Infrastructure Financing through Islamic
Finance in the Islamic Countries
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5.3.4. Providing Support Services
Since the private sector will typically invest in projects for a return, its role in the
infrastructure sector is limited to those projects that are profitable. The role of the private
sector in infrastructure development can be enhanced if the viability of some projects can be
enhanced. This can be done by either providing subsidies or revenue support. The Availability
Payment scheme in Indonesia instituted by the Ministry of Finance supports projects that are
not commercially viable and have high demand risks through budgetary allocations to enable
private participation.
There are other institutions that provide support services such as guarantees to promote
investments in infrastructure projects. For example, Danajamin Nasional Berhad in Malaysia
established by the Ministry of Finance and Credit Guarantee Corporation in Malaysia provides
financial guarantees and insurance for bonds and sukuk issuances to Malaysian companies
that can help investments in the infrastructure sector. Being a GLC, the guarantees provided by
Danajamin are rated AAA by RAM Rating Services and the Malaysian Rating Corporation
(MARC). Similarly, the UK Guarantee Scheme was established to provide guarantees to
encourage investments from the private sector for infrastructure projects of national
importance.
Table 5. 3: Policy Recommendations for Government and Public Bodies
No. Recommendations Specific Steps Implemented by
3.1 Establish Infrastructure
related (GLCs)
 Establish infrastructure-related
GLCs to develop and manage
infrastructure assets
 GLCs issue sukuk to fund
infrastructure projects
 Government
(Ministry of Finance)
 GLCs
3.2 Establish National
Islamic Infrastructure
Investment Bank
 Establish Shariah-compliant
infrastructure investment bank
as GLIC
 Government and GLCs can
provide initial capital
 Issue sukuk to fund
infrastructure projects
 Relevant
government
ministries
 GLICs
3.3 Providing Supportive
Services
 Provide public financial support
to improve the viability of
infrastructure projects
 Establish institutions that can
provide guarantees for
infrastructure projects
 Relevant
government
ministries
5.4. Islamic Banks
As indicated in Chapter 3, the total global banking assets are worth USD 1.598 trillion and
constitute 72.6% of the overall Islamic financial industry. Though large, the size of the Islamic
banking sector is different in various countries. The relative size of Islamic banking in the
countries examined in Chapter 4 along with investments in the infrastructure sectors and