Like all enterprises, there is the business agenda to pursue, ensuring profitability to meet shareholders’ expectations.
But GLCs and GLICs are also expected to meet environmental, social and governance (ESG) requirements, and that includes, among others, the pursuit of a green energy agenda and, more importantly, Bumiputera empowerment.
These objectives are not mutually exclusive, according to Sri Murniati Yusuf, the senior research director at the think tank Institute for Democracy and Economic Affairs (IDEAS).
“GLCs were, in fact, originally established to support the Bumiputera empowerment agenda, but in the current environment, a lot more is expected of them,” she told FMT.
“We should not view this new agenda as one that is in conflict with the need to empower Bumiputeras.”
In fact, she said, both agendas must be integrated effectively for the benefit of both – the GLC and the Bumiputera.
Corporate agenda
In the pursuit of their business objectives, the GLCs and GLICs have done fairly well.
Within Malaysia, GLCs are big. For instance, energy producer Tenaga Nasional Bhd (TNB) now has a market capitalisation of more than RM81 billion, making it one of the biggest entities on Bursa Malaysia.
Collectively, the top 30 GLCs that are listed on Bursa Malaysia have a combined market capitalisation of more than RM952 billion.
Many have already spread their wings beyond Malaysian shores to establish a foothold around the world.
Malayan Banking Bhd (Maybank), the country’s largest financial institution, has a global network of 2,200 branches and 20 offices. It is also one of the top five banks in Southeast Asia.
Among GLICs, Permodalan Nasional Bhd (PNB) is one of the largest fund management companies in Malaysia. It has an interest in telecommunications through its investments in
CelcomDigi Bhd and Maxis Bhd, energy through TNB and Petronas Gas Bhd, and banking through Maybank, CIMB Group Holdings Bhd and Bank Islam Malaysia Bhd, among others.
Ensuring sustainability
Most Malaysian GLICs and GLCs have already included policies to address ESG issues as part of their responsible investment policies. These include engaging in environmental and social matters.
Three Malaysian GLICs are already signatories to the Principles of Responsible Investment (PRI), a UN-backed network of financial institutions working together in pursuit of sustainability.
Many others, such as Petroliam Nasional Bhd (Petronas), are actively pursuing their own green energy agenda.
For instance, Petronas plans to reduce the greenhouse gas emissions from its Malaysia operations to 49.5 million tonnes of carbon dioxide equivalent this year from 54.03 million tonnes equivalent in 2022.
In 2021, TNB announced that it would achieve net zero emissions by 2050 under its TNB Energy Transition Plan.
In the area of technological innovation, the oil and gas sector leads the way. A Petronas subsidiary, Malaysian Refining Company Sdn Bhd, is piloting a programme that involves the use of environmentally-friendly chemicals to treat sludge from which to recover oil and in the process reduce the volume of solid waste.
Support for Bumiputera businesses
Apart from the sustainability agenda, GLCs and GLICs in Malaysia have yet another responsibility – supporting the growth of Bumiputera businesses.
One of the major components of the Bumiputera agenda is to develop suppliers under the vendor development programme. The suppliers in the programme are expected to support the GLCs’ green agenda and technological pursuits.
“When these goals are achieved, both sides – the GLC and the supplier – will benefit,” Sri Murniati pointed out.
She stressed that ensuring corporate governance and empowering Bumiputera businesses should not be mutually exclusive either.
“If the programmes are designed with transparency and adequate disclosure, the Bumiputera agenda can become a cornerstone of corporate governance for GLCs too,” she added.
Economist Rajah Rasiah noted that GLCs had been set up to help the country achieve its development goals, one of which is the Bumiputera agenda.
Nonetheless, he said, a competitive environment where Bumiputera businesses can integrate into the wider society of Malaysia is essential.
“For the GLCs to fulfil their economic obligations and the Bumiputera empowerment agenda, they must uphold stringent corporate governance, which includes monitoring and enforcement,” Rajah told FMT.
He said that while a level of success has been achieved through the Bumiputera agenda, “there still is room for improvement”.
“A critical review must be conducted. Since GLCs operate in an open business environment, there is a clear need to establish a business charter as enshrined in world-class corporations, which is essential for success,” he added.