Govt launches PERKUKUH initiative to renew GLIC capabilities

Prime Minister Tan Sri Muhyiddin Yassin said the genesis of PERKUKUH was to reimagine the role and renew the capabilities of Malaysia's GLICs and comprised 20 main initiatives that would be implemented through 2024 to achieve five key outcomes.

The key outcomes included to sharpen clarity on the mandate of each GLIC; enhance focus on developmental and catalytical investments to spur new growth and enhance the socio-economic impact; and crowd-in the private sector while streamlining the role of the government and its agencies in business.

Muhyiddin said PERKUKUH fundamentally begins by recognising the different mandates, funding structures and risk profiles of various GLICs.

"In particular, the companies will be sub-divided into two categories, namely sovereign wealth funds (SWFs) on the one hand, encompassing entities like Khazanah Nasional Bhd, Retirement Fund (Incorporated), Kumpulan Wang Amanah Negara and Minister of Finance (Incorporated).

"(On the other hand are) institutional Investors like the Employees Provident Fund, Permodalan Nasional Bhd, Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentera to better reflect their unique mandates, strategies and asset liability management," he said in his speech during the launch of PERKUKUH held virtually today.

Muhyiddin said in formulating PERKUKUH, the government drew on the deep expertise of the GLICs ecosystem, regulators, ministries, as well as industry captains including those involved in the first Government-linked companies (GLC) Transformation Programme.

"Similarly, the implementation will span a wide network of stakeholders. For instance, the Securities Commission will spearhead the 'sustainable investment standard' initiative together with Bank Negara Malaysia," he added.

He noted that together with the GLICs, these initiatives will be driven by the Finance Ministry's agency, the Implementation and Coordination Unit Between National Agencies (LAKSANA), which will act as the Programme Management Office.

Muhyiddin said there would be a rebalancing of focus between financial returns and socio-economic deliverables for the SWFs and a key priority would be on patient capital investing in a more strategic and targeted way in new growth areas.

The ecosystem built in the new growth areas would be designed to spur the crowding-in of private sector investments in the long term.

"Khazanah, for instance, will kick-start development of new growth ecosystems through its new RM6 billion Dana Impak. Already, efforts to jump-start co-investments with several international institutional investors and other sovereigns are underway as we speak," he said.

To crowd-in private investments, PERKUKUH would also streamline the relationship between the government and businesses, through among others, the review of golden shares, redefinition of previous strategic sectors, and determining new areas of national interest, Muhyiddin said.

The Prime Minister noted that this would increase the attractiveness of relevant GLCs while allowing them to operate effectively in a regulated environment.

"I would like to provide the assurance that this evolution will be gradual and goes hand-in-hand with the strengthening of the regulatory environment. I would like to stress that this exercise will be in line with the best international practices, wherein the definition and treatment of strategic assets have evolved over time."

Muhyiddin said PERKUKUH would future-proof GLICs with best-in-class governance, capabilities and strategies, stressing that governance practices would be made more robust, such as in leadership appointments whereby several guiding principles will be collectively introduced to address common issues, for instance, conflict of interests and accountability.

As for the people at large, he said this initiative would create high-quality jobs, improve household income and reduce inequality.

"The rakyat's wellbeing will be improved through more effective and holistic social protection programmes, where non-governmental organisations forge partnerships with the GLICs and GLCs will amplify efforts into gaps, beyond the basic needs provided by the government," he added.