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GLC Transformation Programme

The GLC Transformation Programme was launched in May 2004 and was part of an on-going effort by the Government to drive development and grow the economy. The launch saw the introduction of key performance indicators (KPI), board composition initiatives, the revamp of Khazanah Nasional Bhd, as well as changes in the management of a number of GLCs. Three key principles ran through the GLC transformation programme (Programme):
  1. The Programme was part of the larger national development strategies;
  2. The Programme was focused on enhancing performance at the GLCโ€™s; and
  3. The Programme took full cognisance of matters relating to governance, shareholder value and stakeholder management

The Establishment of the Putrajaya Committee on GLC High Performance (PCG)

To sustain the momentum created by the launch of initial measures, the PCG was formed in 2005 to follow through and catalyse the GLC Transformation Programme. The PCG was initially chaired by the Minster of Finance II, and thereafter by YAB Prime Minister, with participation from the heads of the Government-Linked Investment Companies (GLICs) namely Khazanah Nasional Bhd (KNB), Permodalan Nasional Bhd (PNB), Employees Provident Fund (EPF), Lembaga Tabung Angkatan Tentera (LTAT) and Lembaga Tabung Haji (LTH) and representatives from the Ministry of Finance Inc. (MOF) and the Prime Ministerโ€™s Office (PMO) to work together to monitor developments and recommend further improvement measures.

GLC Transformation Manual

The GLC Transformation Manual (Manual) was launched on 29th July 2005. The manual consisted of two parts, i.e. (i) the overall policy guidelines of the PCG to address some of the core challenges and guidelines, and (ii) details of the GLC Transformation initiatives for the years 2005 and 2006. The Manual was the result of robust and well-researched work, with more than 100 in-depth interviews conducted with GLIC & GLC Chairmen and CEOs, Board members, institutional investors and opinion leaders, as well as extensive analysis based on other programmes in Malaysia and similar best practices from other countries. The policy guidelines in the manual were 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 GLCs;
  3. to enhance GLICโ€™s capabilities as professional shareholders;
  4. to adopt corporate best practices within GLCs; and
  5. to implement and enforce the GLC Transformation Programme.
In addition to the policy guidelines, 10 initiatives were identified for development, launched and implemented across all GLCs throughout the Programme journey. These initiatives were set based on their importance as levers for change, their large potential impact on value, and the unique ability of the PCG to drive change in these areas. The 10 initiatives were titled as follows:
  1. Enhance Board effectiveness
  2. Strengthen directors capabilities
  3. Enhance GLIC 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
  10. Enhance operational improvement
The 10 Initiatives were rolled-out over an 18 month period between July 2005 and December 2006. The Transformation Manual highlights various stages of these initiatives. Each initiative included the following:
  1. Terms of Reference: A description of the Initiative that outlined “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 were encouraged to adopt and adhere these guidelines.
  3. Supporting Material for Guiding Principles: Where relevant, this section helped to elaborate the guiding principles by providing examples, templates and other information.
The Manual was augmented with further guidelines and supporting materials, such as ‘How-to Books’, templates, tools and best practice case studies, to make implementation relatively easier. In certain instances, pilot projects for the selected initiatives were implemented at selected GLICs and GLCs to create the momentum for change and to access/gauge execution challenges.