Infrastructure Financing through Islamic
Finance in the Islamic Countries
96
Table 4.2. 2: Infrastructure Needs and Gaps Malaysia 2016-2040
(USD Billion 2015 prices & exchange rates)
Road Rail Airports Ports Telecoms Electricity Water Total
Current trends (CT) 104 28 2 5 27 179 39 383
Investment need (IN) 174 28 2 11 27 179 39 460
Gap between IN and CT 70 0 0 6 0 0 0 77
Source: Global Infrastructure Outlook,
4.2.3. National Level Policies and Framework of Infrastructure Development
Issues related to infrastructure planning and development in Malaysia appear in various
strategic and policy documents. At the very broad level, the role of infrastructure was
recognised in the long-term strategic document, Vision 2020, which was launched by the then
Prime Minister in 1991 to make Malaysia a high-income, fully developed nation economically,
politically, socially, spiritually, psychologically and culturally (Mohamad 1991). The Vision
document identified the role of infrastructure development as a means to achieve overall
development (p. 16), narrow income gaps (p. 6), smooth the functioning of the economy
(p.11), support small and medium enterprises (p. 15), and support the development of
technological capabilities (p. 19). The document recognised the huge investments that would
be needed and the possible bottlenecks that could arise in developing the necessary
infrastructure projects.
While Vision 2020 provides a longer term perspective, the medium term planning for
infrastructure comes in the form of ten-year policy documents and five-year Malaysia Plans.
Coinciding with the launching of Vision 2020, the National Development Policy 1991-2000 was
initiated, followed by the National Vision Policy 2001-2010. Starting with the First Malaysia
Plan 1956-1960, the country is currently implementing the Eleventh Malaysia Plan 2016-2020.
Each Malaysia Plan covers various developmental issues giving high priority to infrastructure
investments. The Economic Planning Unit (EPU) under the Prime Minister’s Office develops
these plans in coordination with other public agencies (Lee and Chew-Ging 2017).
During the Tenth Malaysia Plan 2011-2015, the government made large investments in
various infrastructure sectors such as the transport, energy and digital sectors. Recognizing
that an efficient infrastructure reduces the cost of doing business and can improve
productivity and competitiveness, the Eleventh Malaysia Plan 2016-2020 envisages further
investments in the sector to support economic expansion. The focus areas of the Eleventh
Malaysia Plan 2016-2020 include the following: building an integrated need-based transport
system; improving the coverage, quality, and affordability of digital infrastructure; unleashing
the growth of logistics and enhancing trade facilitation; encouraging sustainable energy use to
support growth; and continuing the transition to a new water services industry framework
(EPU 2018). Finally, in the short term, the infrastructure projects are implemented through the
allocation of funds in annual national budgets.
A key feature of developing the infrastructure projects in Malaysia is to involve the private
sector in infrastructure development through public-private partnerships (Yong 2017). To
enable the participation of the private sector in infrastructure, the Malaysian Incorporated
Policy was launched in 1983 and the Privatization Special Task Force was established under
the Economic Planning Unit (EPU), Prime Minister’s Department to implement the policy. With