Malaysia's Pengurusan Aset Air Berhad (PAAB), wholly owned company of the Minister of Finance (Incorporated), has established Sustainable Islamic Finance Framework with Maybank Investment Bank (Maybank IB) acted as Sole Sustainability Structuring Adviser.
Notably, the framework is the first in Malaysia to feature blue finance and first in Malaysia for Islamic Finance, allowing PAAB to undertake blue instruments such as Blue Sukuk and other Islamic financings in adherence with the Guidelines for Blue Finance Version 2.0 developed by the International Finance Corporation in 2025 as well as the Bonds to Finance the Sustainable Blue Economy - A Practitioner's Guide published by ICMA in 2023. PAAB’s blue instruments will support its role in strengthening the efficiency, resilience and sustainability of Malaysia’s water sector, while contributing to the United Nations Sustainable Development Goals.
The Framework has been independently reviewed by RAM Sustainability and was accorded a “Platinum” Sustainable Finance Rating, in its Second Party Opinion (SPO), confirming its alignment with relevant local, regional, and international sustainable finance guidelines. PAAB is the first to ever achieve the Platinum distinction – the highest tier under RAM Sustainability’s SPO assessment. Hence, providing assurance and credibility for PAAB’s sustainability process and governance in raising funds under this framework.
PAAB forms part of the Malaysian government's efforts, together under the Ministry of Energy Transition and Water Transformation (PETRA), to restructure the water services industry in the country to achieve better efficiency and quality, as well as to ensure sustainability of the industry.
CEO of PAAB, Ir. Zulkiflee Omar, says: “The framework reinforces PAAB’s role as Malaysia’s national water asset custodian and a catalyst for water sector transformation. By embedding sustainable financing into our strategy, we are aligning with the national agenda by ensuring every asset/project funded strengthens our resilience, efficiency, and sustainability as well as ensuring water security for future generations."
The framework ensures alignment with evolving sustainable finance guidelines, comprehensive project eligibility criteria aligned with PAAB’s core business activities, identified sustainability impact indicators, and provides flexibility to issue a wider range of sustainable Islamic finance instruments. The framework provides flexibility for the issuance of Sukuk or other Islamic financing instruments across green, blue and social categories.
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CFO of PAAB, Zaleha Abdul Hamid, says: “We are committed to ensuring that every fundraising effort directly supports assets/projects with measurable environmental and social sustainability impact, from climate resilience to operational efficiency. Hence, this framework provides PAAB with a transparent and credible platform to mobilise sustainable capital across Sukuk and other Islamic financing instruments. By embedding international best practices and rigorous governance, PAAB targets to demonstrate how sustainable Islamic finance can deliver long-term value creation while advancing national agenda in infrastructure and economic development."
The framework sets out how PAAB and its subsidiaries may raise sustainable financing to fund eligible assets and projects that support long term value creation and contribute to national priorities, including the Water Sector Transformation 2040 (WST2040) agenda, Malaysia’s Net Zero 2050 commitment, and the aspirations of the 13th Malaysia Plan in advancing resilient, future-ready infrastructure and sustainable development. The framework also reflects the growing importance of the New Economy, where sustainable infrastructure, resource efficiency and climate resilience are becoming increasingly integral to Malaysia’s development agenda.
CEO of Maybank Investment Bank Berhad, Michael Oh-Lau, says: “With the Blue Economy now a national priority, Maybank is honored to partner with PAAB in structuring Malaysia’s first Sustainable Islamic Finance Framework with integrated blue finance features. Our nation’s goal to reduce Non-Revenue Water (NRW) highlights the urgent need for sustainable capital in water infrastructure."
