Shariah-compliant investing, plainly.

Shariah-compliant investments follow Islamic principles — no interest (riba), no excessive uncertainty (gharar), no gambling (maysir), and only halal economic activities.

The Shariah Advisory Council of the Securities Commission Malaysia oversees compliance standards. Shariah and ESG principles share common ground: both emphasise ethical, responsible investing that considers broader impact beyond pure financial returns.

In simple terms: Shariah investing uses the same financial instruments you know — deposits, funds, bonds, insurance — but structured to comply with Islamic principles. Returns come from real economic activity and profit-sharing, not interest.

Four foundational principles.

No Riba (Interest)

No interest-based transactions. Returns are structured as profit-sharing (Mudarabah) or trade-based (Murabahah) contracts.

ii.

No Gharar (Uncertainty)

No excessive uncertainty or ambiguity. Contract terms must be clear, transparent, and well-defined for all parties.

iii.

No Maysir (Gambling)

No gambling or pure speculation. Investment must have underlying productive economic activity.

iv.

Halal Activities Only

Underlying business must not involve alcohol, tobacco, gambling, pork, weapons, or conventional financial services.

The Shariah-compliant menu.

Product	How it differs from conventional
Islamic FD (FD-i)	Uses Mudarabah or Wakalah contract instead of interest. Returns called "profit" not "interest." Similar rates to conventional FD. PIDM-protected to RM 250,000.
Sukuk (Islamic bonds)	Returns come from underlying asset ownership, not interest. GII (Government Investment Issues) is the Shariah equivalent of MGS.
Islamic Unit Trust	Funds invest only in Shariah-compliant securities screened by SC Malaysia's Shariah Advisory Council.
ESG Range Accrual	May qualify when underlying meets Shariah screening. Principal protected with KLIBOR-range coupon.
Takaful (Islamic insurance)	Mutual assistance (ta'awun) rather than risk transfer. Participants share risk through a Tabarru' donation fund.
EPF Simpanan Shariah	Opt-in via EPF. Savings managed according to Shariah principles. Historical returns comparable to conventional EPF.

Product

How it differs from conventional

Islamic FD (FD-i)

Uses Mudarabah or Wakalah contract instead of interest. Returns called "profit" not "interest." Similar rates to conventional FD. PIDM-protected to RM 250,000.

Sukuk (Islamic bonds)

Returns come from underlying asset ownership, not interest. GII (Government Investment Issues) is the Shariah equivalent of MGS.

Islamic Unit Trust

Funds invest only in Shariah-compliant securities screened by SC Malaysia's Shariah Advisory Council.

ESG Range Accrual

May qualify when underlying meets Shariah screening. Principal protected with KLIBOR-range coupon.

Takaful (Islamic insurance)

Mutual assistance (ta'awun) rather than risk transfer. Participants share risk through a Tabarru' donation fund.

EPF Simpanan Shariah

Opt-in via EPF. Savings managed according to Shariah principles. Historical returns comparable to conventional EPF.

How Shariah compliance is determined.

Securities Commission Malaysia Shariah Advisory Council thresholds. List updated twice yearly (May and November).

Test	Threshold	What it means
Debt-to-Total Assets	< 33%	Not excessively leveraged with interest-bearing debt.
Non-compliant revenue	< 5%	Only minimal income from non-permissible sources allowed.
Interest income	< 5%	Interest income must be a negligible portion of revenue.
Cash + receivables / Total assets	< 33%	Ensures real productive assets, not just financial instruments.

Test

Threshold

What it means

Debt-to-Total Assets

< 33%

Not excessively leveraged with interest-bearing debt.

Non-compliant revenue

< 5%

Only minimal income from non-permissible sources allowed.

Interest income

< 5%

Interest income must be a negligible portion of revenue.

Cash + receivables / Total assets

< 33%

Ensures real productive assets, not just financial instruments.

Frequently asked questions.

Is my FD Shariah-compliant?

Only if it's specifically an FD-i. Check your placement receipt — it should state the contract type (Mudarabah, Wakalah, etc.). Conventional FD uses interest, which is not Shariah-compliant.

Can I invest in US stocks and stay Shariah-compliant?

Yes — some US stocks pass SC Malaysia's screening (e.g. Apple, Microsoft, Tesla). Check the latest SC Shariah-compliant securities list, updated twice yearly. Many Shariah UT funds invest in screened US equities.

Are structured products halal?

It depends on the structure and underlying. ESG-labelled products using Shariah-compliant underlyings may qualify. Each product should be assessed individually — consult your Shariah advisor for specific rulings.

Is EPF Shariah-compliant?

EPF offers Simpanan Shariah as an option. Opt in via the EPF website, kiosks, or branches. Returns have been historically comparable to conventional EPF savings.

How do Shariah returns compare to conventional?

Generally comparable. FD-i rates track conventional FD closely. Islamic UT funds perform based on their investments, not the contract structure. The difference is in how returns are generated, not how much.

Conversation GuideReference · Shariah-Compliant Suite

Reference · Shariah-Compliant Suite

Islamic investment principles, in practice.

Principles, product options, screening criteria, common questions.

01.Four principles

No Riba. No interest. Returns via profit-sharing (Mudarabah) or trade-based (Murabahah) contracts.
No Gharar. No excessive uncertainty. Contract terms must be clear and transparent.
No Maysir. No gambling or pure speculation. Must have underlying productive activity.
Halal activities only. Excludes alcohol, tobacco, gambling, pork, weapons, conventional financial services.

02.Product menu

Islamic FD (FD-i). Mudarabah/Wakalah contract. PIDM-protected to RM 250k. Similar rates.
Sukuk. Asset-backed. GII = Shariah equivalent of MGS.
Islamic UT. SC Malaysia-screened securities only.
ESG Range Accrual. May qualify when underlying meets Shariah screening.
Takaful. Mutual assistance (ta'awun) via Tabarru' fund.
EPF Simpanan Shariah. Opt-in via EPF website/kiosk/branch.

03.Shariah screening thresholds

Test	Threshold	What it means
Debt / Total assets	< 33%	Not over-leveraged on interest-bearing debt
Non-compliant revenue	< 5%	Minimal non-permissible income
Interest income	< 5%	Negligible interest income
Cash + receivables / assets	< 33%	Real productive assets

04.Common questions

Is my FD Shariah-compliant? Only if FD-i. Check the contract type.
Can I hold US stocks? Yes, if they pass SC Malaysia screening (e.g. Apple, Microsoft).
Are structured products halal? Depends on the structure. ESG-labelled may qualify; consult Shariah advisor.
Is EPF Shariah-compliant? Simpanan Shariah option available; opt in via EPF.
Returns vs conventional? Generally comparable. Difference is in how returns are generated, not how much.

For general information only. Shariah compliance is determined by the SC Malaysia Shariah Advisory Council. Please consult a qualified Shariah advisor for specific rulings.

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