GLICs To Strengthen Governance, Capitalise On New Opportunities

PERKUKUH will create an ecosystem that benefits all stakeholders of the economy.

Prime Minister Tan Sri Muhyiddin Yassin today launched the Perkukuh Pelaburan Rakyat (PERKUKUH) Initiative, effectively starting the journey for the six Government-Linked Investment Companies (GLICs) to execute their refreshed mandate.

PERKUKUH is conceptualised to achieve five key outcomes, that is, sharpened clarity on each GLIC’s mandate; enhanced focus on developmental investments to spur new growth; crowding-in the private sector; future-proofing GLICs through improved governance and capabilities; as well as strengthening social safeguards and GLICs’ fiscal resilience.

These are necessary not only to keep up with the continuously changing investment landscape, but also to ensure that Malaysia embraces the concept of Environmental, Social, and Governance in the investment decisions of our national assets. 

Not keeping abreast of such developments could pose a risk to Malaysia’s future ability to, for example, benefit from new technology or scale up on existing technology to achieve the intended socio-economic benefits, in line with our Shared Prosperity Vision 2030.

GLICs, as key players and investors in the economy, are important contributors to Malaysia’s economic fundamentals. Hence, enhancing governance and processes will also enable the entities to remain resilient even during difficult times, which in turn will support Malaysia’s economic stability.

PERKUKUH will create an ecosystem that benefits all stakeholders of the economy.

For the GLICs, the construction of strategic and commercial investment portfolios with higher risk-adjusted returns and improved governance will result in better resilience and growth prospects. This, over time, will cascade down to better return of investments to the depositors, unitholders and pensioners.

The investment community will benefit from the development of new growth areas, which will enhance their opportunities to directly participate via the crowding-in of private investments, into both emerging and developed sectors.

The benefit to the economy is through the development to a knowledge-based and high value-added economy, hence strengthening the nation’s growth prospects and our fiscal resilience in the long run.

Most important, the rakyat will benefit from improved income prospects,more stable returns on their savings/deposits/pensions, as well as more effective and holistic social protection programmes.

The GLICs’ role in encouraging digitalisation and technology through their investments will also support Malaysia’s priority to boost our longer-term economic prospects and resilience. This will be pursued in tandem with the Government’s commitment to medium-term structural reforms to attract higher quality investments, as well as generate high-skilled and high-paying jobs.

Since the onset of the pandemic, the Government has introduced the 6R Economic Recovery Strategy (Resolve, Resilience, Restart, Recovery, Revitalise, & Reform) to rejuvenate the economy. PERKUKUH is a medium-term three-year initiative as part of the last key pillar of the 6R Strategy that is ‘Reform’. Key Performance Indicators will be clearly defined and closely tracked by MOF to ensure that sub-programmes remain on track.

The idea is to split the GLICs into sovereign funds and institutional funds to reflect their unique mandates and for easier asset-liability management.

Entities like Khazanah Nasional Bhd, Kumpulan Wang Persaraan (Diperbadankan) (KWAP), Kumpulan Wang Amanah Negara (KWAN) and Minister of Finance (Incorporated) will be listed under  sovereign funds. 

The Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), Lembaga Tabung Haji (TH) and Lembaga Tabung Angkatan Tentera (LTAT) will be under institutional funds.

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