Dubai: In order to maintain solid economic growth and sustain their surging populations, Asian nations need to develop and upgrade their infrastructure and Islamic finance can play a key role in this, Standard & Poor's Ratings Services has said in a recently published report.
Titled, 'Will Islamic Finance Play A Key Role In Funding Asia's Huge Infrastructure Task?', the report said Islamic finance would be a good match for financing Asia's infrastructure funding gap, especially sukuk bonds.
"With the outlook in global lending markets still uncertain, conventional financing such as bank funding might not be able to completely shoulder this huge financing task. We believe alternatives, such as Islamic finance, could play a key role," Standard & Poor's credit analyst Allan Redimerio said in the report.
The Asian Development Bank (ADB) recently predicted that Asian economies require USD 8 trillion over the next decade to fully address the region's basic infrastructure needs, including developments in areas such as water, transportation, and energy.
The Sharia principles governing Islamic finance ban speculation and specify that income must come from shared business risk. Islamic finance is based on the concept of asset backing.