KUALA LUMPUR (June 30): Pengurusan Aset Air Bhd (PAAB), an entity under the Minister of Finance Inc, on Tuesday launched a sustainable Islamic finance framework aimed at channelling investments into water‑related infrastructure and environmentally sustainable projects.

The framework allows PAAB to issue a blue sukuk of up to RM500 million for water infrastructure upgrades, including renewing ageing mains, upgrading treatment plants, strengthening storage capacity, reducing water losses, and safeguarding rivers and aquatic ecosystems.

"This framework creates a channel for shariah-compliant capital to flow into the water infrastructure Malaysia depends on. It allows investors to support projects that reduce losses, strengthen supply and protect water sources,’’ said Finance Minister II Datuk Seri Amir Hamzah Azizan in his keynote address at the launching ceremony.

"It turns water security into an investable national priority, with capital-market discipline and accountability," he added.

According to the minister, the water services industry projects long‑term investment needs of about RM110 billion over the next 50 years to build, upgrade, and replace the water assets.

Meeting that demand, he noted, will require long-term capital from institutions and private investors alongside public funding.

Maybank Investment Bank Bhd has been appointed as the sole sustainable structuring adviser and RAM Sustainability Sdn Bhd as the second-party opinion provider.

The framework was built according to the Securities Commission's SRI Sukuk Framework, the Asean bond standards and International Capital Market Association (ICMA) principles, while its blue instruments follow International Finance Corporation (IFC) blue finance and ICMA blue economy guidance.

Asked about plans for further sukuk issuance, PAAB chairman Datuk Seri Jaseni Maidinsa said future sukuk issuance will be carefully timed to match project requirements rather than raising large sums upfront which could increase the borrowing cost.

"We [PAAB] must make sure the money is earning and not just sitting in the bank," he said at a press conference. "We will plan and schedule, and it's basically to reduce finance costs and benefit the rakyat."

Jaseni said PAAB will be focusing on states where non‑revenue water levels are above 40%.