Enhancing Cross Border Connectivity: Venturing into Islamic Finance as a New Source of Infrastructure Financing

Abstract

Connectivity within Association of Southeast Asian nation (ASEAN) member countries becomes a central issue in view of the  ASEAN Economic Community 2015. However, progress towards ASEAN connectivity especially for  infrastructure developments has been limited. One of the problems is  the resource mobilization for project financing.  In recent years, rising demand for Islamic securities among global investors in jurisdictions where  legal framework and financial infrastructure are well  established has made sukuk a cost effective and  preferred  method  of raising finance.  It has also attracted liquidity to and has made Malaysia a leading  global sukuk issuer and a leading Islamic financial  hub. This paper is a case study on how Malaysia has used the Public-private partnership (PPP) for infrastructure development and how this has extended into Islamic financing  and further examines how this model can be expanded into other ASEAN member countries in particular the Cambodia, Vietnam, Laos and Myanmar  (CVLM)  countries where issues of  infrastructure financing is critical and need to be quickly resolved in view of   an enhanced ASEAN connectivity and the future of an  ASEAN community development.