KUALA LUMPUR: After committing nearly RM47bil to Malaysia’s water services sector, Pengurusan Aset Air Bhd (PAAB) is pursuing sustainable financing with the launch of Malaysia’s first sustainable Islamic finance framework, incorporating blue sukuk principles to support future water infrastructure investment.
“At the early stages of this reform journey, one of PAAB’s most critical responsibilities was to address the legacy debt burden carried by state water operators,” said PAAB chairman Datuk Seri Ir Jaseni Maidinsa at the ceremonial launch yesterday.
Jaseni highlighted funding constraint, reinforcing the need for a sustainable financing framework.
“Many operators were constrained by substantial federal government loans and commercial borrowings, which limited their ability to invest in new infrastructure and improve service delivery,” he explained.
Therefore, to support the restructuring agenda, Jaseni said PAAB undertook the takeover of RM23.04bil in water loan debts consisting of RM7.96bil from the federal government and RM15.08bil from commercial debts, which involved 10 migrated state water operators.
“This exercise provided much-needed financial relief, strengthened the water operators’ financial position, enabling focus on operational performance and service quality improvement.”
As at Dec 31, 2025, PAAB’s committed investment in Malaysia’s water services industry had reached a total of RM46.88bil.
According to Jaseni, the group’s investments had delivered significant improvements to the country’s water infrastructure, including the completion of 21 water treatment plants, construction of 42 reservoirs, and installation of over 3,200km of pipelines to boost water supply capacity, reduce losses and improve reliability.
“PAAB has carried a clear mandate to support the sustainability of Malaysia’s water services industry by restructuring legacy water debts and financing the development, upgrading and rehabilitation of water infrastructure nationwide.
“To fulfil this responsibility, PAAB has evolved into one of Malaysia’s largest and most active sukuk issuers.
“PAAB’s sukuk programme has served as the cornerstone of our funding strategy, enabling us to raise long-term capital efficiently and competitively to support critical water infrastructure development across the country, over the last two decades,” Jaseni stated.
Second Finance Minister Datuk Seri Amir Hamzah Azizan noted Malaysia remains the world’s largest sukuk market, commanding around 36% of total global sukuk outstanding as at end of 2024.
According to Amir Hamzah, the framework integrates blue finance into an Islamic finance structure, paving the way for Malaysia’s potential first blue sukuk issuance of up to RM500mil, subject to market conditions and approvals.
“It creates a channel for syariah-compliant capital to flow into the water infrastructure Malaysia depends on, allowing investors to support projects that reduce losses, strengthen supply and protect water sources.
“This will turn water security into an investable national priority, with capital-market discipline and accountability,” he said.
The framework is developed with Maybank Investment Bank Bhd and independently reviewed by RAM Sustainability Sdn Bhd.
