Retail Sukuk Malaysia: How to Buy Government Bonds with Small Capital
•By wan mahersaham
Artikel ini juga tersedia dalam Bahasa Melayu
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For most Malaysians, the phrase "government bonds" feels exclusive - something only owned by big institutions like EPF, Tabung Haji, or investment banks. The reality? You can start investing in Malaysian government bonds and sukuk with as little as RM1,000 - through the Exchange Traded Bonds & Sukuk (ETBS) platform on Bursa Malaysia.
Malaysia is the world's largest domestic sukuk market - accounting for 50.6% of global sukuk issuance in 2025. Yet ironically, many local retail investors don't know how to access this market. This article breaks down every available entry point - from ETBS on Bursa Malaysia, MGS, GII, to digital sukuk like Sukuk Prihatin - and shows you concrete steps to start investing without needing to be a millionaire.
Retail sukuk are sukuk sold specifically to individual investors with lower entry capital compared to institutional sukuk. Traditionally, Malaysia's bond and sukuk market was exclusive to high-net-worth and institutional investors like EPF, with minimum amounts starting from RM250,000 and above.
To democratize this market, the Securities Commission Malaysia (SC) has developed a retail bonds and sukuk framework. This framework allows issuers to offer sukuk to retail investors through two main channels:
Retail sukuk differ from conventional bonds in their Shariah structure - they don't involve riba (interest) but are based on Islamic contracts such as Murabahah, Ijarah, or Wakalah. For a deeper foundational understanding, see our article: Bonds and Sukuk - Differences & How to Invest.
Three main reasons why Malaysian retail investors are turning to sukuk and government bonds:
For Muslim investors, sukuk also provide an opportunity to invest in Shariah-compliant instruments with structures approved by the issuer's Shariah advisors and the Securities Commission.
Before you buy, understand your options:
Malaysian Government Securities (MGS) and Government Investment Issue (GII) are two main types of government securities. The differences:
Latest yields (March 2026) show 10-year MGS yield at 3.55%, and 10-year GII at 3.55%. These yields are usually competitive with bank fixed deposit rates, but offer the advantage of liquidity - you can sell bonds in the secondary market anytime.
This is the most popular channel for retail investors. ETBS are bonds and sukuk listed and traded on Bursa Malaysia - just like shares. You use a regular broker account to buy or sell.
According to Bursa Malaysia, ETBS:
Popular ETBS issuers include DanaInfra Nasional Berhad, Khazanah Nasional, and several other major GLCs. Each ETBS has a maturity period (5, 10, 15, or 20 years) and a coupon rate fixed at issuance.
In September 2020, the Malaysian government launched Sukuk Prihatin - the country's first digital sukuk - as part of the COVID-19 economic recovery plan. Its unique features:
Sukuk Prihatin was fully redeemed in September 2022 with a total issuance of RM666 million - far exceeding the original target of RM500 million. This demonstrates strong demand for retail sukuk products in Malaysia.
For investors who want exposure to sukuk without picking individual instruments, bond unit trust funds are a practical option:
Minimum capital usually starts from RM100-RM1,000 with sales charges of 1-3%. Average annual returns for Malaysian bond funds are around 4-5% - lower than equity funds but more stable. For a unit trust primer, see 5 Reasons to Choose Unit Trust.
Here's the practical process for Malaysian retail investors:
You need two accounts to trade ETBS:
The same CDS account you use to buy stocks can be used for ETBS - no need to open a new one.
Browse Bursa Malaysia or your broker platform for the list of active ETBS. Factors to consider:
Same as buying shares. Enter a limit order with:
Once the buy is successful, the ETBS will be credited to your CDS account. Coupons will be paid according to the issuer's schedule (usually semi-annually) directly to the bank account linked to your CDS. You can hold until maturity (receive principal back) or sell on the secondary market anytime.
Although bonds and sukuk are considered low-risk investments, they're not risk-free:
Instead of parking all your money in sukuk, consider a layered investment strategy:
Instead of buying one RM10,000 sukuk maturing in 10 years, buy 5 sukuk of RM2,000 each with maturities staggered (1, 3, 5, 7, 10 years). Each year one matures - usable to reinvest at the latest rate or as cash flow.
Malaysian retail investors are typically advised to allocate based on age:
Sukuk act as stabilizers - when stocks fall in the short term, sukuk usually preserve portfolio value.
Instead of spending coupons received, reinvest them in stocks, ETFs, or other sukuk. The compounding effect over 20 years can multiply your initial capital several times.
| Instrument | Min Capital | Estimated Return | Risk | Liquidity |
|---|---|---|---|---|
| ETBS (Retail Sukuk) | RM1,000 | 3.5%-5% | Low | Medium (sell on Bursa) |
| Bank Fixed Deposit | RM500 | 2.5%-3.5% | Very low | High |
| ASB (Bumiputera) | RM10 | 5%-6% | Very low | High |
| Bond Unit Trust | RM100 | 4%-5% | Low | High (T+3 redemption) |
| Bursa Malaysia Stocks | RM100 | 8%-10% (avg) | Medium-High | Very high |
| SSPN-i Plus | RM30/month | 4.05% + tax relief | Very low | Medium |
Retail sukuk aren't for those who want to get rich quick - they're for those who want to grow wealth steadily and receive regular cash flow. For comparison with other popular instruments, read EPF vs ASB vs Tabung Haji Dividend Comparison 2026.
Sukuk are based on Shariah contracts (Murabahah, Ijarah, Wakalah) and don't involve riba (interest). Conventional bonds are traditional debt that pays interest. For Muslim investors, sukuk are the primary choice. According to global data, the Malaysian Ringgit leads with 50.6% of the global sukuk market.
For ETBS on Bursa Malaysia, the minimum is 1 lot = 10 units × RM100 = RM1,000. For Sukuk Prihatin (if reissued), the minimum is RM500. For bond unit trusts, the minimum can be as low as RM100.
No. PIDM only insures deposits at Malaysian banks. Sukuk and government bonds are not PIDM-insured, but MGS/GII are directly guaranteed by the Malaysian government. For corporate sukuk, it depends on the issuer's credit rating.
When market interest rates are high - because new sukuk yields will also be high. When Bank Negara cuts rates, existing bond prices rise but new issuance yields fall. As of 2026, Malaysia's OPR is 3.00% - a moderate level for entry.
Yes. The same CDS account can hold stocks, ETFs, and ETBS. You can diversify your entire portfolio in one place - simplifying management. To open an account, see our guide on how to activate CDS with the Bursa Anywhere app.
For individual investors, coupons from MGS and GII are exempt from income tax. Corporate sukuk and other ETBS are subject to individual income tax rates. For broader tax strategy, read our Personal Finance Management Guide.
Sukuk holders typically rank higher than shareholders in claims priority. But if the company has insufficient assets, you can still lose principal. This is why credit ratings matter - AAA or AA ratings are safest. RAM Ratings and MARC are the two main rating agencies in Malaysia.
ETBS direct ownership = you have full control, no management fees. Bond unit trust = automatic diversification but with management fees of 1-1.5% annually. For small capital (RM1,000-RM5,000), unit trust may be more practical. For larger capital (RM20,000+), direct ETBS is more cost-effective.
Retail sukuk in Malaysia are no longer an institutional monopoly - with ETBS on Bursa Malaysia, capital as low as RM1,000 is enough for you to start. Stable returns of 3.5%-5% per year, government protection for MGS/GII, and Shariah structures for Muslim investors make sukuk a strategic choice for portfolio diversification.
What matters: don't view sukuk as a substitute for stocks - they are complementary. The combination of stocks (for growth) + sukuk (for stability + cash flow) provides better long-term portfolio resilience than holding just one asset class.
The easiest way into the world of retail sukuk is through the same CDS account you use to buy stocks.
Open a CDS Trading Account to start investing in ETBS, retail sukuk, and stocks on Bursa Malaysia - and also access foreign stocks like the United States and Hong Kong.
Download our Free Stock Market Basics Ebook to learn the foundations of investment analysis before making decisions with your own capital.