Persatuan Remisier Bumiputera Malaysia And Bursa Malaysia Collaborate To Pioneer The World’s First Zakat Index

• PRIBUMI Bursa Malaysia Zakat Index, the Exchange’s first customised index, aims to promote recognition of Corporate Zakat practice among public listed companies (“PLCs”)
• Encouraging Corporate Zakat practice within the capital market framework can enhance PLCs’ appeal to attract socially conscious investors and customers

Persatuan Remisier Bumiputera Malaysia (“PRIBUMI”) and Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) today launched the PRIBUMI Bursa Malaysia Zakat Index (“PBMZI”), a new customised index designed to promote greater recognition of PLCs that choose to adopt Corporate Zakat practice.  

The PBMZI, designed in collaboration with PRIBUMI, marks Bursa Malaysia’s first customised index, underscoring the Exchange’s commitment to advance Shariahcompliant products and services by providing innovative market offerings that leverage on data analytics.   

Zakat’s Significance to Malaysia’s Capital Market

Studies show that zakat has a positive correlation with economic growth. The distribution of zakat increases the purchasing power of zakat recipients, thereby boosting aggregate demand. Between 2018 and 2020, Malaysia’s zakat collections increased from RM3.0 billion to RM3.5 billion^[1]. More can be done to encourage awareness and practice of contributing Corporate Zakat within the capital market, which is also in line with Islamic social finance and ethical investments. With this, companies making Corporate Zakat contributions can potentially increase their market appeal by attracting socially conscious investors and customers.  

Izrul Zainal Abidin, President of PRIBUMI said, “PRIBUMI lauds Bursa Malysia for collaborating with capital market intermediaries such as our association to custom design the world’s first Zakat index. This pioneering initiative exemplifies our shared goal with the Exchange to innovate by launching the PBMZI to meet the demand from our clients to invest in socially responsible PLCs.”      

Tan Sri Abdul Wahid Omar, Chairman of Bursa Malaysia commented, “The PRIBUMI Bursa Malaysia Zakat Index integrates Islamic financial principles with Environmental, Social, and Governance (“ESG”) and Sustainable and Responsible Investment (“SRI”) elements. This is in line with Bursa Malaysia’s thought leadership and intent to encourage PLCs to embrace Corporate Zakat as part of their ESG and SRI initiatives. As the global leader in Islamic Finance, Malaysia’s capital market has the solid foundation and  framework, as well as the right pool of constituents to champion Corporate Zakat practice.” 

Details of the PRIBUMI Bursa Malaysia Zakat Index (PBMZI)

The PBMZI tracks the performance of top 200 companies listed on the MAIN Market of Bursa Malaysia that meet specific eligibility criteria - namely profitable companies that make Corporate Zakat contributions. In addition, the shortlisted companies undergo rigorous screening to ensure they have no known significant controversies before being deemed eligible for inclusion in the index.

Eligible PLCs are weighted within the index based on market capitalisation. Currently, the PBMZI has 27 constituents spanning various sectors - including financial services, consumer products, energy, healthcare, plantation, property, technology,  telecommunications, transportation and utilities. The constituents of companies in the PBMZI will be assessed semi-annually in June and December.   

Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia said, “Bursa Malaysia’s pool of data is central to developing market-driven indices such as the PRIBUMI Bursa Malaysia Zakat Index.” Added Datuk Muhamad Umar Swift, “Bursa Malaysia anticipates that the PRIBUMI Bursa Malaysia Zakat Index will serve as a foundation for developing several capital market products, including exchange-traded funds and unit trust funds. These products will then offer investors diversified and ethical investment options.”

PLCs and investors interested to learn more about this index can visit https://www.bursamalaysia.com/trade/our_products_services/indices/customised_in dex/pribumi_bursa_malaysia_zakat_index or contact isb@bursamalaysia.com.