Yorqulov Umidjon Muzaffar o’g’li,
Tashkent State University of Economics
PhD student at the Department of Industrial Economics
e-mail address: umidyork@gmail.com
ORCID: 0000-0002-1908-4422
Abstract. Nowadays, the leading alternative system, which is developing at an amazingly high pace, can be considered the Islamic financial system, which offers a range of financial products that have no analogues. Initially, this article aims to give a detailed definition of the Salam product which was traditionally used in the Agricultural sector. Further, the article continues with the description of the seven fundamental guiding principles of “Salam” transaction. Thirdly, the article describes an example of a modern application of “Salam” contract in agricultural financing using the example of the Alfalah Islamic Bank, which operates in Pakistan. Fourthly, an example of the modern application of “Salam” structure in personal financing by the Islamic Bank of Dubai, UAE is provided. Following that, the article discusses the possibility of widespread application of this unique financing instrument not only in modern agricultural projects, but also in enterprises engaged in production in Uzbekistan. In particular, the introduction of Salam financing structure into the list of services of the organization “Uztrade” JSC can lead to a more sustainable development of entrepreneurship, industry, expansion of export potential and enrichment of the organization’s fund. The usage of “Salam” financing structure brings several benefits such as access to finance prior to starting a business/farming, the possibility to purchase goods at a discount price by the organization, the possibility to confidently set prices to these goods for further export sales, which in turn is associated with the possibility to enter sales of goods with foreign partners before the start of the harvest period, applying the “Parallel Salam” agreements. Finally, one of the most essential advantages of Salam financing is that entrepreneurs and farmers who are not interested in traditional types of financing can be attracted to export production and agricultural activities by alternative financing instruments which are based on Islamic principles of financing.
Key words. Salam contract, Salam financing, Islamic finance, financing agriculture, financing entrepreneurship, innovational financing.