Building the Boards Malaysia's Companies Need

This is a podcast from BFM89.9, the Business Station. BFM89.9, good afternoon. Welcome to Enterprise Explores. The show where we help you navigate the ever-changing universe of business, money and technology. I'm Elaine Boy. Now across corporate Malaysia, board effectiveness is increasingly being linked to its valuations, the valuations of its company. As the Securities Commission Malaysia and Bozer Malaysia push to strengthen the country's capital market through the My Value Up program, investors are starting to look at more than just financial results. They are looking at the quality of the board itself, whether its directors have the skills that the company will need in the future. So I want to take a look at this, what it means. And to discuss this, I have Jackie Ma, president and CEO of the Institute of Corporate Directors Malaysia, also known as ICDM and Pankaj Kumar, managing director of Data Matrix Research and Information Centre. Pankaj is also a member of a few boards in the country. So Jackie and Pankaj, welcome back to BFM. How are both of you? Thank you, Elaine. Very good today. Thank you. All good, Elaine. Thanks. As always, if you have questions or a comment, please WhatsApp our you mobile number 018789888989. Okay, so for the both of you, let's start with this question on boards, which have traditionally been judged on compliance and oversight. But now, investors are starting to look at board effectiveness and how it relates to the company's valuations. Can you tell us why this shift? Jackie, maybe we start with you. Thanks, Elaine. You know, I like to start off by saying that traditionally boards are actually responsible for the value protection of the company. And increasingly over, you know, the past months and years, we've seen conversations shifting into boards being the enabler for value creation. Now, why is this so? Actually, if you look at generally in a boardroom discussion, now a lot more issues are coming to the forefront of boards. You know, it's not the traditional compliance issues, but you have issues like AI, cyber security, talent, geopolitics, all these issues are floating. And they are not just risk that companies and boards have to manage, but they're actually issues that can impact the competitiveness and resilience of a particular company. So, I was looking at some stats the other day in the S&P 500 companies, and I noticed that about 60 years ago, the general average lifeline of a company on an S&P 500 company is actually about 33 years. Now, we bring that forward 60 years later to 2026. It's already halved. So, you have an average tenure of about 15 years for a company and an S&P 500 company. Now, what does that tell you? So, companies lifeline is a little bit short enough because there are so many issues that they have to grapple with, which means fundamentally, the board's capability and leadership is real, it's important. It's one of the most important factors of the performance of a company. So, I know we'll cover a wide range of areas, but perhaps to start off, I like to touch on composition and capability of the board. And now, what we really need to look at is not what are the current skillsets that a board has. We are now talking about, is the skillsets sufficient? And what are the skillsets and capabilities that a board needs to match where it is going? And where are the gaps coming from? And this is really making board seriously think about the diversity around the table, the people around the table, and who you want to run the table. So, I want to add this point is that we recently did what we call an ASEAN Board Trend Study. It's about 300 respondents to this study and it's across eight countries. And one sort of a consistent message that is coming across is almost more than half of these boards feel that at least one board member needs to be replaced over the next two years. It means we're not looking at traditional skillsets. We may be looking at new skillsets that we want to bring to the table. So, I'll leave that a bit for a foot for thought. Must have been an anonymous study where you rank your fellow board member. Definitely. Bangkok, what are your thoughts? What do you think about what Jackie said? I think the question is more about, I mean for investors, when they are investing into a public listed company, the expectation is that they want to make money out of it. And when you talk about making money, it's either in the form of dividend and of course capital growth. And the share of the returns are basically what investors are basically measuring. And in this sense, I suppose the board effectiveness is actually delivering value to investors. And that can only come from growing the business in terms of direction, profit growth, higher dividends, which basically translates to higher market prices. So when you talk about companies' valuation, then it has to be about deliverables. And that's where the board's role is important in terms of setting the stage where the company should be going, in terms of its direction, in terms of growth, what are the opportunities out there, what are the risk factors, all that comes in. So for investors, it's always about how are these delivered year in year out. It sounds like their responsibilities have grown. And it's the areas that they look at. Is this part of the plan, or has this got to do with the MyValueR program that was introduced by the SE and Versa Malaysia? Is there a relationship with the functions of board members now and initiatives to strengthen Malaysia's capital market? Well, I personally feel that when MyValueR program was launched, in a way it has forced boards to think further ahead about the value they are creating. So as I alluded my earlier point about the fact that they're not just there to guard the company, but they also have to ensure that it's sustainable across over the long term. So what we work with a lot of boards and what we are seeing that changes is that there are a lot more of these strategic conversations creeping into the board agenda. We don't see so much of operations and so forth, but we see that boards are trying to balance that conversations with more strategic conversations. So when they talk about areas like AI or human capital, they now have to talk about what is the value of MyEI investment? What is the economic value of certain projects? How does it translate into my overall growth value as what Pankash has alluded to? And things that what are my productivity gains? So even when we're talking about talent and human capital, it's not about the, you still talk about the traditional matrix, but you also talk about the value of workforce. So one company I spoke to, you know, was speaking about the fact that, you know, they spend a lot of time talking about the financial impact of the, you know, when workforce are being replaced by AI. And they feel that they don't spend enough time talking about job redesign, job roles, what new capabilities, how do you work alongside technology and so forth. So if you see a lot of these conversations are meant to create value and forces them to think future, think about the future, think about the growth, think about the strategic aspirations and ambitions of the organisation. And as you go along, as my value of translates into, you know, further disclosures and so forth, you will see that there will be maybe a change in terms of balance of agenda. So you may see more of these strategic conversations, rather than compliance, depending on the face and maturity of the company. I was just imagining the conversations while you were answering the question, and I wonder now with the new sort of function that these boards are doing, does it overlap with the CEO's functions because the CEO is focused on what to do, right? Well, I think there is a distinction because the board is at the board level where strategic decisions are made. CEO and management are basically as secretors. So direction wise is set by the board itself. But coming back again to the issue about my value up, I think we got to look back as to how the program came about. If you look back in other markets or jurisdictions, we saw it happening in Japan, in Korea, or even to a certain extent in Singapore. And results have shown that the programs implemented there have shown results where some of these companies have delivered what has been expected of them. And I think the regulators have taken that as a benchmark in terms of how companies in these markets were able to improve their deliverables because of my value up program or related to it. And so I think the idea is a correct approach in terms of trying to push companies to deliver results. What is lacking in Malaysia is actually the narrative, in terms of how do we do it? How do we implement it?. saya akan berhenti dengan perlukan. Apa yang berlaku? Jadi, regulitas yang saya pernah melihat. saya akan berhenti dengan segera segera. Orang-orang yang berhenti dengan perlukan. Mereka yang berlaku adalah yang paling menerima di dalam organisasi, ia perlu menjadi orang yang berlaku, yang berlaku. sebab tahu percaya rancangan agak. Saya bercakap dengan Jackie Maah. dan Pankech Kuma. Kita berada di dalam kumpulan. saya berada di mana-mana. sebabkan kembali ke kumpulan. saya berada di dalam kumpulan. Jadi kita lihat ini kemungkinan ini kemungkinan, tapi perlukan kembali untuk investasi, hanya di IPO. Dan selepas itu, itu itu. Jadi saya betul mereka perlu membuat mereka terus buat begitu. Saya rasa seperti awak sayang, "Tolong sekali lagi, tapi apa yang berapa kali?" "Tolong sekali lagi, kita perlu menghubungi karena awak perlu beritahu investasi yang terjadi di kuala tahun." Dan awak akan beritahu, "Tolong sekali lagi, tapi apa yang berapa kali ini?" Jadi awak tak boleh beritahu, "Tolong sekali lagi, tapi apa yang berapa kali ini?" Jadi awak boleh beritahu, tapi apa yang berapa kali ini? Jadi awak boleh beritahu, tapi apa yang berapa kali ini? kemudian kita berjaya kembali. Ini adalah negatif yang kita sekarang. Sekarang menghantar semua other IOD Network dengan ASEAN untuk membuat. Pankajah ingin mempunyai. Kita mempunyai Talon Pu, ASEAN White. Dan mereka datangkan Pankajah, "Pankajah, boleh kamu bekerja saya?" Apa yang pertama ada beberapa perkara yang kamu tak pernah membuat? Orang akan mempunyai mereka, terima kasih. Saya ada bekerja untuk mempunyai Pankajah sebenarnya. Ya. Jadi, apa yang kita melihat adalah. seperti baru untuk mempunyai perempuan yang mencari. apabila, saya rasa yang penting untuk mempunyai Pankajah. saya hanya terdapat ekonomi atau perempuan. Tapi juga untuk mempunyai perempuan yang mempunyai. Apa yang mempunyai perempuan yang mempunyai? Apa yang mempunyai perempuan yang mempunyai perempuan yang mempunyai perempuan yangpunyai? bagaimana kamu mempunyai masalah untuk berhati-mari untuk berhati-mari berhati-mari untuk berhati-mari untuk berhati-mari berhati-mari untuk berhati-mari berhati-mari untuk berhati-mari berhati-mari untuk berhati-mari berhati-mari berhati-mari berhati-mari berhati-mari berhati-mari berhati-mari berhati-mari untuk berhati-mari untuk berhati-mari dan berada di mana-mana berada di mana-mana berada di mana-mana berada dan semua mereka mencari ke dalam kelihatan-kelihatan. Kita ada banyak kelihatan dalam kelihatan. Saya rasa itu tentang masa untuk mempunyai lebih banyak kelihatan. Jika bukan hanya di dalam kelihatan publik, jika GIL ICS dan semua itu ada di dalam kelihatan. Tapi juga di dalam kelihatan publik. Pangkat Jackie, terima kasih banyak untuk berhenti kelihatan. Always ajar berhenti kelihatan dengan both. Terima kasih. Itu Jackie Ma, president dan CEO di ICDM. Pangkat Kuma, Manager Director di dalam kelihatan-kelihatan datang. Kita bercakap tentang apa yang berlaku. Terima kasih banyak untuk melajar, kelihatan, dan berbual. Dan apa yang akan berlaku untuk membantu memberi memberi yang mempunyai kelihatan. Mereka ada di dalam kelihatan-kelihatan pada BFM app. Orangatbfm.my. Saya Melain Boy. Ini adalah kelihatan-kelihatan BFM 89.9. BFM-89.9. Mereka ada di dalam kelihatan-kelihatan BFM.