Infrastructure Financing through Islamic
Finance in the Islamic Countries
89
Issues Recommendations Implemented by
due to investments in long-term
projects) can be mitigated is to
develop a well-functioning
Islamic money market through
which Islamic banks can access
liquidity when needed.
 The balance sheet structure of
life insurance and pension funds
supports investment in long-
term investments. However, the
Islamic nonbank financial
institutions sector in Indonesia
are relatively small.
incentives for Islamic banks to invest in
long-term illiquid assets.
 Increase the shares of family takaful and
Islamic pension funds to increase the
role of Islamic finance in the
infrastructure sector.
 Establish specialized Islamic funds and
platforms to increase investments in
infrastructure projects.
Islamic financial
institutions
 Relevant ministries to
create the right legal and
regulatory framework
 Market players
Islamic Capital Markets
 Although Indonesia has used
sukuk to raise funds for the
infrastructure sector, there is
potential to expand it further.
 Sukuk structures are complex
and new for many stakeholders.
 Indonesia has issued retail sukuk
to tap into alternative sources of
funds which can be further
increased.
 Develop market and infrastructure for
Islamic capital market/sukuk.
 Issue more project sukuk.
 Establish an institution that can advise
on the issuance of sukuk and develop
templates for the issuance of sukuk for
infrastructure projects.
 Increase literacy of Islamic finance and
introduce efficient mechanisms for the
delivery and redemption of sukuk issues
to further encourage retail investors to
invest in infrastructure sector
 Capital markets authority
 Issuers (sovereign and
corporates)
 The government linked
financial institution PT
SMI that also has a
Shariah unit
 Capital markets authority
 Issuers (sovereign and
corporate)
 Financial institutions