IslamicFinance.de

Sukuk remains an important segment in Islamic finance in Asia where they are preferentially used to fund large public or private infrastructure or combined public-private projects. Recent estimates by the Asian Development Bank (ADB) have put the infrastructure financing needs of developing Asian economies at $22.6tn from now up to 2030, which equates to $1.7tn per year. Looking back, more than ten Asian countries issued a total of $73.1bn in infrastructure sukuk between 2002 and the end of 2015. Malaysia’s ongoing Economic Transformation Programme is expected to accelerate the issuance of Infrastructure sukuk. In addition, China’s Asia-wide Belt and Road Initiative has created a business case for Islamic funding. The Philippines and Indonesia are both seeking to use sukuk for badly needed infrastructure improvements. Kazakhstan and more Central Asian countries are expected to follow.

The Asian Development Bank (ADB) has engaged in its first Shariah-compliant project financing, offering assistance to two projects to build wind farms close to the port city of Karachi, exploiting two partial credit guarantees valued up to $66 million to the Islamic Development Bank (IDB).
The Fauji Foundation, which is the majority stake holder in the two projects had demanded that all financing be acquired in compliance with Shariah principles, so ADB used an innovative structure in which it supplied a partial credit guarantee to half of the IDB financing.