Infrastructure Financing through Islamic
Finance in the Islamic Countries
140
Issues Recommendations Implemented by
 Islamic banks contribution to
infrastructure development can
also be increased by jointly funding
the projects with other banks
through syndicated financing.
 Create a sound legal and contractual
framework for syndication to increase
the participation of Islamic banks in
infrastructure projects along with other
banks.
 Relevant government
ministries
Islamic Financial Institutions
 One reason for the small direct
investments in infrastructure
sector by Islamic banks is likely
due to their liquid and short-term
liabilities structure.
 The contribution of the Islamic
nonbank financial institutions in
Saudi Arabia can be enhanced by
increasing the share of investments
in the infrastructure sector.
 Introduce and expand the size of
restricted investment accounts which
can be used for longer-term investments.
 Increase the takaful companies’
investments in infrastructure projects.
 Enhance the Shariah-compliant share of
the pension funds and sovereign wealth
to expand the contribution of Islamic
finance in infrastructure development.
 Develop Islamic funds/ banks for
infrastructure investments to further
increase the share of Islamic finance in
infrastructure investments. The national
level institution will be able to pool
funds from different sources for
investments in infrastructure projects.
 Banking regulators
 Islamic banks
 Islamic nonbank
financial institutions
 Relevant public bodies
 Islamic investment
banks
Islamic Capital Markets
 Infrastructure financing and sukuk
structures are complex.
 Issuing sukuk for projects instead
of bonds has the potential to
increase the investor base as both
Islamic and conventional financial
institutions can invest in these
securities.
 To expand the investor base, retail
sukuk can also be issued in Saudi
Arabia.
 Establish an advisory GLC that can
advise on the issuance of sukuk and
develop templates for issuing sukuk for
infrastructure projects.
 Develop market and infrastructure for an
efficient Islamic capital market/sukuk.
 Issue more sukuk by both public and
private sector entities for infrastructure
projects.
 Issue retail sukuk
 Introduce financial literacy programs to
increase the literacy of Islamic finance
 Introduce efficient mechanisms for the
delivery and redemption of sukuk issues.
 Capital markets
authority.
 National Centre for
Privatization (NCP)
 Capital Markets
Authority
 Issuers (sovereign and
corporates)
 Financial institutions
 Capital markets
authority
 Issuers (sovereign and
corporates)
 Financial institutions
Islamic Social Sector
 Vision 2030 emphasises the role of
the non-profit sector in achieving
developmental goals.
 Increase the role of the social sector in
providing infrastructure services such as
health and education by providing a
supportive legal framework under which
innovative models of zakat and waqf can
develop.
 Relevant government
ministries