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Tuesday 16 August 2011

Government-Linked Companies (GLCs) Transformation Programme





The transformation of GLCs into high-performing entities is critical for the future prosperity of Malaysia.
Its principal mandate is to design and implement comprehensive national policies and guidelines to transform GLCs into high performing entities and establish the institutional framework to program-manage and subsequently to oversee the execution of these policies and guidelines. The Government's efforts at improving performance in companies under its control  will have a positive  effect on the rest of the corporate sector.


GLCs and their controlling shareholders, GLICs (Government Linked Investment Companies), constitute a significant part of the economic structure of the nation. GLCs employ an estimated 5% of the national workforce and account for approximately 36% and 54% respectively of the market capitalisation of Bursa Malaysia and the benchmark Kuala Lumpur Composite Index. Even with active divestment and privatisation, GLCs remain the main service providers to the nation in key strategic utilities and services including electricity, telecommunications, postal services, airlines, airports, public transport, water and sewerage, banking and financial services.




There are 3 key principles to the GLCs Transformation including:
  1. National development foundation - the GLC Transformation Programme is a subset of the broader national development strategies that include the principles of growth with equity, improving total factor productivity, the development of human capital, and the development of the Bumiputera community.

  2. Performance focus - the underlying rationale of the GLC Transformation Programme is to create economic and shareholder value through improved performance at GLCs. Hence, specific policy guidelines and initiatives will be driven by principles of performance and meritocracy within the broader national development focus described above.

  3. Governance, shareholder value and stakeholder management - the GLC Transformation Programme, while being led by the Government, fully observes the rights and governance of shareholders and other stakeholders. Hence, the policy measures to be implemented come in the form of policy guidelines rather than rules that GLCs are expected to implement through their Board of Directors in line with good governance. In addition, and within the context prescribed above, GLCs are expected to engage in managing other valid stakeholder interests, in particular those of employees, customers, suppliers and the Government itself as regulators and policy makers.


    Source: Khazanah Nasional Berhad, Malaysia

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