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GLC Transformation Program

The GLC Transformation Program was first launched in May 2004 and is part of an ongoing effort by the Government to drive development and grow the economy. The launch saw the introduction of the K.P.I. (Key Performance Indicators), board composition initiatives, the revamp of Khazanah Nasional Bhd, as well as changes in the management of a number of GLC’s. Three key principles run through the GLC transformation program:
  1. program is part of the larger national development strategies;
  2. program is focused on enhancing performance at the GLC’s; and
  3. program takes full cognisance of matters relating to governance, shareholder value and stakeholder management.
The Establishment of PCG

To sustain the momentum created by the launch of initial measures, the Putrajaya Committee on GLC High Performance (PCG) was formed in January 2005 to follow through and catalyse the GLC Transformation Program. PCG is chaired by the Second Finance Minister, with participation from the heads of the Government-Linked Investment Companies (G.L.I.C.’s) namely Khazanah Nasional Bhd (KNB), Permodalan Nasional Bhd (PNB), Employees Provident Fund (EPF), Lembaga Tabung Amanah Tentera (LTAT) and Lembaga Urusan Tabung Haji (LTH) and representatives from the Ministry of Finance Inc. (MOF) and the Prime Minister’s Office to work together to monitor developments and to recommend further measures of improvements.

GLC Transformation Manual

The work of the PCG has culminated in a 'Transformation Manual' which was launched on 29th July 2005. The manual has two parts, the overall policy guidelines of the PCG to address some of the core challenges and guidelines, and it details of the GLC Transformation initiatives for 2005 and 2006. The manual is the result of robust and well-researched work, with more than 100 in-depth interviews conducted with GLIC CEO’s, GLC Chairman, CEO’s and Board members, institutional investors and opinion leaders, as well as extensive analysis based on Malaysia’s own programs and similar ‘best practice’ experiences from other countries.

The policy guidelines in the manual have been set out to achieve 5 objectives:
  1. to clarify the GLC mandate in the context of national development;
  2. to upgrade the effectiveness of Boards and reinforce corporate governance of GLC’s;
  3. to enhance GLIC’s capabilities as professional shareholders;
  4. to adopt corporate best practices within GLC’s; and
  5. to implement and enforce the GLC Transformation Program.
In addition to the policy guidelines,10 initiatives have been identified for development, launched and implemented across all GLC’s for the rest of 2005 and 2006. These initiatives have been set out based on their importance as levers for change, their large potential impact on value, and the unique ability of the Putrajaya Committee to drive change in these areas. The 10 initiatives are:
  1. enhance Board effectiveness;
  2. strengthen directors capabilities;
  3. enhance G.L.I.C. monitoring and management functions;
  4. improve regulatory environment;
  5. clarify social obligations;
  6. review and revamp procurement;
  7. optimise capital management practices;
  8. manage and develop leaders and other human capital;
  9. intensify performance management practices; and
  10. enhance operational improvement.
The 10 Initiatives for 2005 and 2006 should be rolled-out over the next 17 months. The Initiatives are work in progress. The manual highlights the various stages of these initiatives. Each initiative includes the following:
  1. Terms of Reference: A description of the Initiative outlining “what” to expect;
  2. Guiding Principles: A set of detailed guidelines to assist GLCs in their effort to implement the initiatives derived from the Policy Guidelines. All GLCs are encouraged to adopt and adhere these guidelines.
  3. Supporting Material for Guiding Principles: Where relevant, this will elaborate on the guiding principles by providing examples, templates and other information;
The Transformation Manual will be augmented with further guidelines and supporting materials, such as 'How-to Books', templates, tools and best practice case studies, to make implementation that much easier. In certain instances, pilot projects for the 2005 and 2006 initiatives have been implemented at selected GLIC’s and GLC’s to create the momentum for change and to access/gauge execution challenges.

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