The Opportunity for Implementing Islamic Project Financing to the Indonesian Infrastructure Development

Abstract

Purpose

This chapter discusses the opportunity of Islamic project financing implementation for public infrastructure development in Indonesia.

Design/Methodology/Approach

This chapter, firstly, reviewed existing literature on Islamic finance to explore the applicability of Islamic financing in infrastructure development. Interviews were conducted as the first stage of Delphi method approach. This was then followed by reviewing Indonesia’s government policies and regulations in infrastructure industry and Islamic financing.

Findings

This chapter enlightens the implementation of Islamic financing on infrastructure project financing in Indonesia. The findings indicate that the government policies and regulations on both infrastructure investment and Islamic financing support the implementation of Islamic project financing, whereas, an improvement is still needed in order to overarch infrastructure business and Islamic financing investment.

Research

Financing framework development for Indonesia infrastructure projects.

Limitations/Implications

The result reported comprises the preliminary study of Islamic project paper written based on published research papers and interviews. Furthermore, the data collected for the study are limited to the case of Indonesian infrastructure projects.

Practical Implication

Islamic financing in Indonesia infrastructure projects development has not been optimally implemented. Therefore, this chapter serves as a catalyst to explore alternative financial scheme such as Islamic financing for infrastructure development.

Originality/Value

This chapter highlights possibilities and obstacles in applying Islamic scheme to infrastructure project financing. This provides a framework to analyse the steps to implement Islamic financing successfully in infrastructure development.

Citation

Rarasati, A.D., Trigunarsyah, B. and Too, E. (2014), "The Opportunity for Implementing Islamic Project Financing to the Indonesian Infrastructure Development", The Developing Role of Islamic Banking and Finance: From Local to Global Perspectives (Contemporary Studies in Economic and Financial Analysis, Vol. 95), Emerald Group Publishing Limited, Leeds, pp. 103-116. https://doi.org/10.1108/S1569-3759(2014)0000095015