GOVERNMENT-linked companies (GLCs) and government-linked investment companies (GLICs) must maintain a balancing act at all times.
On the one hand, as enterprises, they are expected to achieve profitability and fulfil the expectations of shareholders.
GLCs and GLICs, however, are also required to uphold environmental, social and governance (ESG) principles. This includes green energy initiatives and Bumiputera empowerment.
Institute for Democracy and Economic Affairs (Ideas) senior research director Sri Muniati Yusuf said that these objectives are not mutually exclusive, but ought to be integrated.
"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 Free Malaysia Today.
"We should not view this new agenda as one that conflicts with the need to empower Bumiputeras."
FINDING THE BALANCE
Within Malaysia, GLCs and GLICs have achieved notable success in pursuing their business goals.
For instance, Tenaga Nasional Bhd (TNB), with a market capitalisation of over RM81 billion, is among the largest entities on Bursa Malaysia. Collectively, the top 30 GLCs listed on Bursa Malaysia have a combined market value of over RM952 billion.
Many of these GLCs and GLICs have also made a mark beyond Malaysian borders.
Among GLICs, Permodalan Nasional Bhd (PNB) is one of the leading fund management companies in Malaysia. It holds significant stakes in telecommunications through its investments in CelcomDigi Bhd and Maxis Bhd, energy through TNB and Petronas Gas Bhd, and banking through Maybank, CIMB Group, and Bank Islam Malaysia Bhd.
On the sustainability front, most GLCs and GLICs have adopted responsible investment policies to address ESG issues, including environmental and social matters — three Malaysian GLICs are signatories to the Principles of Responsible Investment (PRI), a UN-backed network of financial institutions.
Many others, including Petroliam Nasional Bhd (Petronas) are actively pursuing their own green energy agenda. Petronas, for example, aims to reduce greenhouse gas emissions from its Malaysian operations to 49.5 million tonnes of carbon dioxide equivalent this year, down from 54.03 million tonnes in 2022. TNB, on its part, has committed to achieving net zero emissions by 2050 through its Energy Transition Plan.
In technological innovation, Petronas subsidiary Malaysian Refining Company Sdn Bhd is piloting an environmentally friendly sludge treatment programme aimed at recovering oil and reducing solid waste.
GLCs and GLICs in Malaysia also play a critical role in supporting the growth of Bumiputera businesses, especially through vendor development programmes. These initiatives encourage suppliers to contribute to both the green energy agenda and technological advancement.
Sri Murniati emphasised that the empowerment of Bumiputera businesses and strong corporate governance are not at odds.
"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 were set up to help the country achieve its development goals, one of which is the Bumiputera agenda.
"For the GLCs to fulfil their economic obligations and the Bumiputera empowerment agenda, they must uphold stringent corporate governance, which includes monitoring and enforcement," he said.
While acknowledging the successes achieved under the Bumiputera agenda, he called for a critical review.
"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 concluded.