ADB Assists Local and Foreign Banks in the Philippines to Establish Islamic Banks and Units

In 2017, ADB approved a technical assistance (TA) program to promote the Philippines’ socioeconomic development and acceleration through the creation of Islamic banks and designated Islamic banking units (IBUs). In just five years, ADB has made huge strides. In particular, ADB, through its Office of the General Counsel's Law and Policy Reform Program, assisted in advancing the Islamic finance bill. The Islamic Banking Law, officially Republic Act No. 11439, paves the way for both local and foreign banks to establish full-fledged IBUs.   

To date, eight implementing rules and regulations (IRRs) have been finalized by various agencies, including a licensing framework for Islamic banks, guidelines for reporting Islamic banking and finance transactions, tax neutrality for Islamic finance transactions, and baseline regulatory framework for takaful undertaking. Currently, at least three more IRRs are in the pipeline.  

Additionally, ADB provided structuring advice to the Bureau of Treasury (BOT) to develop the first sovereign sukuk (Islamic "bonds") for the Philippines. The sukuk issuance will open the financial markets to new investors and is an essential part of the broader development of Islamic finance in the Philippines.  

ADB is also currently assisting the government to establish an acceptable Islamic Deposit Insurance Scheme in the country.