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Islamic Project Finance and Private Funding Schemes

In: Business and Management

Submitted By manoranjani
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ISLAMIC PROJECT FINANCE AND PRIVATE FUNDING SCHEMES

INTRODUCTION
From Islamic perspective there is no objection to such private provision (private sector companies) but there is always involve Shariah compliance issues. There is borrowing on the basis of riba is haram. The adoption of Islamic financing techniques such as istisna can avoid such difficulties and discounting of future income is seen as legitimate by Islamic economist. This technique can be used to calculate for social rate of return in Muslim societies.
Increased knowledge can reduces uncertainty involved in any project but it will take time to reach the fruition. The modern techniques of project appraisal can be used by Islamic financial institutions and if there is commercial funding method that gives the appropriate needs and circumstances of Muslims countries and communities. As raise the private sectors, good information flow is important for the project to be properly evaluated.
The issue of discounting is potentially causes problems from the perspective of Shariah. Discounting rate is equated with interest rate which constitutes riba. It also useful tool if the decision on the merits of different projects are to be made on the basis of comparison from their present value. Such the calculations enhance the knowledge of decision makers. Islamic financing instruments are used to replace the interest-based borrowing and to ensure the financial arrangements are efficient.

2. State arrangement of project financing :

The state arrangement of project financing is largely undertaken by government. The budget is being dividing between current spending on wages, salaries and capital expenditure. It regarded as a type of national investment. The investment was funded from tax revenue or through government borrowing. The government borrowing is arranged through issuance of domestic bond, if

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