ME investors eye Islamic banks, tourism and infra projects in RP

Middle East funds led by the Abu Dhabi Investment Authority, are eyeing investments in the country’s Islamic banking industry, tourism and infrastructure sector.

After meeting with investors in Dubai, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said there is particularly strong interest among government-owned investment funds to invest in the Philippines.

“We didn’t even dwell on discussing our macro-economic conditions because they immediately wanted to know what areas they could put their funds into,” said Tetangco.

According to Tetangco, state-owned investment funds are eager for the Philippine government to identify areas that they could explore in order to take advantage of the country’s economic upswing.

Tetangco said the Philippine delegation that met with investors and investment funds in Dubai directed their interest towards infrastructure and tourism but there is also interest in real estate development and Islamic banking.

“They are looking at areas they can invest in and there is most interest in real estate and infrastructure,” he said.

Tetangco said investment authorities in Dubai and Kuwait are also interested in possible investments in the country.

Tetangco said there is also interest in the country’s only Islamic Bank, the Al Amanah Islamic Investment Bank which had been taken over by the Development Bank of the Philippines.

“There were groups that were interested in Al Amanah as well as possible commercial banking in the country,” he said. “The groups would be following up with the finance department what they could do with Al Amanah.”

Al Amanah has been for sale for the last two years but the public bidding process has repeatedly failed, compelling DBP to take over the bank and possibly operate it as a subsidiary.

What made the privatization more difficult was the expiration of the law that allowed foreign interests in owning 100 percent of any bank operating in the country.

This meant that foreign banks interested in acquiring the Al Amanah Islamic Bank would have to look for Filipino partners as its privatization failed to beat the June 12 deadline set under the law.

According to Tetangco, however, investors in the Middle East appeared amenable to owning only up to 60 percent of the bank should negotiations actually succeed.

Al Amanah Islamic Bank was put on the block with the floor price set at P900 million for the government’s share representing up to 90 percent.

Finance officials originally expected the auction to attract  foreign Islamic bankers that have been waiting for the bank to be on sale as well as local business groups.

The bank’s prospects were dramatically improved by the decision to allow it to operate as a regular bank as the BSP approved the proposal to let it perform conventional banking functions for at least five years after it is privatized.