Last month, there had been news about MinDA to tap Islamic Finance as a source of funds for projects and programs under the Duterte Administration known as Build, Build, Build program. Using economic lens, this is the best strategy to wedge the infrastructure inequality, and addressing this after will force institutions to improve, and eventually, small economic dynamos will be created. The tiny economic dynamos, in turn, will create a demand for labor that is familiar with the locality. In the short run, the movement of labor will change which will diffuse migration to urban centers.
There already are funds from other countries either in official assistance, loans or private investments. These traditional sources kept our projects and programs afloat, but the nation can do more. One source of funds for investment is Islamic Finance.
It is a system that operates according to Islamic Law making it Sharia-compliant. It features banks, capital markets, fund managers, investment firms and insurance companies much like the regular financial systems. Risk sharing in capital raising and avoidance of usury, and given that interest payments are prohibited, then funds for development projects will be based on the expected value of the project and nothing more. Also, the system prohibits speculation, investment in prohibited activities and producing & selling of alcohol, and participation in derivative contracts. Well, this is the way to eliminate breeding ground of corruption, and a change the mindset of SOPs, and avoidance of bubble economies.
The Mindanao Development Authority (MinDA) under the leadership of Sec. Datu Hj Abul Khayr Alonto had been hopeful the Muslim investors will come in the light of Halal program that the Agency is pushing for. MinDA is pushing for the creation of an integral environment of food, nonfood and service industries can bring an inclusive and holistic development to Mindanao. Other MinDA projects like creation of Agro-Ecozones, Picong Ecozone, Bucas Grande Eco-Tourism, Information and Technology & Business Process Management, Interconnectivity projects like roads and bridges, and flood control projects are all complementary investments that will benefit from Islamic Finance, and can catapult the general condition of laggard infrastructure to endogenously growing administrative regions within the island.
The most substantial reason why MinDA considers Islamic Finance is due to the scarcity of financial services available in Mindanao. For one, Bangsamoro remains largely unbanked as many other places in Mindanao as well. With the ratification of the Bangsamoro Organic Law, potential investors will come and see Bangsamoro areas and the rest of Mindanao to fund projects. After all, it is all of us who will benefit. Secretary Alonto believes that it is high time for the Islamic Finance as a component of the development agenda for Mindanao to unleash from the funding limitations that cause delays in the implementation of the project. Remember that a completed project is a needed project, Mindanao had too much of needed project needing completion.
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