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BSP’s Introduction of Islamic Bonds for Economic Inclusion in the Philippines

Nowadays, globalization has made the world more connected. The previous status quo where divisions on the basis of geography, race or religion have hampered international inclusion and cooperation is now only a part of a bygone era.

Economic Growth and Inclusion for Filipino Muslims

In the Philippines where more than 90% of its citizen adhere to Christianity, great strides have been made in the past years to include our Muslim brothers and sisters in the country’s economic progress. From the enactment of the Bangsamoro Basic Law (BBL) to the expansion of peace initiatives in our country’s Muslim-majority areas, a bright future waits for the Philippines’ economic progress.  Likewise, the Philippine government has taken major initiatives to expand the country’s reach in Muslim-majority countries such as those in Middle East. The Bangko Sentral ng Pilipinas (BSP) sees a vast potential for the Philippines as an investment destination for Islamic Finance.

Philippines’ Push for Islamic Finance with Sukuk Bonds

The Philippine government, through the Bangko Sentral ng Pilipinas (BSP), is set to integrate “Sukuk’ or Islamic bonds in 2025 to further expand Islamic finance in the country’s financial landscape. Under BSP regulations, Sukuk is particularly as a type of investment approach grounded in Sharia Law principles and primarily prohibits the imposition of Riba or interest.

Sharia-Compliant Investments: How Sukuk Bonds Work

Instead of debt obligation, each Sukuk issuance is tied to a tangible asset, project or business venture. Sukuk represent a proportional undivided ownership right in tangible assets, or pool of tangible assets and other types of assets. These assets could be in a specific project or investment activity that is Shari’ah-compliant.

Islamic Bonds: A $1 Billion Opportunity for the Philippine Economy

The Philippines eyes to raise around $1 Billion from the Islamic bond issue in 2025. In a report, the BSP said, “This will send a strong signal that the Philippine economy is ready to accommodate Islamic finance investors and players. This will also generate the push for the domestic market to explore private Sukuk issuances to boost the country’s capital market”.

Ensuring Compliance: Legal Essentials for Doing Business in the Philippines

Consulting with a Philippine law firm ensures that doing business in the Philippines by a foreign and domestic corporations will be subject to compliance with rules and regulations. Regulatory compliance not only helps avoid criminal, civil, or administrative liabilities but also translates to profitability and productivity. Moreover, with proper legal advice, foreign corporations can flourish in the Philippines by availing of benefits and incentives granted by tax laws.

Abo Law Firm: Your Partner for Philippine Business Succes

Abo Law Firm is a full-service firm that caters to both domestic and foreign corporations. The firm is an expert in business registration and other legal solutions for businesses intending to enter the Philippine market. With extensive knowledge of technology regulation, intellectual property, and investment policies, Abo Law Firm, as a leading Philippine law firm, supports its clients in navigating the complexities of establishing and growing their operations in this emerging semiconductor hub.

Written by: Zejomar Semic

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