Issues relating to governance and leadership in public entities in Malaysia

1. Governance and
Leadership in Public
Entities
Nik Mohd Hasyudeen Yusoff
6 July 2021

2. Complexity of public entities
Federal
ministries
State
departments
Federal agencies
State agencies
Federal GLICs &
GLCs
State GLCs
The different groups of public sector entities have different governance structures
and are governed differently
Public entities in Malaysia are not homogeneous and established for different
purposes
The purpose and scope of each public entity is dependent on the instrument which
establishes the entity - law/enactment/constitution

3. Regulators
Government Beneficiaries
Stakeholders
Corporate governance Business governance
Internal control
Assurance
Strategy
People
Process
Finance
Attaining public
benefits
Role and structure
Risk management
Society
Compliance
Stewardship
Those in-charge of governance sets tone
and oversees management with division of
responsibilities based on the delegation of
power and authority by them or statute
Culture
“Business development”
A framework to assess governance structure of public entities
Competence
Leadership
Conscience
Courage Power
Communication Trust

4. Purpose
• Described clearly in law/enactment/instrument,
some may be behind time
• Scope creeping as the entity evolves over time and
changing political landscape
• Balancing between the interests of the stakeholders
• Do stakeholders have any say?

5. Clarity of establishment
instruments
• Principle-based vs detailed prescriptions
• How to deal with evolution of governance practices
over time
• Who has the power, extend of those power and
accountability

6. People in-charge of
governance
• Basis of appointment, competent for the job?
• Fit and proper?
• Possible to have succession planning?
• Continuity of strategy and policies?
• Separation of power for check and balances

7. Governance standards
• Who decides on the strategic direction, objectives, action
plans and performance measures?
• Financial reporting standards not as robust as those
applied in corporate sector
• Capabilities of auditors auditing public entities as some
are complex and require specialisation
• Consequences of failure of governance - reliance on
Penal Code and doesn’t have specific offences for
breach of corporate governance practices

8. Supervision
• Some public entities are managing huge amount of
funds and cause systemic risk to the financial system
• This requires highly effective risk management and
internal control within the applicable legal framework
• Quality of talents in delivering upholding the mandate
• Who supervises?

9. Leadership
• Competent and trustworthy
• Must have clarity as to the reason being in the organisation
• Have clarity on the purpose and how to deliver the
mandate in the interest of the beneficiaries
• Able to navigate through the complexity surrounding the
entity
• Have the courage to do what is right based on the mandate
of the entity, even when there is no security of tenure