Pengurusan Aset Air Bhd (PAAB) has launched Malaysia’s first sustainable Islamic financing framework incorporating Blue Sukuk principles, marking a significant step towards expanding sustainable funding for the country’s water infrastructure sector.
The framework is designed to channel Shariah-compliant capital into water-related projects while supporting Malaysia’s long-term water security and sustainability agenda. It also paves the way for a potential Blue Sukuk issuance of up to RM500 million, subject to regulatory approvals and market conditions.
Speaking at the launch, PAAB chairman Datuk Seri Ir Jaseni Maidinsa said the initiative builds on the organisation’s longstanding role in strengthening Malaysia’s water services industry through financing and debt restructuring.
He noted that one of PAAB’s earliest priorities was addressing the heavy debt burden faced by state water operators, many of which were constrained by federal government loans and commercial borrowings that limited their ability to invest in new infrastructure and improve service delivery.
To support the national water restructuring agenda, PAAB assumed RM23.04 billion in legacy water-related debt involving 10 migrated state water operators. The exercise comprised RM7.96 billion in federal government loans and RM15.08 billion in commercial borrowings.
According to Jaseni, the restructuring provided significant financial relief, strengthened the financial position of water operators and enabled them to focus on improving operational efficiency, service quality and infrastructure development.
As of Dec 31, 2025, PAAB had committed a total investment of RM46.88 billion to Malaysia’s water services industry.
These investments have contributed to the completion of 21 water treatment plants, the construction of 42 reservoirs and the installation of more than 3,200 kilometres of water pipelines, helping to enhance water supply capacity, reduce non-revenue water and improve overall system reliability.
Jaseni said PAAB has evolved into one of Malaysia’s largest and most active sukuk issuers over the past two decades, with its sukuk programme serving as the cornerstone of its long-term funding strategy for critical national water infrastructure projects.
He added that the new sustainable financing framework reflects PAAB’s continued commitment to ensuring the resilience and sustainability of Malaysia’s water sector while broadening access to sustainable capital markets.
Meanwhile, Second Finance Minister Datuk Seri Amir Hamzah Azizan said Malaysia continues to lead the global sukuk market, accounting for approximately 36% of total global sukuk outstanding as of the end of 2024.
He described the framework as an important milestone in integrating blue finance with Islamic finance, creating new opportunities for investors to support projects that improve water supply resilience, reduce water losses and protect the country’s water resources.
According to Amir Hamzah, the framework transforms water security into an investable national priority by combining Shariah-compliant financing with greater transparency, accountability and capital market discipline.
The sustainable Islamic financing framework was developed in collaboration with Maybank Investment Bank Bhd and independently reviewed by RAM Sustainability Sdn Bhd.
