Proceedings of the 12th Meeting of the COMCEC
Financial Cooperation Working Group
36
Policy Recommendation 4: Encouraging Innovative Models to use Islamic Social Sector (i.e.,
Zakat, Waqf and Sadaqah) to Provide Social Infrastructure Services (such as Education and
Health) provided that they are Shariah-compliant.
Rationale: A key untapped source that has potential to provide social infrastructure services is the
Islamic social sector such as Zakat, Waqf and Sadaqah. In some countries such as Malaysia and
Indonesia innovative models of these institutions have been used to provide certain social
infrastructure services to the poorer segments of the population. Since the size of zakat, waqf and
Sadaqah is potentially large and many member countries face financing constraints to fund
infrastructure projects, the Islamic social finance can be mobilized to provide some of the social
infrastructure services such as education and health, provided that they are Shariah-compliant.
Policy Recommendation 5: Improving Capacity and human capital for increasing the use of
Islamic Finance for infrastructure financing.
Rationale: One of the key issues of involving Islamic finance in infrastructure projects is having
appropriate Shariah-compliant products. Since the projects are large and involve complex
contractual arrangements, there are many intricacies that need to be resolved from a Shariah point
of view. However, there are a limited number of Islamic financial institutions that understand the
complexities of project financing and Shariah advisory services on these can also be scant and
costly. There is, thus, a need to reduce the knowledge gap and build capacity on the use of Islamic
finance for PPP projects and enhance the awareness among stakeholders to increase the use of
Islamic finance for infrastructure projects.
Instruments to Realize the Policy Advices:
COMCEC Financial Cooperation Working Group: In its subsequent meetings, the Working Group
may elaborate on the above-mentioned policy areas in a more detailed manner.
COMCEC Project Funding : Under the COMCEC Project Funding, the COMCEC Coordination Office
issues calls for project proposals each year. With the COMCEC Project Funding, the member
countries participating in the Working Groups can submit multilateral cooperation projects to be
financed through grants by the COMCEC Coordination Office. For realizing above-mentioned policy
recommendations, the member countries can utilize the COMCEC Project Funding facility. These
projects may include organization of seminars, training programs, study visits, exchange of experts,
workshops and preparation of analytical studies, needs assessments and training
materials/documents, etc.