JAKARTA - National Committee for Sharia Finance (KNKS) Director Taufik Hidayat stressed that a sharia-compliant financing scheme can provide alternative financing for infrastructure development in Indonesia.
“Infrastructure projects normally rely on the government budget. However, due to the large need for infrastructure financing and the gap between existing financing schemes, investment needs in the infrastructure sector should involve alternative schemes from the private or the sharia financial sector,” Mr Hidayat told the press on the sidelines of the 2019 Indonesia Sharia Economic Festival (ISEF) at the Jakarta Convention Center, South Jakarta on Wednesday (13/11).
The government, Mr Hidayat added, continues to diversify the financing of infrastructure projects, including through a sharia-compliant scheme. However, globally the percentage of sharia-based investment in the infrastructure sector is still within the range of 2%-11%.
“[Infrastructure projects] are highly prestigious, and it’s very probable to develop potential revenue and obtain returns,” said Mr Hidayat.
To maximise the use of sharia-compliant financing for infrastructure projects, Mr Hidayat said four essential things are required: First, a well-structured set of regulations supported by concrete legal documents. Second, standardisation of sharia-compliant contracts. Third, government support in sharia-based infrastructure financing such as through incentives. Fourth, the involvement of sharia-compliant industry players in infrastructure projects. (MS)