Kota Kinabalu: University College Sabah Foundation Chairman Datuk Dr Mohd Yaakub Johari
(pic) said Sabah’s government-linked companies need deep structural reform rather than superficial changes if they are to fulfil their original mandate of driving industrialisation and economic development across the State.
“Weak governance, inadequate oversight and slow economic transformation have prevented many State GLCs from achieving their intended goals,” said Mohd Yaakub, who is also a member of Permodalan Nasional Berhad’s Board of Directors, on the TV Teh Tarik Podcast@SG, recently.
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He traced Sabah’s GLCs to the administration of Tan Sri Harris Salleh, when they were established as development catalysts for strategic industries, including oil and gas, pulp and paper, and other resource-based sectors.
The companies were designed to operate with greater flexibility than government departments, attract private financing, create employment and stimulate economic growth, particularly in less-developed regions.
“However, performance across Sabah’s GLCs has been uneven over the decades,” he said.
“Some GLCs have demonstrated that the model can work, while others illustrate what happens when governance and oversight fail,” he added.
He cited Sabah Energy Corporation Sdn Bhd as a positive example, noting its ability to generate dividends for the state government and maintain relevance in energy resource development.
“By contrast, Sabah Forest Industries Sdn Bhd, once intended to anchor the pulp and paper industry, collapsed under heavy debt and operational inefficiencies before ceasing operations in 2016.
“The SFI’s failure resulted from poor financial management, weak corporate governance, operational inefficiencies, outdated infrastructure, declining market conditions and unresolved land issues, problems that persist in other underperforming GLCs.
“At the core of many failures are weak governance, inefficient operation, poor financial management, and a lack of oversight,” he said, adding that effective GLC governance requires clear separation of roles.
“The chairman must provide board leadership, ensure accountability and represent the board. The board of directors serves as the apex decision-maker, responsible for overall direction, policy, strategy, oversight and regulatory compliance.
“The CEO must execute board decisions and manage daily operations according to approved policies and directives.
“While board appointments are often influenced by political considerations, political involvement is not inherently problematic if appointees are qualified, experienced and balanced in skills and diversity.
“Problems arise when appointments are made purely on political grounds without regard to merit. That undermines professionalism, public trust and long-term performance,” he said.
He said reviving underperforming GLCs requires more than piecemeal reforms.
“Restructuring must begin by identifying root causes of failure, whether external factors such as global economic fragmentation, technological disruption and volatile macroeconomic conditions, or internal issues including governance weaknesses, operational inefficiencies, financial mismanagement and lack of professionalism,” he said.
He welcomed recent efforts by the Chief Minister to introduce KPI-based performance monitoring and quarterly reporting, including the possibility of closing persistently non-performing entities.
“There must be no business-as-usual mindset. Reform must be comprehensive, leadership professionalism, governance, financial restructuring, operational turnaround, risk management, digitalisation and ESG compliance must move together,” he said.
Among his key proposals is establishing a High-Level Independent GLC Oversight Committee under the Chief Minister’s Office, with representation from the Finance Ministry.
“The committee would monitor performance, identify governance gaps, reduce duplication, enhance synergies and recommend corrective actions,” he said.
He also called for a Sabah GLCs Transformation Plan, aligned with the Madani Economic Framework, SMJ 2.0 and the spirit of MA63, to provide long-term strategic direction.
“This would include standardised guidelines on board composition, tenure, responsibilities and remuneration, as well as efforts to place more Sabahans in leadership roles within national GLCs at the board of directors and top management levels.
“GLCs should venture into strategic growth sectors such as renewable energy, healthcare and biotechnology, digital economy, artificial intelligence, semiconductors, logistics, maritime and aerospace, while being mindful not to compete with and crowd out the private sector,” he said.
To safeguard public interest, Yaakub supported mandatory vetting of all GLC joint ventures by the State Attorney-General’s Office and the Finance Ministry before Cabinet approval.
He noted that despite managing substantial public assets, Sabah GLCs are not currently required to table regular financial and performance reports in the State Legislative Assembly.
“While a monitoring committee exists at the Finance Ministry, transparency can be strengthened through a publicly accessible online GLC performance dashboard under the Office of the Chief Minister or Finance Ministry,” he said.
On the question of listing GLCs on the stock exchange, he said public listing can improve governance, transparency, access to capital and investor confidence, but may not be suitable for entities involved in sensitive or security-related activities.
“Listing should be pursued selectively, particularly for fundraising, joint ventures or mergers and acquisitions,” he said.
