GLICs, GLCs are catalysts for the country’s post-pandemic recovery

EXCELLENCE is a journey, not a destination.

It is a concept I hold on to since I became the Finance Minister in March, 2020.

At that time, Covid-19 was beginning to have an impact on our economy and the public’s health.

Over the last two years, the government implemented various aid packages totaling RM530 billion, the majority of which were short and medium-term measures.

I have also discussed about long-term reforms with my colleagues at the Finance Ministry since Covid-19 has highlighted a number of structural issues in our economy.

To accomplish this, I would always ask my colleagues at the ministry to use the concept of systems thinking which is an analytical and holistic approach focusing on how each part of the ecosystem are interrelated and how the systems function within the context of local and global economy.

I believe that a well-established ecosystem has the potential of resolving various issues and problems easily.

That is why more than a year ago, we paired our economic restructuring vision with rethinking of roles, functions and capabilities of government-linked investment companies (GLICs) and government-linked companies (GLC).

This is crucial because despite the fact that the government had launched a 10-year GLC Transformation Programme in 2005 to improve the performance of GLICs and GLCs, many of the planned developments in various sectors faced setbacks due to Covid-19 within the two years.

Before I elaborate on the reorganisation of GLICs and GLCs by the ministry, it is important to remember their roles in the country’s nation building.

From the electricity that powers our homes, the fuel that mobilises our vehicles, the clean water, the rice we eat, the highways we use to travel to other states, the funds that secures employees’ retirement to the banks that process our financial transactions.

The services provided from various GLICs and GLCs are pervasive in our lives that we often take them for granted.

For example, Petroliam Nasional Bhd has not only played an important role in the country’s socioeconomic development since its establishment in 1974, but it has also grown to become a Fortune 500 company with operations globally.

Another example is the Employees Provident Fund (EPF) founded in 1951 to manage its members' retirement fund, and is now one of the largest pension funds in the world.

Various GLICs and GLCs have also played a crucial role to enable SMEs and businesses in various sectors and industries to thrive, particularly through their ecosystem and vendor programmes.

For example, the Iskandar region development by Khazanah Nasional Bhd has benefitted many SMEs in property development.

Corporate companies such as Axiata Group Sdn Bhd, Malayan Banking Bhd, CIMB Group Holdings Bhd and the UMW Group have also succeeded in expanding its businesses in Asean, benefitting many other companies along the way.

Strategic investment

In fact, if an agency supported by the government did not build strategic infrastructures such as highways, public transportations or the 5G network, the private sector would not invest in such projects.

In short, since many decades ago, the government has made strategic investments in GLICs and GLCs to achieve its policy goals outlined in various Malaysia Plans.

It is very clear that GLCs are important policy agents to assist Malaysia to recover from the serious economic and public healthcare crises.

Therefore, the ministry has spent the last one and a half years to reorganise and clarify the GLIC and GLC mandate to improve its capabilities to help the government revive the economic damage caused by the pandemic.

Among the initiatives introduced are new ecosystem growth, turnaround assets strategy and sustainable investment standards.

These efforts are expected to take five years, and we have been at it for more than a year.

For example, various key performance indicators (KPIs) have been set to ensure that the profit-oriented GLICs and GLCs are not only viable in making profit, but also have a clear plan to implement environmental, social and governance or ESG, paired with well-formulated strategies to drive focus and investments into future growth sectors.

The systems thinking approach is also a main principle for the scope expansion of GLICs and GLCs Disaster Relief Network (GDRN) that was re-launched by the Prime Minister in March under its new name – GLC Demi Rakyat dan Negara.

Besides disaster relief, the GDRN’s expanded scope is better-coordinated with existing GLIC and GLC social impact contribution in three key areas namely education, sustainable livelihood and well-being (including the environment), and humanitarian aid.

At the same time, it is to improve the observation process and achievement of the GLIC and GLC corporate social responsibility (CSR) initiatives.

On April 15, the ministry launched the Principles for Good Governance (PGG) to guide GLICs and GLCs on three main board of directors-related principles - Leadership and Board Effectiveness, Strengthening the Composition of Board and Promoting Investment Effectiveness and Transparency of Investment.

Among the objectives under the main principles are related to ESG matters such as ensuring women are on the board of directors list, applying the right criteria and appointing directors based on quality, as well as ensuring their professional development for an optimum corporate performance.

One of the key targets is to ensure that GLICs and GLCs’ operations will be stronger, to allow them to contribute more effectively and meaningfully to nation building, as well as to assist the country in developing resilience in facing shock and pandemic threat in the future.

These objectives would not be possible if we do not change how we tackle the structural issues.

Instead, by ensuring that everything is looked at holistically, all GLICs and GLCs would get to clearly see how their contributions had supported the nation building as a whole.

Moving forward, I am confident that with the support of all key stakeholders, we will be able to continue the systemic reforms in making GLICs and GLCs the catalysts for the country’s recovery and to pave way for the nation to achieve the next level of sustainable growth.

Tengku Datuk Seri Zafrul Tengku Abdul Aziz is Malaysia’s Finance Minister