During the period, the leading GLCs also returned a staggering RM108.3 billion in dividends to shareholders, including the government, with the ultimate beneficiary being the rakyat.
The G20 companies are controlled by five government-linked investment companies (GLICs), namely Employees Provident Fund (EPF), Khazanah Nasional Bhd, Lembaga Tabung Angkatan Tentera (LTAT), Lembaga Tabung Haji (LTH) and Permodalan Nasional Bhd (PNB). Its original list comprised of 20 GLCs but current list stands at 16 due to various mergers, demergers and other corporate exercises over the years.
High-performing entities: Government-linked firms significantly support the nation’s ambition of becoming a developed nation
The G20 are expected to graduate from the programme next Wednesday, as it marks the completion of the decade-long journey since its official launch on July 29 2005.
The G20 includes CIMB Group Holdings Bhd, Axiata Group Bhd, Malaysia Airports Holdings Bhd (MAHB), Malayan Banking Bhd (Maybank), Telekom Malaysia Bhd (TM), Tenaga Nasional Bhd (TNB), UEM Group Bhd, UMW Holdings Bhd and Sime Darby Bhd. Other G20 companies are Malaysia Building Society Bhd (MBSB), Chemical Company of Malaysia Bhd (CCM), BIMB Holdings Bhd, TH Plantations Bhd, Affin Holdings Bhd, Malaysian Resources Corp Bhd (MRCB) and Boustead Holdings Bhd.
These public-listed companies have recorded a threefold increase in combined market capitalisation on Bursa Malaysia, surging to RM425 billion over a 10-year period from May 14 2004. Upon graduation from the GLCT programme, the GLCs are expected to be at par with competitors in the country, with several companies emerging as regional champions.
At the GLIC level, Khazanah, with seven companies within its stable, said it continuously collaborates with its investee companies to drive greater performance. Its executive director Mohd Izani Ashari said, this is being done through Khazanah’s Five-Point Engagement Framework that guides the collaborative investment approach with its investee companies.
“As an active shareholder, we help to ensure that there is strong and capable leadership within each investee company that will execute the appropriate business strategies. “
We work with them to implement key systems and controls such as governance and risk management frameworks and talent and performance management system,” said Izani.
Khazanah, in its capacity as the PCG secretariat, pointed that on an aggregate basis, the G20 are continuing their upward trajectory in delivering high performance.
Izani said the transformation of the GLCs into high-performing entities will significantly support the nation’s ambition of becoming a developed nation with high-income, sustainable and inclusive economy.
“To date, the GLCs have achieved wide-ranging results, strengthened financial capacity and contributed significantly to the national economy and all stakeholders,” he added.
In 2013, the G20 achieved an economic profit of RM2.6 billion, up RM8.4 billion from an economic loss of RM5.8 billion in 2005. G20’s combined net profit grew at a compound annual growth rate of 11.1 per cent, from 2004 to 2013, moderating to RM25.6 billion in 2013, from the all-time high of RM26.1 billion in 2012.
The G20 are currently generating revenue from operations and assets in 55 countries with their share of assets (as a percentage total assets) having grown to 28.7 per cent, from 11.6 per cent, between 2004 and 2013.
Over the same period, the G20 non-bank overseas share of revenue grew from 30.3 per cent to 33.8 per cent while G20 bank overseas share of net interest income also surged to 20.8 per cent from 15.2 per cent. Several GLCs within the G20 which are already regional champions include Axiata, CIMB, Maybank and Sime Darby. Other GLCs which have successfully extended their footprints overseas are CCM, MAHB, UEM and UMW.
On the domestic front, the GLCs have benefited all stakeholders, including the average Malaysian citizens through the companies’ award-winning quality products and services which have created a positive impact on consumers.
PNB for example, has been mobilising people’s savings to encourage equity ownership by the rakyat and consequently their participation in the nation’s corporate wealth since its establishment in 1978.
Its president and group chief executive Tan Sri Hamad Kama Piah Che Othman said through the innovative products offered by PNB, even those with limited capacity and even those with no capacity to save have been able to invest.
“To date, PNB has mobilised more than RM200 billion of savings and channeled them into equity holdings in various corporations in Malaysia, which is equivalent to more than 15 per cent of Bursa’s market capitalisation,” he said.
Hamad Kama Piah said PNB’s assets under management have grown tremendously from RM52.1 million at its inception to RM276 billion to date, while more than RM130.5 billion of dividends and bonuses had been distributed to its unit holders. Lembaga Tabung Haji chief executive officer Tan Sri Ismee Ismail on what is next upon the GLIC graduation, expressed his utmost confidence that graduation is just the beginning.
“Graduation is just the beginning. I believe for the GLICs, the challenges upon us will be that we have to spread our wings beyond what we have already achieved and start giving back to the people. “
Transformations need to be coupled with giving back, at least the business communities, as well as to the country’s socio-economic environment.
“One of the good things we have developed in GLICs is the CSR initiatives and this need to be emulated by other sectors. I think the private entities that are listed and are non-GLCs need to find their CSR role,” said Ismee.
Championing the corporate governance as the thrust of G20 transformations, the Employees Provident Fund’s (EPF) chief executive officer Datuk Shahril Ridza Ridzuan said EPF, in being a big investor to about 200 companies, tries to ensure that the companies adopt the corporate governance put in place.
“Not all GLCs are the same as they have different histories and backgrounds. Most of the transformations and challenges are also different, depending on the routes and directions they were taking. Therefore, they all have different challenges to address.
“Our role is to support the development of common principles with the understanding that every business is different. There are certain principles that need to be understood such as corporate governance, integrity and performing business in an ethical manner.
“Our stance has always been to never impose a single standard on everybody. But the actual process, we leave it to the respective companies as they have to find a balance that makes sense to them, depending on the nature of businesses,” he said.
Shahril said the EPF believes that there have been improvements in corporate governance, not only in the 20 GLCs, but also the wider corporate companies as well. “
Now that we have gone passed the ‘teaching’ phase, it is time for us to move forward and evolve.”
Besides customers, the G20 also benefited employees, with a total of RM513 million spent on human resource training and development in 2013, involving nearly 130,000 non-executive personnel.
This includes upward mobility schemes designed to provide opportunities for the non-executives to grow professionally. The GLCs continued to execute various vendor development programmes, benefitting suppliers, besides being actively involved in numerous corporate responsibility (CR) initiatives which largely contributed to the society.
There were 60,666 suppliers registered with the G20 in 2013 with RM75.1 billion worth of business opportunities awarded to them, according to the GLCT programme report card for June 2014.
In giving back to the community, the G20 had spent some RM4 billion for their CR initiatives from 2004 to 2013. A total of 5,892 hard-core poor families have also benefited from the GLCs’ support through Yayasan Sejahtera set up under the PCG and Khazanah.
Moving forward, Izani who heads the PCG secretariat, expressed his hope for GLCs to continue the spirit of the programme and continue to leverage on the collective strength of the network for collaboration, knowledge sharing and synergy.
He said the secretariat is currently finalising a stock-take exercise to assess programme performance to-date and to propose recommendations for the future.
Meanwhile, commenting on the 10-year transformation programme and beyond, LTAT chief executive Tan Sri Lodin Wok Kamaruddin said the armed forces fund will continue its journey to take the GLCs to a new level of performance.
“We will continue the journey, moving the companies from average to excellence, to glory, and then to distinction, thereby creating more and more global champions and best-in-class companies in Malaysia. “
By doing that, we should be able to better realise our dreams and aspirations and join the league of developed nations in 2020, for the benefit of the current and future generations of Malaysians, especially the members of the armed forces,” he added.
To mark the completion of the GLCT programme, GLCs are scheduled to showcase their activities and achievements via a GLC Open Day event in August, to engage the public and report on the programme’s final outcomes.