What have we done so far?

Initial Attempt in Zamboanga City

• SHFC did a culturally-sensitive housing
project/mortgage for a Tausug
community in Zamboanga City
• Assisted by Al Qalam of Ateneo de Davao
University
• Not really Shari’ah-compliant yet
according to the consultant of NHMFC
Potential in Marawi City
• There is a potential to do a fully Shari’ah-
compliant housing finance in Marawi
City
• The partnership among Task Force
Bangon Marawi, SHFC, UN-Habitat, and
the Islamic City of Marawi will benefit
1,500 families
• There is also a demand for Shari’ah-
compliant housing finance among LGU
employees. This can be through the
regular CMP
• Subcommittee on Islamic housing
finance has been formed
• The said housing projects can serve as the
primary contractual arrangements /
mortgage to underpin sukuk or Islamic
bonds.
• The KSA heads have agreed on 15 March
2018 that the issuance of sukuk is a priority
program
• HUDCC has formed a TWG indicated in a
letter dated 21 March 2018
• SHFC has its own TWG
 Are there legal impediments to
issuing a sukuk bond right now? Do
we need an en
• No. Because the contracting concepts
used in Islamic Finance (for the primary
contract) can easily be covered by
existing Philippine civil laws on
contracts
• Thus, no enabling law needed
• Also, note that under Article 1306 of
the Civil Code, there is autonomy of
contract
i. Mudarabah – profit sharing
partnership separating responsibility
for capital investment and
management

ii. Murabahah – cost + profit

agreement
iii. Musharakah – profit sharing joint
venture partnership agreement

iv. Ijarah – lease to own agreement

v. Wadiah – safekeeping agreement

What about the prohibition against
interest (riba) which is one of the main
Islamic principles? Does this pose a
problem?
No. This does not pose a problem because
Article 1956 of the Civil Code states that:
No interest shall be due unless it has been
expressly stipulated in writing. Thus,
parties can exclude interest by not
stipulating it in their contract.
 EXAMPLE:
First Sukuk Issuance in the
United Kingdom
• Worth £200 million
• Issued in 2014, with maturity of 5 years
• Underpinned by rental income from
three central UK government offices in
London
• Used the Ijarah structure
Challenges
Challenges

• Mandate of NHMFC
• COA rules
• Revise the contractual documents of
SHFC to make them Shari’ah-compliant
• Capacity building (October workshop)