By Rexcel Sorza, IOL Correspondent

 MANILA, March 6, 2006 (IslamOnline.net) – Bidders from Malaysia and the Middle East are eyeing to take over Al-Amanah Islamic Investment Bank of the Philippines, the country's first and only Islamic bank, after the government put it for sale.

"The sale is aimed to better the performance of the bank," Al-Amanah chair Ali Sangki told IslamOnline.net on Monday, March 6.

"The government initially thought of rehabilitating Al-Amanah but we found it a better choice to invite foreign investment into the bank," he added.

Al-Amanah Islamic Investment Bank of the Philippines was officially born under Philippine laws as an Islamic bank in 1990 with the primary objective of providing banking facilities and services to Filipinos in general, and Filipino Muslims in particular in accordance with Islamic commercial law.

Actual Islamic banking operation was initially launched in its Cotobato City branch on February 11, 1991.

The response of the banking public, particularly the Muslim population, was very favorable and encouraging.

During the opening day, total deposits received amounted to P367,350 involving 35 accounts.

As of May 31, 1991, it increased to P4.910 million with savings deposits comprising 311 accounts, current deposits 43 accounts and investment deposits, 3 accounts.

The bank has since grown with its nine branches scattered in Mindanao and Manila, with its headquarters in the Mindanao city of Zamboanga.

It is overseen by a Shari`ah Advisory Council, a non-organic council of the Islamic Bank composed of five members, selected from among Islamic scholars and jurists.

The council offers advice and undertakes reviews pertaining to the application of the principles and rulings of Shari`ah to the bank's transactions.

The Philippines has an estimated Muslim minority of eight million or ten percent of the population.

Foreign Bidders

Al-Amanah senior vice-president Amado Bulawitan said the bank should be sold by August 2006.

"In the terms of reference, we have to sell the bank in seven months," he told IOL.

The Philippine government, through the Department of Finance, earlier formed an inter-agency committee to oversee the bank's sale to interested foreign investors, which Bulawitan said, include banking firms from Malaysia, Saudi Arabia, Kuwait and Qatar.

Under the guidelines set by the finance department, bidders were given until Wednesday, February 22, to submit their letters of intent to the bank's bids and awards committee.

Winning bidders will assume the bank's 552 million pesos (US$1= P52) in liabilities apart from taking care of bad loans amounting to 7 million pesos and another 32 million pesos in foreclosed assets.

As of January 2006, it has only 98 million pesos in assets.

Development

Sangki said the bank sees itself primarily as an institution providing not only the key financial and banking services to the actively growing Muslim population in the country, but also ensuring the development of vital corporate businesses in the area.

The bank considers Islamic banking not only to be interest-free banking business but also as a "partnership in the generation of productive profits for real economic growth and national development," he added.

Sangki said the bank's goal based on its charter is "to promote and accelerate socio-economic development of the Autonomous Region by performing banking, financing and investment operations and to establish and participate in agricultural, commercial and industrial ventures based on the Islamic concept of banking."

Al-Amanah hopes to achieve the noble objective "by performing banking, financing and investment operations" and by participating in "agricultural, commercial and industrial ventures based on the Islamic concept of banking."

The bank also caters to the business requirements of both Muslims and non-Muslims alike so long as the bank's manner of operations is accepted by them.

Reservations

Jamil Hamza Olermo , co-founder of business group Mindanao Business Forum, is apprehensive with the sale of the bank to a private entity.

"The Philippine government-run Al Amanah Islamic Investment Bank, in operation for more than 30 years, should have been a breakthrough had it been given much attention to make it a viable and sustainable finance institution," he told IOL.

"However, the plan by the government to have the bank disposed (for sale) at a time when Islamic banking is growing and expanding at a frenetic pace, is hard to reckon with if its sole purpose is to recover equities put in by government institutions to its capital and to raise funds for the Philippine treasury."

He said if the sale pushes through, "giving up the bank may have to be replaced by an enabling environment through changes in the current banking law or rules and regulations that would allow the private sector (foreign and local) to put up Islamic-oriented banking services."

Olermo, the founder of the Halal Resource Center, asserted that for now and by operation of law, the understanding is that only Al Amanah Bank is authorized to engage in Islamic banking services.

He hoped the banking community together with the regulators and the legislature may take a second look at Islamic finance being fully adopted into the mainstream of the financial community, with a strong participation of the private sector.

"The present financial institutions, both government-run and private-owned, may likewise seriously consider creating Shari`ah units within its conventional banking (to operate autonomously with separately managed lending portfolios under the guidance of in-house Shari`ah supervisory board), and other fee-based services as it connect with the rest of the world in providing services to the burgeoning international trade."

He expects that in the near future, "other Shari`ah-compliant financial instruments such as Islamic insurance (takaful), debt securities (sukuk), credit cards, asset management funds, and the like may find a space in the market in co-existence with conventional financial products."

Also read:

• Internships Open Horizons for Young Filipino Muslims
• Filipino Muslims Miss Hajj Over Economic Hardships

Source : http://www.islamonline.net/English/News/2006-03/06/article02.shtml