Abstract
Mindanao represents twenty-four percent of the Philippines’ population; yet, there are no Islamic financial products offered by any domestic institution, aside from Al Amanah Islamic Investment Bank (AAIIB). The recently enacted “Philippines’ Credit Surety Fund (CSF) Cooperative Act of 2015” offers a financing arrangement for those micro, small, and medium enterprises (MSMEs) experiencing difficulty in financing. This study determines the possibility of creating Shariah-compliant CSFs, compares Shariah-compliant financing characteristics with traditional financing, and investigates the existing Philippines’ Shariah screening methodology for financial products and services. The author conducted a one-on-one interview with the regulators from Cooperative Development Authority, Bangko Sentral ng Pilipinas (BSP), and members of the Advisory Council of AAIIB regarding characteristics and objectives of the CSF and the methodologies and frameworks used in determining the Shariah compliance in financial products. Focused group discussions were done with Mindanao MSMEs representatives to gather issues and problems regarding their access to credit facilities. Results showed that the Philippines has no coherent, consistent, and inclusive set of regulations and standards for Shariah-compliant financial products and services. All regulatory decisions are on a per-industry basis and no universal methodology has been produced.
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KEYWORDS
"Credit Surety Funds", " Shariah"
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