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

Connectivity among Association of Southeast Asian Nations (ASEAN) member countries has become a central issue, particularly with the establishment of the ASEAN Economic Community in 2015. However, progress in enhancing ASEAN connectivity—especially in infrastructure development—remains limited. A key challenge lies in mobilizing resources for project financing. In recent years, growing global demand for Islamic securities, especially in jurisdictions with strong legal frameworks and financial infrastructure, has made sukuk a cost-effective and preferred method of raising capital. This trend has attracted significant liquidity and positioned Malaysia as a leading global sukuk issuer and a prominent Islamic financial hub. This paper presents a case study of Malaysia’s use of public-private partnerships (PPP) for infrastructure development, highlighting its integration with Islamic financing. It further explores how this model can be adapted and expanded to other ASEAN member countries—particularly Cambodia, Vietnam, Laos, and Myanmar (CVLM)—where the need for infrastructure financing is urgent in order to support enhanced ASEAN connectivity and the broader goal of ASEAN community development.