KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB) has launched Malaysia’s first sustainable Islamic financing framework based on blue sukuk principles, reinforcing its commitment to funding future water infrastructure projects. The initiative comes after the company invested nearly RM47 billion in the country’s water services sector and aims to support long-term sustainability in water development.
PAAB Chairman Datuk Seri Ir Jaseni Maidinsa said one of the organisation’s key responsibilities during the early stages of the national water sector reform was to address the significant debt burden carried by state water operators. Many operators were unable to invest in new infrastructure because they were weighed down by federal government loans and commercial borrowings.
To ease this financial pressure, PAAB took over RM23.04 billion in water-related debts, including RM7.96 billion owed to the federal government and RM15.08 billion in commercial loans involving 10 state water operators. Jaseni said the restructuring strengthened the financial position of the operators, allowing them to focus on improving operational efficiency and enhancing the quality of water services.
As of Dec. 31, 2025, PAAB’s total committed investment in Malaysia’s water services industry had reached RM46.88 billion. The investments have helped deliver major infrastructure projects, including the completion of 21 water treatment plants, the construction of 42 reservoirs, and the installation of more than 3,200 kilometres of pipelines to improve water supply capacity, reduce losses, and increase system reliability across the country.
Jaseni added that PAAB has evolved into one of Malaysia’s largest sukuk issuers over the past two decades. Its sukuk programme has played a vital role in raising long-term funding to finance the development, upgrading, and rehabilitation of water infrastructure nationwide.
Second Finance Minister Datuk Seri Amir Hamzah Azizan said Malaysia continues to lead the global sukuk market, accounting for around 36% of total global sukuk outstanding at the end of 2024. He noted that the new framework combines blue finance with Islamic finance principles and could pave the way for Malaysia’s first blue sukuk issuance worth up to RM500 million, subject to market conditions and regulatory approvals.
According to Amir Hamzah, the framework will enable syariah-compliant investment to flow into projects that strengthen water infrastructure, reduce water losses, improve supply systems, and safeguard the country’s water resources. He said the initiative also positions water security as an investable national priority while promoting accountability and sustainability in infrastructure financing.
The sustainable Islamic financing framework was developed in collaboration with Maybank Investment Bank Bhd and independently reviewed by RAM Sustainability Sdn Bhd.