Shariah (Halal) Investing in Malaysia

Halal investing rests on avoiding three things and screening the business behind the asset.

The three prohibitions:

• Riba (interest or usury): earning a fixed return purely for lending money. This rules out conventional bonds, fixed deposits and interest income.
• Gharar (excessive uncertainty): contracts where the terms, subject matter or delivery are unclear. Conventional insurance and some derivatives fall here.
• Maysir (gambling or pure speculation): betting-style contracts where gain comes at another's loss by chance.

On top of that, the underlying business must not earn material income from prohibited activities. Screened-out sectors include conventional finance and interest-based lending, alcohol, gambling and casinos, tobacco, non-halal food and pork, adult entertainment, and weapons.

For Malaysian equities, you do not have to judge all this yourself. The Securities Commission's Shariah Advisory Council applies a defined screen and publishes the verdict for every Bursa-listed company. For funds, a shariah committee oversees the mandate. Your job is to pick from the compliant list and, where relevant, purify any small residual non-compliant income (covered below).

A note on tax: going shariah does not change how Malaysia taxes you. Listed-share capital gains are generally not taxed for individuals, dividends are single-tier, and the same rules apply to compliant and non-compliant holdings alike. See the tax section below for the 2025 dividend change.

The authority for shariah-compliant equities is the Securities Commission Malaysia (SC) Shariah Advisory Council (SAC). It publishes the List of Shariah-Compliant Securities and updates it twice a year, in May and November, with the new list taking effect on the last Friday of those months.

As of the 30 May 2025 list, around 850 of roughly 1,056 Bursa-listed securities were classified shariah-compliant, about 80% of the market. That high-70s to 80% ratio has held steady for years. Treat the exact count as a moving number: it changes every May and November, so always check the latest list rather than memorising a figure.

The SAC uses a two-tier quantitative screen plus a qualitative check on public perception and image.

An important 2025 change: the SAC moved to a single 5% business-activity benchmark in November 2025. This replaced the older two-tier 5%/20% system, so the previous 20% tier for activities like hotels, share trading and rental income was removed, tightening the screen. Many older blog posts still describe the outdated 20% tier. For the financial ratios, note that only conventional cash and interest-bearing debt count; Islamic accounts, sukuk and Islamic financing are excluded.

Two FTSE Bursa Malaysia indices let you track the compliant part of the market.

The Hijrah index applies a stricter, internationally recognised shariah screen on top of the SAC list, so it suits investors who want blue-chip compliant names. Both indices are reviewed semi-annually in June and December, roughly in step with the SAC list updates.

You cannot buy an index directly. You get exposure through a fund that tracks it, most commonly a shariah ETF (next section) or an index-linked Islamic unit trust. When you compare products, check which benchmark a fund follows: a Hijrah-linked fund gives concentrated large-cap exposure, while an Emas Shariah fund is broader and more diversified across mid-caps.

These indices are calculated by FTSE Russell (LSEG) together with Bursa Malaysia, so the constituent list is transparent and published. The Edge and Bursa both report the semi-annual constituent changes, which is a useful way to see which compliant companies are entering or leaving the large-cap universe.

Most Malaysians go halal through pooled funds rather than picking stocks.

Islamic unit trusts. Hundreds of funds are sold in Malaysia and a large share are shariah-compliant, distributed by SC-licensed managers and regulated for distribution by FIMM (Federation of Investment Managers Malaysia). Each has a shariah committee overseeing the mandate.

Shariah ETFs (i-ETFs). As of early 2026, 8 of the 13 ETFs listed on Bursa are shariah-compliant. MyETF-DJIM25, tracking the Dow Jones Islamic Market Malaysia Titans 25, was Asia's first shariah ETF, listed in January 2008. The MyETF range was taken over by Kenanga Investors from i-VCAP and rebranded to Eq8 Capital in May 2024, so look for the current Eq8 naming rather than the old MyETF operator name.

ASNB shariah funds. ASNB (Amanah Saham Nasional Berhad, part of PNB) runs several compliant funds.

One common mistake: ASB (Amanah Saham Bumiputera) is not certified shariah-compliant, and some scholars still debate it. Shariah-seeking investors use ASB-i or the ASN shariah funds instead. See our ASB and ASNB guide for how these funds compare on returns and access.

Sukuk are Islamic investment certificates. Instead of paying interest, they represent ownership in an asset or venture and pay returns from that, which keeps them clear of riba.

For retail investors there are three practical routes:

ETBS is the most accessible listed route: if you already have a Bursa trading account, you can buy government or corporate sukuk the same way you buy shares, and prices are transparent on the exchange. The trade-off is that listed retail sukuk are limited in number, so a sukuk unit trust often gives better diversification for a small ticket.

Sukuk suit the defensive part of a halal portfolio, giving steadier income than equities. As with any fixed-income product, returns are not guaranteed and prices move with profit rates and credit conditions. The SC's investor empowerment pages list the current retail bond and sukuk market, which is worth checking for what is actually available to buy.

Robo-advisors build and rebalance a diversified portfolio for you, using shariah-screened ETFs, sukuk and gold. They suit hands-off investors who want a ready-made halal portfolio.

Wahed is the established name and the most straightforward starting point for a fully shariah portfolio. Its portfolios mix compliant global equity ETFs, sukuk and gold, and it is a licensed shariah robo-advisor rather than a conventional platform with a halal add-on.

BEST Invest (BIMB) is no longer an option: BIMB decommissioned the BEST app effective 1 January 2026 (removed from the app stores in December 2025), so treat Wahed as the default shariah robo, with StashAway and Versa offering shariah portfolio options.

Confirm the exact fee tiers on each provider's own pricing page before committing, since these figures move. Whatever you pick, check it appears on the SC's list of licensed entities.

Gold is a ribawi commodity, so shariah rules add conditions that ordinary gold products do not always meet. The trade must settle spot, hand to hand, with immediate or constructive possession and full allocation of specific gold to you.

The reference standard is AAOIFI Shariah Standard No. 57, published in 2016 and backed by the World Gold Council. Under it:

The deciding factors are immediate settlement and full allocation. If specific gold is set aside in your name and settled without delay, a product can be compliant. If you hold only a claim against a pool, or trade on margin with deferred delivery, it generally fails the shariah test.

When a bank or dealer markets a 'shariah gold account', check that it states T+0 settlement and full allocation, and look for the specific shariah certification. Individual product certifications vary, so do not assume all gold investment is halal. Our gold and silver guide covers the practical side of buying, storing and pricing physical gold in Malaysia.

Purification (tazkiyah). Even a compliant company may earn a small slice of non-compliant income, for example interest on conventional cash. Investors cleanse this by donating the non-compliant portion of their income to charity. The common formula:

> Purification amount = total dividend x (non-compliant revenue / total revenue)

This usually works out to a small 1% to 5% of dividends. In Malaysia, purification funds are channelled through state Islamic religious councils, for example e-MAIS in Selangor. Some fund managers do this at fund level so you may not need to calculate it yourself; check your fund's shariah reporting.

Is crypto halal? In July 2020, the SC Shariah Advisory Council resolved that digital assets are recognised as māl (property or asset) and that it is permissible to invest and trade digital currencies and tokens on SC-registered Digital Asset Exchanges (DAX), subject to conditions. This is a permissible-with-conditions position rather than a blanket ruling that any coin is halal. Compliance still depends on the specific token, the rights it represents and how its proceeds are used, and scholars remain divided.

So the honest framing is: trading on an SC-registered exchange is permitted under stated conditions, judged token by token, with genuine scholarly disagreement. Avoid treating 'Bitcoin is halal in Malaysia' as settled. Our crypto guide lists the SC-registered exchanges and how the regulation works.

A simple halal path for a Malaysian investor:

1. Emergency and defensive base: an Islamic savings or fixed-price ASN fund, plus sukuk or a sukuk unit trust for steadier income.
2. Growth: shariah ETFs (Eq8 range), Islamic equity unit trusts, or a robo-advisor like Wahed for a ready-made mix.
3. Retirement: PRS shariah funds, which qualify for personal income tax relief of up to RM3,000 per year, extended to YA2030 under Budget 2025. PRS splits contributions 70:30 into Sub-Account A (locked to age 55) and Sub-Account B (one pre-retirement withdrawal a year, 8% tax penalty unless for housing or healthcare).
4. Direct stocks: pick only from the current SAC List of Shariah-Compliant Securities, and purify residual income.

Tax notes (2026). Shariah status does not change your tax. Listed-share capital gains are generally not taxed for individuals and dividends are single-tier, but a 2% tax on individual dividend income above RM100,000 applies from YA2025, and companies (not individuals) that dispose of unlisted shares face capital gains tax from 2024. See our tax guide for detail.

Avoiding scams. 'Shariah' and 'halal' branding is used by fraudsters too. Before you put in a ringgit, confirm the provider is on the SC's list of licensed entities and check it is not on the SC Investor Alert List. Promises of fixed high returns with no risk are a red flag regardless of the Islamic label.