The Principles of Good Governance for Government-Linked Investment Companies (PGG) will be the sole reference for the governance baseline and sustainability practices of all government-linked investment companies (GLICs) said Finance Minister Tengku Datuk Zafrul Aziz.
PGG was based on three main principles, namely leadership and board effectiveness; ensuring an optimal, qualified and credible board composition; and supporting the effective handling of investments.
“To ensure the GLIC is well run, PGG emphasises the role and responsibilities of the board. All directors must lead by example based on principles as well as duty in accuracy, transparency, and loyalty,” he added.
Tengku Zafrul said PGG was part of the GLIC/Government Linked Companies (GLC) Restructuring Programme spearheaded by the Ministry of Finance for the past 18 months, which included, among others, the Strengthening Government-Owned Investment Institutions Programme.
The preparation of the PGG had taken into account current developments and discussions on the principles and practices of best governance at the local and international levels, including the Malaysian Code on Corporate Governance (MCCG) launched by the Securities Commission Malaysia last year.
PGG also recommended the establishment of a governance structure for the oversight of environmental, social, and governance (ESG) elements in future investment strategies.
“There is a wealth of data that shows that companies that focus on ESG issues have managed to reduce costs, increase employee productivity, reduce various risks, and create more business opportunities.
“Furthermore, the COVID-19 pandemic has clearly proven that corporate companies that are always ready and practise good governance have an advantage in terms of resilience,” he explained.
GLICs consist of six organisations namely Employees Provident Fund, Perbadanan Nasional Bhd, Retirement Fund (Incorporated), Khazanah Nasional Bhd, Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentera.
The total assets under the control of these six GLICs are worth RM1.7 trillion, making GLICs among the main pillars of the country’s socio-economic development.
