Focusing Project Financing for Growth and Realizing the Higher Objectives of Shar¯ı‘ah

Ayub, Muhammad

doi:10.26501/jibm/2019.0902-001

Cited by 3 publications

(1 citation statement)

References 6 publications

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“…Islamic banking is different from the conventional banking as it is interest free and operates under different principles and they have different risk profiles (Salman and Nawaz 2018 ). All products in Islamic bank have to comply with Shari’a requirement and approved by Shari’a committee member (Ayub 2019 ). Grassa et al ( 2020 ) mentioned that the basic rules to govern the of Islamic banks' operations are that it is forbidden to conduct interest-based (riba) transactions, not allowed to participate in uncertainty (gharar) or speculation, and proscribed from sinful financing and socially irresponsible activities.…”

Section: Literature Reviewmentioning

confidence: 99%

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Imaduddin

Sharofiddin

2021

The Importance of New Technologies and Entrepreneurship in Business Development: In the Context of Economic Diversity in Develo

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The study aims to identify the creditworthiness criterions and approval factors in providing financing facility to corporate and commercial clients of Islamic banks in Indonesia. It also explores the financing approval process in the Islamic bank for this segment. It employs qualitative study of in-depth and semi-structured interviews method via the available online tool. The study selects 3 (three) Islamic bank officers from the different banks as the respondents. The study finds that the 5Cs elements are all important by emphasizing in proper fixed asset collateral and sound capacity of the clients. There is a typical internal approval process with the timing is different between each bank. It highlights the importance of financial covenants and the requirement to use CASA products. The study also reveals that covid-19 pandemic has impacted the client’s business and its ability to repay the banks. The strategy is to conduct relaxation, reprofiling, and restructuring of the client’s facilities as per guideline from regulator.

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Section: Literature Reviewmentioning

confidence: 99%

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Imaduddin

Sharofiddin

2021

The Importance of New Technologies and Entrepreneurship in Business Development: In the Context of Economic Diversity in Develo

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Developing Conceptual Framework for Public–Private Partnership Projects via Mobilization of Islamic Finance in Indonesia

Imaduddin

Kassim

2023

Contributions to Management Science

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Indonesia needs to address the issue of widening infrastructure gaps by investing IDR 6445 trillion in infrastructure development until 2024. The investments, however, cannot be funded solely from the government budget as it can only cover 37 percent of the required amount. The concept of public-private partnership (PPP) has the potential to fulfill the requirements of the remaining 63 percent of the funding gap of infrastructure investment in Indonesia. Islamic finance has the potential to support the PPP projects as the alternative financing source to meet this objective. Islamic finance focuses on the risk allocation through distribution into the best possible parties in the transaction that is also in line with the concept of PPP. Despite the increasing efforts to mobilize Islamic finance for financing PPP projects, so far there have been no projects funded under Islamic finance instruments in the existing PPP projects that have reached "Financial Close" with total investment of US$67.27 billion. This study aims to develop a conceptual framework based on the cycle of the PPP process using the institutional theory and value chain theory. The institutional theory is important to regulate the PPP arrangement from being an innovation to procure infrastructure asset outside the government budget. PPP projects present a contractual term of long-term concession agreement, and the applied PPP concept comprises the causal processes from inputs, related activities, outputs, and outcome as defined under value chain theory. The primary purpose of conceptual framework is to explore the status and challenges of Islamic finance mobilization in PPP infrastructure projects in Indonesia. The framework also assists the study in exploring the feedbacks from the relevant stakeholders and formulating way forward. The study is expected to contribute to proposing the applicable policy and framework recommendation, strategy, and incentives to mobilize proper Islamic finance resources for the development of PPP project in Indonesia.

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Asya'nın Karayla Çevrili Gelişmekte Olan Ülkeleri İçin Altyapı Finansmanı Alternatifi Olarak İslami Finans

NIAMAN,

ASLAN

2023

Kocatepe İslami İlimler Dergisi

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Various infrastructure financing methods are being used worldwide, each with its own set of advantages and obstacles. Basically, the advantages and disadvantages of a financing method manifest differently depending on each country's economic system, geographical location, economic dependency, political conditions, cultures, and beliefs. Using a funding strategy in one country may be beneficial under certain situations but harmful in another. As a result, the usefulness and efficacy of financing methods should be studied in light of the countries' circumstances. The Asian Landlocked Developing Countries (LLDC), which share the same fate in terms of geographical constraints and economic reliance, are grappling with severe infrastructural gaps in all sectors. These countries have an emerging economy, are largely dependent on agriculture, have a poor management structure, are unorganised and have weak financial markets, and rely heavily on their neighbours’ transit routes to interact with the global economy. Some of these countries depend upon foreign assistance, and the lack of transparency and binding nature of this funding has had little impact on developing such countries' infrastructure. As a result, in order to finance their infrastructure projects, these countries must select the most acceptable financing option for their circumstances. The national budget constraint, inadequate local financial markets, the risk of foreign credits, and cultural and religious values in these countries are among the obstacles that contemporary financing methods present. Consequently, looking for alternative financing methods for these countries' infrastructure projects is critical. This paper intends to look at infrastructure financing methods and their challenges in Asian landlocked developing countries and evaluate Islamic finance as an alternative to conventional finance. The qualitative research method is used for this study. Furthermore, document analysis has been utilised as a data collection tool. First, the concepts of Islamic finance will be presented before moving on to the definitions and types of infrastructure. Afterwards, the conventional infrastructure financing methods, along with the shortcomings of these methods in Asian landlocked developing countries, will be discussed. Then the development of Islamic finance in Asian LLDCs will be studied. Finally, how Islamic finance addresses the challenges of conventional finance methods will be perused. The study found that the Islamic finance models, which are founded on the principle of shared income or risk sharing, can be implemented as an alternative to conventional finance in infrastructure financing. Public-private partnership (PPP) initiatives can be implemented effectively within the framework of Islamic financing concepts because the elements of the public-private partnership initiatives are congruent with Islamic finance principles. First of all, public-private partnership initiatives allow for risk sharing among project participants, including financiers. In addition, public-private partnership projects allow Islamic financiers to become project participants rather than just lenders. Following that, PPP infrastructure projects are by definition, free of speculation and gambling. Finally, project contracts are frequently well-specified and free of uncertainty. Besides this, creating financial inclusion and risk sharing in the framework of Islamic finance reduces the currency risk and the cost of financing and causes equitable distribution of wealth in society.

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Focusing Project Financing for Growth and Realizing the Higher Objectives of Shar¯ı‘ah

Cited by 3 publications

References 6 publications

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Developing Conceptual Framework for Public–Private Partnership Projects via Mobilization of Islamic Finance in Indonesia

Asya'nın Karayla Çevrili Gelişmekte Olan Ülkeleri İçin Altyapı Finansmanı Alternatifi Olarak İslami Finans

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