MinDA proposes sukuk issuance to fund Mindanao projects

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An Indonesian bank employee helps visitors searching information about sukuk during an exhibition in Jakarta February 6, 2009. -- AFP

DAVAO CITY — The Mindanao Development Authority (MinDA) has proposed the issuance of sukuk, or Islamic bonds, to raise funds for the national government’s key projects in Mindanao.

MinDA Deputy Executive Director Romeo M. Montenegro, in an interview last week, said they have submitted the proposal to the Cabinet economic cluster for evaluation.

“We hope we can tap this kind of funding so that key programs in Mindanao will attract Islamic countries (to fund them),” said Mr. Montenegro.

He added that sukuk is also seen to help attract more Islamic investors to Mindanao.

“We need more assistance from outside fund sources to help the government ease its burden in making Mindanao progressive,” Mr. Montenegro said.

The administration of President Rodrigo R. Duterte, the country’s first top leader from Mindanao, announced at the beginning of his term in 2016 that they will consider tapping the sukuk market, but the initiative has yet to gain ground.

“We hope that we are able to tap this huge fund market this time,” said Mr. Montenegro.

Sukuk, unlike regular bonds, do not earn interest, which is prohibited under the Shar’ia, or Islamic laws.

Mr. Montenegro said the issuance of sukuk is timely given the expected passage of the Bangsamoro Basic Law (BBL), which will create a new territory and political set-up that will replace the existing Autonomous Region in Muslim Mindanao.

Both chambers of Congress are expected to pass the final BBL draft this week, in time for a possible signing by Mr. Duterte before he delivers his State of the Nation Address on July 23. — Carmelito Q. Francisco