UAE and Philippines seek to boost investment ties with a focus on Islamic finance

Asian nation is planning to issue its maiden sukuk by year's end or early next year

Benjamin Diokno, Secretary of Finance of the Philippines, speaks at the Ritz Carlton in DIFC in Dubai. Pawan Singh / The National

The UAE and the Philippines are seeking to boost investment and financial ties, with the Asian country looking to Islamic finance as a sector of focus.

Senior officials from both sides – including Mohamed Al Husseini, UAE Minister of State for Financial Affairs, and Benjamin Diokno, the Philippines' Secretary of Finance – met to discuss ways to enhance investment flows and potential opportunities, especially with the establishment of the Philippines’ first ever sovereign wealth fund, the UAE Ministry of Finance said in a statement on Wednesday.

Bilateral relations were strengthened in 2021 and 2022 after the signing of initial pacts such as the agreement to boost mutual investments and protect them from non-commercial risks in June last year, and the beginning of talks on a Comprehensive Economic Partnership Agreement, or Cepa, the previous February.

The senior delegation from the Philippines is in the UAE as part of a familiarisation visit, Mr Diokno told The National last week.

“We told them [UAE officials] about our priority projects. These are big projects that are ready to implement, so they may choose to show interest,” he said.

“We're going to be back here for the [Cop28] meeting. And so we hope that there will be some concrete deals by that time.”

The country is currently focusing on developing 197 flagship infrastructure projects worth about $155 billion across sectors including digital connectivity, health, power and energy, agriculture, water supply and irrigation, among others.

In July this year, the Philippines also established the Maharlika Investment Fund, the country's first sovereign wealth fund aimed at boosting economic growth.

The fund is expected to be operational before the end of this year and officials are in discussions with institutional investors, including sovereign wealth funds from GCC, to participate in it.

The Asian nation's economy, which grew 7.6 per cent in 2022, slowed slightly in the second quarter mainly due to a contraction in government spending, Francisco Dakila Jr, deputy governor of the Bangko Sentral ng Pilipinas, told The National.

But that is being addressed and the aim is to hit a target growth rate of at least 6 per cent for the year, Mr Diokno added.

A major focus for potential collaboration with the UAE is Islamic finance.

“We just had the broad Islamic banking law in 2019, shortly before the pandemic,” said Arifa A Ala, assistant governor of the Bangko Sentral ng Pilipinas.

“Before that law, we could also not entertain foreign investors in the area of Islamic finance.

“The market is now open and we have a clear legal and regulatory framework. We have laid down the stage [with all] the necessary elements like the tax neutrality provision, licensing framework, we have even established a Sharia supervisory board, which are all supportive to make Islamic banking operations in the Philippines viable.”

The country is also planning to issue its maiden sukuk by the end of this year or early next year.

More details, including the size of the offering, are still being worked on.

“Judging from the conversations we're having … and even in the queries coming from the investors … in the Middle East, I think there would be a very a strong reception for our maiden sukuk,” said Treasurer of the Philippines Rosalia V De Leon.

“I think before the actual issuance, we would conduct roadshows and maybe … we will even be coming back here [to the UAE].”