kuala lumpur: The Bumiputera Malaysia Remission Association (Pribumi) and Bursa Malaysia have launched the Pribumi Malaysia Zakat Index (PBMZI).
The PBMZI is designed to raise awareness of public listed companies (PLCs) that adopt corporate zakat practices. As Bursa Malaysia’s first customised index, the index demonstrates the exchange’s commitment to promoting Shariah-compliant products and services through innovative and data-driven market offerings.
Speaking at the PBMZI launch today, Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said the index combines Islamic finance principles with environmental, social and governance (ESG) and sustainable and responsible investment (SRI) factors.
“This is in line with Bursa Malaysia’s goal of encouraging PLCs to adopt corporate zakat within their ESG and SRI efforts. As a global leader in Islamic finance, Malaysia’s capital market is well placed to promote this practice,” he said at the time of the announcement.
Citing data from the Zakat Collection Centre under the Federal Territories Islamic Religious Council (PPZ-MAIWP) and the Selangor Zakat Committee under the Selangor Islamic Religious Council, Abdul Wahid said zakat donations by corporations in 2023 reached RM165 million and RM176.4 million respectively.
“These donations will significantly support socio-economic development, fund education and human capital development programs and infrastructure projects, and promote a more inclusive economy,” Abdul Wahid said.
The PBMZI tracks the top 200 companies on Bursa Malaysia’s main market that meet the criteria of profitability and corporate zakat donations. The shortlisted companies undergo rigorous screening to ensure they are free of any significant controversies before being included in the index.
Abdul Wahid said the index’s strong potential is backed by compelling back-testing results.
“Based on backtesting over the past five years, the Zakat Index has consistently outperformed the FBM KLCI over one, three, six and 12 months, as well as over three and five years, demonstrating that investing in ethical and socially responsible companies can produce superior returns,” he said.
“Zakat contributions from the 27 PLCs now included in the Zakat Index total RM233 million in 2023, compared to RM197 million in 2022 and RM142 million in 2021. This represents a 64% increase in zakat contributions during the period, even during the challenging pandemic and post-pandemic times,” Abdul Wahid added.
Currently, PBMZI comprises 27 components across various sectors, including financial services, consumer goods, energy, healthcare, plantations, real estate, technology, communications, transport and utilities.
Abdul Wahid said the PBMZI is reviewed twice a year, with evaluations taking place in June and December.
“By December 2024, the exchange expects more PLCs to be included in the index, increasing the current number of constituent stocks from 27. The exchange is confident that the PBMZI will receive multiple positive responses from PLCs,” he said.
Pribumi president Izrul Zainal Abidin praised Bursa Malaysia’s efforts in working with capital market intermediaries such as Pribumi to custom design the world’s first zakat index.
“This pioneering initiative demonstrates our shared goal of innovating together with Bursa by launching PBMZI to meet client demand for socially responsible investments. Facilitating corporate zakat in the capital market is in line with Islamic social finance and ethical investment,” he said.
