A Qatar-based fintech start-up and a foreign bank have both expressed interest in setting up Islamic digital operations in the Philippines, where a draft guideline for operating digital banks was recently proposed following the passing of the Islamic law bill to allow for the establishment and operation of Shariah banks and windows.
E-wallet and payment platform cwallet, based in Qatar, uses integrated blockchain and fintech to serve low-income and unbanked workers across the MENA and ASEAN regions, and is in the process of obtaining Shariah compliance certification, IFN Fintech has learned. Michael Javier, the managing partner, CEO and founder of cwallet, said they hope to become Shariah compliant in the coming two months.
Javier and his team will then initiate the process of establishing their Islamic digital operations in the Philippines with an aim to set up by 2021, a subject they broached at the Islamic Finance as a Vehicle for Economic Recovery webinar with the Philippine Economic Zone Authority (PEZA) and the Bangko Sentral ng Pilipinas (BSP), held on the 23rd July 2020.
During the webinar, in which the BSP had outlined the guidelines and requirements for application, an official from a yet unspecified foreign bank also expressed interest in applying to establish a Shariah digital bank in the Philippines.
The BSP admitted that some other Islamic banks from the Middle East had previously declared intent to open branches in the country, but had been deterred at the time by the lack of a legal framework to support them. Charmaine Yalong, the commercial attache for MENA at the Department of Trade and Industry, also noted that many companies in the Middle East have been interested to set up in the Philippines as well, but the lack of Islamic banks to help facilitate their transactions has been a compelling factor in their decision to do so.
From the ASEAN region, while Malaysian banks Maybank and CIMB — which both have Islamic units — have not officially spoken on opening Shariah banks in the Philippines where both have branches, they have been active participants in training programs and workshops conducted in the past few months by the BSP on Islamic banking, IFN has learned.
Both the BSP and PEZA, whose mandate includes transforming selected areas in the country into highly developed banking, investment and financial centers, have launched initiatives to support and train industry players in preparing for a Shariah banking and financial system.
The BSP and PEZA welcome the idea proposed during the webinar of collaborating on another initiative to encourage the establishment of Islamic banks in special economic zones, particularly the ones where foreign companies (many from the Middle East) have set up their offices. Earlier this month, the central bank issued a draft circular, which is currently under review and will be finalized soon according to an official, that includes digital banks as a distinct classification of banks under the BSP’s Manual Regulations for Banks, as well as details on conducting digital banking businesses in the country.