The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis

Build Operate Transfer (BOT) is a kind of legal mechanism of privatisation. It is a business venture between the government and the concessionaire, with the ownership of the project asset transferred to the government at the end of the concession period. In Malaysia, a decade after the beginning o...

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Main Authors:	Markom, Ruzian, Engku Ali, Engku Rabiah Adawiah, Hasan, Aznan
Format:	Article
Language:	English
Published:	Universiti Pertanian Malaysia Press 2012
Subjects:	HG Finance K Law (General)
Online Access:	http://irep.iium.edu.my/29261/ http://irep.iium.edu.my/29261/1/The_Current_Practices_of_Islamic_Build_Operate_Transfer_%28BOT%29.pdf

id	iium-29261
recordtype	eprints
spelling	iium-292612014-08-18T22:40:12Z http://irep.iium.edu.my/29261/ The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis Markom, Ruzian Engku Ali, Engku Rabiah Adawiah Hasan, Aznan HG Finance K Law (General) Build Operate Transfer (BOT) is a kind of legal mechanism of privatisation. It is a business venture between the government and the concessionaire, with the ownership of the project asset transferred to the government at the end of the concession period. In Malaysia, a decade after the beginning of privatisation was marked by the emergence of capital market which consisted of conventional and Islamic capital market. Both Islamic and conventional capital markets facilitate the privatisations and infrastructure projects by the issuance of bonds, equity financing securities and Islamic securities. Islamic BOT financing is a new type of contract in contemporary Islamic law, and it is resulted from the modern infrastructure development needs. Although the financing of BOT is new to the Islamic law, the specific contracts used in the structure are common to the Islamic principles of muamalat (i.e. Islamic transactions) like sale, partnership and lease contract. The objective of this work was to study the current practices of the Islamic BOT financing contracts in Malaysia and other countries. The study adopted an analytical approach by assessing the strengths and weaknesses of the financing contracts via the sale, partnership, and lease contract. Finally, the findings showed that sale-based financing is more popular to the Project Company of BOT in Malaysia due to the fixed return and deferred payment mechanism. On the other hand, the mudarabah and musharakah contract provides an alternative to the project since both structures are in the form of business venture and lease-based financing which exploit the beneficial interest of an asset. Universiti Pertanian Malaysia Press 2012-06 Article PeerReviewed application/pdf en http://irep.iium.edu.my/29261/1/The_Current_Practices_of_Islamic_Build_Operate_Transfer_%28BOT%29.pdf Markom, Ruzian and Engku Ali, Engku Rabiah Adawiah and Hasan, Aznan (2012) The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis. Pertanika Journal of Social Science and Humanities, 20 (spec.). pp. 73-85. ISSN 0128-7702
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG Finance K Law (General)
spellingShingle	HG Finance K Law (General) Markom, Ruzian Engku Ali, Engku Rabiah Adawiah Hasan, Aznan The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
description	Build Operate Transfer (BOT) is a kind of legal mechanism of privatisation. It is a business venture between the government and the concessionaire, with the ownership of the project asset transferred to the government at the end of the concession period. In Malaysia, a decade after the beginning of privatisation was marked by the emergence of capital market which consisted of conventional and Islamic capital market. Both Islamic and conventional capital markets facilitate the privatisations and infrastructure projects by the issuance of bonds, equity financing securities and Islamic securities. Islamic BOT financing is a new type of contract in contemporary Islamic law, and it is resulted from the modern infrastructure development needs. Although the financing of BOT is new to the Islamic law, the specific contracts used in the structure are common to the Islamic principles of muamalat (i.e. Islamic transactions) like sale, partnership and lease contract. The objective of this work was to study the current practices of the Islamic BOT financing contracts in Malaysia and other countries. The study adopted an analytical approach by assessing the strengths and weaknesses of the financing contracts via the sale, partnership, and lease contract. Finally, the findings showed that sale-based financing is more popular to the Project Company of BOT in Malaysia due to the fixed return and deferred payment mechanism. On the other hand, the mudarabah and musharakah contract provides an alternative to the project since both structures are in the form of business venture and lease-based financing which exploit the beneficial interest of an asset.
format	Article
author	Markom, Ruzian Engku Ali, Engku Rabiah Adawiah Hasan, Aznan
author_facet	Markom, Ruzian Engku Ali, Engku Rabiah Adawiah Hasan, Aznan
author_sort	Markom, Ruzian
title	The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
title_short	The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
title_full	The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
title_fullStr	The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
title_full_unstemmed	The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis
title_sort	current practices of islamic build operate transfer (bot) financing contracts: a legal analysis
publisher	Universiti Pertanian Malaysia Press
publishDate	2012
url	http://irep.iium.edu.my/29261/ http://irep.iium.edu.my/29261/1/The_Current_Practices_of_Islamic_Build_Operate_Transfer_%28BOT%29.pdf
first_indexed	2023-09-18T20:42:56Z
last_indexed	2023-09-18T20:42:56Z
_version_	1777409485653934080

The current practices of Islamic Build Operate Transfer (BOT) financing contracts: A legal analysis

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