PAAB Establishes Malaysia’s First Sustainable Islamic Finance Framework With Blue Finance Elements

KUALA LUMPUR, March 19 (Bernama) -- Pengurusan Aset Air Bhd (PAAB) has established Malaysia’s first sustainable Islamic finance framework that incorporates blue finance elements, with Maybank Investment Bank Bhd (Maybank IB) serving as the sole sustainability structuring adviser.

PAAB is a wholly owned company of the Minister of Finance (Incorporated) and plays a central role in the government’s efforts, under the Ministry of Energy Transition and Water Transformation (PETRA), to restructure Malaysia’s water services industry towards greater efficiency, improved service quality, and long-term sustainability.

In a joint statement today, PAAB and Maybank IB said the framework marks a significant milestone as the first in Malaysia to incorporate blue finance elements within an Islamic finance structure.

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“The framework allows 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 the International Capital Market Association 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,” they said.

The statement said RAM Sustainability has independently reviewed the framework and accorded it a “platinum” sustainable finance rating under its second-party opinion (SPO), confirming alignment with relevant local, regional, and international sustainable finance standards.

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“PAAB is the first organisation to achieve the Platinum distinction, the highest tier under RAM Sustainability’s SPO assessment, underscoring the robustness of its sustainability governance and providing strong assurance to investors in its capital-raising activities under the framework,” it said.

Meanwhile, PAAB chief executive officer (CEO) Zulkiflee Omar said 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,” he said.

Furthermore, Maybank IB CEO Michael Oh-Lau said the collaboration reflects Maybank’s commitment under its ROAR30 strategy to mobilise RM300 billion in sustainable finance by 2030, alongside a target of RM100 billion in new economy financing to support sectors driving a low-carbon, inclusive and future-ready economy. 

He said the collaboration builds on RM176.12 billion in sustainable finance mobilised between 2021 and 2025. 

“With the blue economy emerging as a national priority, we are honoured to partner with PAAB in structuring Malaysia’s first Sustainable Islamic Finance Framework with integrated blue finance features. 

“This initiative addresses the urgent need for sustainable capital in water infrastructure while supporting the nation’s efforts to reduce non-revenue water,” he added.

-- BERNAMA