Monday, 26 December 2011

Khazanah and GLC roles in National Transformation Agenda

At Invest Malaysia in March last year, at the launch of the New
Economic Model (NEM), Khazanah had outlined a five-point approach to play their
part in executing the NEM.

First, for the GLC Transformation Programme, to diligently stay the course as they
moved into the seventh year of the ten-year programme. Khazanah have outlined
clearly the various programmes and “rainbow-coloured books” and the use of KPIs and
so on in delivering this first principle. Governance and integrity is also part of this track,
and it is critical as the program grows, and even more so as it gets some successes, that
they must remain vigilant against such impostors that can breed complacency and hubris.

Second, to continue with the gradual regionalization programme of their key
companies so as to benchmark and integrate their national champions to compete to
become regional champions and beyond.

Third, to contribute significantly to private sector investments in new areas of growth
for the new economy, especially in targeted sectors including, inter alia, leisure &
tourism, healthcare, education services, Islamic finance, information and
communication technology (ICT) and creative industries.

Fourth, to intensify the collaboration and co-investments between Khazanah and
GLCs and non-GLCs private sector, both at home and abroad.

Fifth, to diligently focus on core competencies. This means continuing with the
orderly exit of non-core and non-competitive assets at the appropriate time. A
corollary of this is for a better, more level playing field and better regulatory
management to emerge, working with the Government and other industry players in
the process.

These are the five key roles of GLCs that they have charted and are indeed implementing,
to not just produce the “Gold” in the New Economic Model era and the new Malaysia Inc. but, to help contribute towards a new and better economic success.

It is in this regard, GLCs are taking the principle of focusing on core competencies, of taking no free lunch, but to instead build a strong kitchen and develop good cooks, continues to be at the top of our agenda. While those are the five specific roles for GLCs under the New Economic Model, indeed, there is now, in addition, a sixth role, specifically for Government Linked Investment
Companies (“GLICs”)

That is the imperative to better optimize the pools of national savings and funds residing in GLICs through a streamlining of investment styles and mandates. Perhaps an early manifestation
of this is the co-investment and streamlining of ownership between EPF and UEM in the ongoing PLUS acquisition and toll restructuring. In this case, with some careful design and proper execution, khazanah will be able to solve concurrently and balance the interests of minority shareholders, bond holders, toll users, taxpayers and indeed better match the different risk appetites and return objectives of two different GLICs. Khazanah is striving to complete this imminently and this efforts reflect an example of innovative and proper rebalancing that serves the interests of all valid stakeholders.

( Source: Adapted from a speech by Tan Sri Azman Mokhtar, CEO of Khazanah Nasional Berhad )

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