KUALA LUMPUR, 18 March 2026 – Pengurusan Aset Air Berhad (PAAB) has established Malaysia’s first Sustainable Islamic Finance Framework incorporating blue finance, marking a major milestone in the evolution of the country’s sustainable capital markets.
The framework, structured with Maybank Investment Bank Berhad as Sole Sustainability Structuring Adviser, enables PAAB to issue Blue Sukuk and other Islamic financing instruments, positioning Malaysia at the forefront of integrating water-focused sustainability into Islamic finance.
First-of-Its-Kind Blue Finance Framework in Malaysia
The initiative is the first in Malaysia to feature blue finance within an Islamic finance framework, aligning with global standards including guidelines developed by the International Finance Corporation and ICMA.
Through this framework, PAAB will channel funding into projects that enhance:
- Water infrastructure efficiency
- Climate resilience
- Long-term sustainability of the national water sector
The move also supports broader global and national agendas, including the United Nations Sustainable Development Goals (SDGs) and Malaysia’s long-term infrastructure transformation plans.
Platinum Rating Sets New Benchmark
In a landmark achievement, the framework received a “Platinum” Sustainable Finance Rating from RAM Sustainability, the highest tier under its Second Party Opinion (SPO) assessment.
PAAB is the first organisation to attain this top distinction, reinforcing strong governance, transparency, and alignment with international sustainable finance principles.
The rating provides investors with enhanced confidence in the credibility and impact of funds raised under the framework.
Driving Malaysia’s Water Sector Transformation
As a wholly owned entity of the Ministry of Finance (Incorporated), PAAB plays a central role in restructuring Malaysia’s water services industry under the national transformation agenda led by the Ministry of Energy Transition and Water Transformation (PETRA).
Chief Executive Officer Ir. Zulkiflee Omar said the framework strengthens PAAB’s role as a catalyst for sector reform, ensuring that every financed project contributes to resilience, efficiency, and long-term water security.
Flexible Financing Across Green, Blue and Social Categories
The framework allows PAAB to issue a wide range of Islamic financing instruments, including:
- Green Sukuk
- Blue Sukuk
- Social Sukuk
It also incorporates:
- Clear project eligibility criteria
- Measurable sustainability impact indicators
- Strong governance and reporting standards
This flexibility enables the mobilisation of capital across multiple sustainability themes, supporting both environmental and social outcomes.
Supporting National and Global Sustainability Goals
Funds raised under the framework will support key national priorities, including:
- Water Sector Transformation 2040 (WST2040)
- Malaysia’s Net Zero 2050 ambitions
- The 13th Malaysia Plan
The framework also reflects the growing importance of the “new economy,” where infrastructure resilience, resource efficiency, and sustainability are becoming central to long-term economic development.
Maybank’s Role in Advancing Sustainable Finance
Maybank Investment Bank’s involvement aligns with its broader ROAR30 strategy, which targets the mobilisation of RM300 billion in sustainable finance by 2030.
The bank has already mobilised over RM176 billion between 2021 and 2025, underscoring its leadership in sustainable financing across the region.
CEO Michael Oh-Lau noted that the framework supports Malaysia’s push toward a “blue economy”, particularly in addressing challenges such as Non-Revenue Water (NRW) and the need for long-term infrastructure upgrades.
A Catalyst for Sustainable Islamic Finance
The launch of PAAB’s framework signals a significant step forward for Malaysia’s capital markets, demonstrating how Islamic finance can be leveraged to support sustainability and infrastructure development.
For investors, the development highlights a key structural trend:
the convergence of Islamic finance and sustainability is creating new opportunities for capital deployment into essential infrastructure sectors.
