The passage of the Bangsamoro Basic Law (BBL) is seen to address the issue of delivery and, most importantly, financing of priority investments identified in the Bangsamoro Development Plan (BDP).

Among the priority programs in the BDP during the next two years are the provision of water and sanitation services; improvement of access to health services (Philhealth and mass immunization) and education (adult literacy and madrasah), provision of livelihood assistance and skills training; provision of electricity and agriculture infrastructure support; and construction of access roads.

The BBL proposes giving the Bangsamoro government the power to create its sources of revenues and levy taxes, fees and charges. (See infographics for other sources of financing.)

Maria Lourdes Lim, regional director of NEDA Regional Office XI in Davao, said that for the region’s tax base to grow, the private sector has to be encouraged to put up their businesses in the Bangsamoro. This should also be supported by the entry of Islamic banking and financial institutions, for Bangsamoro communities to access financial services and products. Amina Rasul, President of the Philippine Center
for Islam and Democracy (PCID), noted that Islamic banking and finance is a fast-growing industry globally. “The United Kingdom has already set its eye on becoming a global center, while Malaysia is the Asian center. If we are thinking about what’s good for Bangsamoro, definitely banking and finance are a necessity,” she said.

The BBL proposes the establishment of the Intergovernmental Fiscal Policy Board, which will determine the participation of the Bangsamoro in the ownership and management of Al-Amanah Islamic Investment
Bank of the Philippines, the country’s only Islamic bank.

Investing in women and adult education

Rasul likewise stressed the importance of investments in women and education, as these are shown to lead to dramatic increases in development. “We need to be a little bit more proactive, think out of the box and address this section of the population,” she said. Rasul noted that in ARMM there is a madrasah (Islamic school) and mosque in every neighborhood. “This can be part of delivery mechanisms, not only for education but also in health, whether teaching children to brush their teeth, eat vegetables, or teaching mothers that breastfeeding is encouraged in the Quran,” she said.

According to the 2010 census, there are almost 320,000 adults without education in the Autonomous Region in Muslim Mindanao (ARMM), while more than 715,000 adults did not finish elementary.

Connective infrastructure

Another priority investment for the Bangsamoro is physical infrastructure that allows far-flung areas to be efficiently connected to the regional or metropolitan trade centers. Dr. Steven Rood, the Asia Foundation’s Country Representative to the Philippines and member of the Third Party Monitoring Team that assesses the implementation of the Framework Agreement on the Bangsamoro, said that the proposed network of growth centers should ensure connectivity between the islands, like Basilan, Sulu and Tawi-tawi, and those from the mainland. Rood agreed with Lim that rebuilding commerce and trade, and linking conflict-affected areas to areas of growth, will gradually allow healthy economic relationships between Bangsamoro areas and other areas in Mindanao. Lim further said that investments should be strategically
directed towards the social and human capital of the Bangsamoro people, to generate employment and bring down poverty, which is a major source of conflict in the region.

What makes Islamic banking different?

Islam prohibits interest charging, as this equates with usury (riba); forbids speculative transactions involving risks (gharar); and avoids transactions on sinful things (haram), such as pork, alcohol and gambling. With these tenets, Islamic banks observe profit and loss sharing, encourage entrepreneurship and promote social development activities. Some features of an Islamic bank are as follows:

• It serves as a partner/investor for clients.
• No interest rates; financing is based on risk-andreward sharing.
• In equities, loss sharing is based on equity participation, while profit sharing based on a pre-agreed ratio.
• It may allow default or late-payment penalties, strictly for administrative costs. Such penalties may be donated to charity or used to offset collection costs.

The country’s only Islamic bank is the Al-Amanah Islamic Investment Bank. While establishing other Islamic banks requires special laws, the Bangko Sentral ng Pilipinas is looking at an “open approach,” where commercial banks can operate Islamic banking windows.

• Shanmugam, B., & Zahari, Z. R. (2009). A Primer on Islamic Finance. The
Research Foundation of CFA Institute.
• Tetangco, A. M. Jr. (2014). Islamic Banking and Finance in the Philippines:
Opportunities and Challenges. Speech during the Islamic Banking and
Finance Workshop.