country.
Assistant Governor Ala’s contributions to the development of the Philippine banking system have been recognized internationally. She received the WOMANi Professional Award for 2022 from the Cambridge Institute of Islamic Finance for being one of the most influential women in Islamic business and finance. This recognition was given during ceremonies held on 12 December 2022 in Jakarta, Indonesia.
On behalf of the BSP, the Assistant Governor also received the Islamic Banking and Finance Institution Malaysia (IBFIM) Outstanding Industry Collaboration Award on Feb. 25, 2023 in Kuala Lumpur, Malaysia. This recognition acknowledges the BSP’s calibrated efforts and strong commitment to expanding its personnel’s knowledge and expertise in Islamic banking and finance.
Assistant Governor Ala said the huge potential presented by Islamic finance prospects in the country is already ripe for the picking, amid regulations and policies in place to foster a sound Islamic banking system.
“It is important that we use various tools and venues to promote Islamic banking and to expand our financial inclusion agenda. The Philippine banking system has been liberalized and so foreign investors can establish Islamic banks in the Philippines, in the form of a branch or a full-fledged subsidiary Islamic bank,” she stressed.
The BSP is rolling out a communication campaign to send a signal to the market that the Philippines is very much ready to accept Islamic banking players. Another goal is to improve the awareness and appreciation of Filipino individuals and businesses on Islamic banking services.
“With our enabling regulatory environment—brought about in part by the enactment of Republic Act No. 11439 or the Islamic Banking Act and the domestic economy’s recovery momentum from the COVID-19 crisis—the Philippines is poised to attract Islamic banking investments,” Assistant Governor Ala said.
Assistant Governor Ala earned her bachelor’s degree in business administration majoring in accounting from the Mindanao State University. She also obtained a law degree from San Beda College, Manila. She also has master’s degrees in business administration from the Ateneo de Manila University, and in public management from the National University of Singapore and Harvard Kennedy School.
