Malaysia’s corporate makeover
Malaysia’s government-linked companies are at a crossroads. All are embarking on reform but are they moving quickly enough? Sudip Roy reports from Kuala Lumpur.
IT IS NOW well over two years since Malaysian prime minister Abdullah Ahmad Badawi announced a revamp of Khazanah, the state’s investment arm, with the proclamation that the proposals represented “nothing less than a remaking of Malaysia Inc”. One of its goals included reviving the country’s government-linked companies, whose performance up to that point was nothing short of underwhelming.
Khazanah set about modernizing the GLCs through a series of initiatives and performance targets. Guidelines were issued to help transform the GLCs and specific directives have been released on enhancing board effectiveness, procurement and performance management. More will follow in due course.
In addition, western-educated, younger and supposedly sharper leaders were brought in to replace old managers. These new executives were put on fixed-term contracts whose renewal depended on meeting set targets. Corporate discipline was the new mantra.
But is Khazanah’s approach working?
As far as management prowess is concerned, there has definitely been an improvement. “The quality of the management, the level of integrity of management and their general handling of finance is far better today,” says Nazir Razak, chief executive of CIMB, one of the leading GLCs.