Identifying risk in shariah compliant financing for transport infrastructure projects in Indonesia

Shariah compliant financing to develop Indonesia’s infrastructure are seen by the Government of Indonesia to be suitable considering factors such as increasing market appetite for Islamic finance products and the risk-sharing principles in their transaction. Indonesia is still in its early stage with its first Shariah compliant financed public infrastructure project in 2013, there is limited knowledge of the risk factors. This research identified the sources and types of risk in Indonesia’s practice of using Shariah compliant financing to finance their transportation project, in particular railway, seaport, and airport projects; and provided strategic approach to manage the identified risks