Infrastructure Financing through Islamic
Finance in the Islamic Countries
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construction of projects. The mandate of DanaInfra is to execute and implement fundraising
and payment strategies for major infrastructure projects, develop the best structures for long-
term funding, and raise funds primarily from the capital markets at efficient costs. As of June
2017, DanaInfra has assets worth RM 37.261 billion, showing the level of funds raised to invest
in infrastructure assets.
GLICs play an important role in financing infrastructure-related projects and entities.
Permodalan Nasional Bhd is the investment vehicle for Yayasan Pelaburan Bumiputra,
established as a vital instrument of Government’s New Policy to enhance the prosperity of the
country and promote business ownership among Bumiputra.53 Kumpulan Wang Amanah
Pencen (KWAP) is Malaysia’s largest public services pension fund with a total value of RM
140.8 billion in 2017.54 Khazanah Nasional Berhad, established in 1994 and owned by Minister
of Finance Incorporated, is the strategic investment fund of the government of Malaysia. The
market value of the assets of Khazanah was RM 157.2 billion in 2017 and it had investments in
media and communications (17.0%), power (15.9%), healthcare (13.8%), transport and
logistics (6.0%), innovation and technology (5.2%), infrastructure and construction (3.4%)
and sustainable development (1.2%). 55 Lembaga Tabung Haji (LTH) is a specialised financial
institution providing long-term savings opportunities to individuals who plan to go for hajj
(pilgrimage). With 9.1 million depositors in 2016, Tabung Haji has net assets of RM 65.994
billion invested in different sectors including the financial (18%), plantation (16%),
construction (14%), telecommunications (12%), utilities (12%), properties (9%) and oil and
gas (8%) sectors (LTH 2016).
While some of the largest GLICs are partly Shariah-compliant, LTH is wholly Islamic. GLICs in
the former group include EPF (Malaysia’s largest retirement fund), with AUM worth RM266.5
billion (end-2016), of which 45% is Shariah-compliant, and KWAP (Malaysia’s 2nd largest
retirement fund), with AUM RM126.8 billion (end2016) of which 49.7% is Islamic (COMCEC
2018: 87). Other than investing in key sectors and industries that can nurture the long-term
economic interests of Malaysia, Khazanah also plays a catalytic role in the development of
Islamic finance.
Danajamin Nasional Berhad was established in 2009 with capital from Minister of Finance
Incorporated (50%) and Credit Guarantee Corporation (50%) with the goal of providing
financial guarantee insurance for bonds and sukuk issuances to Malaysian companies to
facilitate their access to corporate bond/sukuk markets. 56 The guarantees provided by
Danajamin are accorded a rating of AAA by RAM Rating Services and Malaysian Rating
Corporation (MARC). The enhanced ratings provided by Danajamin help promote the domestic
corporate bond/sukuk market which serves as an alternative source of long-term financing
that can stimulate economic growth. Regulated by BNM, Danajamin had RM 1.7 billion in
shareholder equity and assets worth RM 2.7 billion as of 31 December 2017. By 2017,
Danajamin had a total of 33 clients, 15 of which were Islamic entities. Several guarantees were
given for infrastructure related projects such as Northern Gateway Infrastructure Sdn Bhd.,
West Coast Expressway Sdn Bhd, N.U.R. Power Sdn Bhd and TRIplc Medical Sdn Bhd.
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