Finance & Banking

CAMBRIDGE LECTURE ON SUSTAINABILITY PURPOSEFUL LEADERSHIP AND SUSTAINABILITY BY TAN SRI ABDUL WAHID OMAR CHAIRMAN OF THE BOARD OF DIRECTORS, UNIVERSITI KEBANSAAN MALAYSIA (UKM)

The Cambridge Institute of Islamic Finance (Cambridge-IIF) recently
held its inaugural Cambridge Lecture on Sustainability on July
12, 2019 at Clare College, University of Cambridge. The lecture
on ‘Purposeful Leadership and Sustainability’ was delivered by Tan Sri Abdul
Wahid Omar, Chairman of the Board of Directors, Universiti Kebangsaan
Malaysia (UKM). Well known as a versatile corporate leader in Malaysia, Tan
Sri Abdul Wahid Omar have led the helms of four main organisations in the
areas of infrastructure development, telecommunications, financial services
and investment management. He had held the post of president and chief
executive officer of Maybank, chief executive officer of Kumpulan Telekom
Malaysia Berhad, managing director/chief executive officer of UEM Group
Bhd, vice executive chairman of PLUS Expressways Bhd and chairman of
the Association of Banks in Malaysia. From June 2013 to August 2016, he
was appointed Senator and Minister in the Prime Minister’s Department for
economic planning before being appointed chairman of Kumpulan Permodalan
Nasional Bhd (PNB), the largest fund management company in Malaysia; a post
he held until June this year. Tan Sri Abdul Wahid is also a Trustee of the World
Wide Fund for Nature (WWF) Malaysia since March 2019.

Cambridge-IIF is an independent research
centre, specialising in the financial sectors of the
countries wherein Islamic banking and finance is a
significant activity. Leveraging upon the academic
resources the city of Cambridge offers, CambridgeIIF is well-positioned to undertake research projects
to study the global phenomenon of Islamic banking
and finance. Cambridge-IIF aims at conducting
policy-oriented research to further spur growth
in Islamic banking and finance, with a special focus
on the Sustainable Development Goals (SDGs). As
part of its activities, Cambridge-IIF plans to host a
series of lectures each year with specific themes.

The below is the excerpt of the lecture given by Tan Sri Abdul Wahid Omar.

Let me begin by thanking the Cambridge
Institute of Islamic Finance for giving me the honour
to deliver the inaugural lecture on sustainability at
this prestigious University of Cambridge. I must
say I was initially undecided on how best to deliver
this lecture. However, after consultation with the
hosts, I thought that perhaps the best way to talk
about Purposeful Leadership is by sharing with
you my personal journey and the lessons learnt,
eight thoughts on organisational sustainability and,
Islamic finance and sustainability.

I was born as the ninth of eleven children in the
southern state of Johor, Malaysia. Life was tough
then. Imagine a family of eleven in a small living
space. But we were blessed to have determined
parents and support from extended family
members; uncles and aunties who supported us
financially. We were given good education as the
means to get the family out of poverty.

When I was young, I was told accountants make
a lot of money. That was when I decided to choose
accountancy as my profession; arguably the most
versatile profession in the world. As an accountant,
my ambition was to be a Chief Financial Officer
(CFO) of a large public listed company (PLC). That
ambition was realised when I was appointed as
the CFO of Telekom Malaysia Berhad (TM); one of
the top four PLCs in Malaysia in 2001. But I got
more than what I bargained for. I was fortunate
to have been given the opportunity to lead three
major organisations as CEO, i.e. the UEM Group
involved in infrastructure development, TM in
telecommunications, and Malayan Banking Berhad
(Maybank) in banking. This was followed by a term
of three years serving as a Senator and Minister,
before returning to the corporate sector as Group
Chairman of Permodalan Nasional Berhad (PNB) in
funds management. For the purpose of this lecture,
please allow me to focus on my tenure at UEM
Group, TM and Maybank.

Purposeful Leadership 1: Turning around the UEM Group

In September 2001, Malaysia’s sovereign wealth
fund Khazanah Nasional Berhad (Khazanah),
through a special purpose vehicle Syarikat
Danasaham Sdn. Bhd. (Danasaham), undertook the
takeover of conglomerate United Engineers (M)
Berhad (UEM) for RM5 billion (almost GBP1 billion)
as part of the effort to remove a major corporate
governance ‘overhang’ in Malaysia. Such ‘overhang’
has been affecting market sentiments since UEM’s
controversial acquisition of Renong Berhad shares
in September 1999. That acquisition caused the
Kuala Lumpur Composite Index (KLCI) to decline
by some 20% within 3 days. The then Prime
Minister’s Special Adviser Tan Sri Nor Mohamed
Yakcop was tasked to find someone to spearhead
the turnaround of UEM Group.

I was identified as one of the candidates to
helm UEM Group. I figured out three reasons why
I should say yes to such an opportunity. First, I
was very familiar with the UEM/Renong Group
as they were my client when I was at a local
investment bank, Bumiputra Merchant Bankers
Berhad. Second, I was experienced in corporate
transactions, restructuring and M&As; which I
regard as one of my core competencies. And third,
I was only 37 years old and felt that if I were to fail,
I could always go back to being a CFO in another
organisation.

Following an intense interview by the UEM
Board, I was offered the CEO job and joined
UEM Group as its MD/CEO in October 2001.
I was reminded that this was not just a job but a
purpose; a mission if you like, to address corporate
governance issues that have been plaguing the
Malaysian corporate sector and help restore
confidence in the Malaysian capital market. There
were many good reasons why the government,
through Khazanah, had to initiate such a bold
move. First, the UEM Group owned a number of
strategic national infrastructure concessions and
assets such as the North South Expressway/Projek
Lebuhraya Utara Selatan (PLUS), the MalaysiaSingapore Second Link (Linkedua) and the Light
Rail Transit (LRT) systems. Second, the UEM Group
had total group debts of some RM30 billion and
some banks had very large exposure to the Group.
Should the Group fail, some of the banks would
suffer considerable losses. And third, the UEM
Group had some 24,000 employees and a collapse
of the Group would result in significant job losses.
The purpose was then very clear to me – turning
UEM Group around was not just a task but a cause
for us to pursue.

Being my first CEO job, I still remember the
nervousness and awkward feeling of having to chair
the first UEM Group management meeting. UEM/
Renong Group was a large conglomerate with some
eleven public listed companies under its wings, and
a thirty-seven year-old “freshie” being the boss to
many senior CEOs of subsidiaries and associated
companies, was indeed a big feat. But my fellow
management colleagues were professional and
respected the chair, and they were also hoping that
I would be able to steer the Group out of troubled
waters after two prior failed attempts of takeover
by Khazanah.

The first step towards addressing the
predicaments of the UEM Group was to unlock
the value of its highway concessions led by PLUS.
So, with the support of the management team,
the shareholder Khazanah, the Government, the
bankers and the investing community; we reviewed
the toll concession to a more reasonable level (from
5% pa to 3.3% pa) but made the increase automatic
every 3 years, restructured the debts of PLUS and
thereafter undertook the initial public offering
(IPO) and listing of PLUS Expressways shares on
Bursa Malaysia in July 2002. This was followed by
disposal of non-core assets in order to reduce the
Group’s debt to a more manageable level. While I
focused my efforts on corporate matters, my fellow
management colleagues continued their efforts to
improve operational efficiency and profitability.
After two and a half years, we managed to halve the
Group’s debts to a more sustainable level of RM16
billion with the bulk of them in the form of project
financing. The UEM Group was back on profitable
track with an annual profit of RM500 million and
revalued net assets of RM10 billion. Khazanah not
only achieved its main objectives but also doubled
the value of its investments within three years.

Purposeful Leadership 2: Creating a Regional Telecommunications Company

Having completed my task at UEM Group I
returned to TM as CEO on July 1, 2004, as part
of the larger transformation of Government Linked
Companies (GLCs). The mandate given to me was to
transform TM into a regional telecommunications
company with particular emphasis on mobile
communications. The experience of turning around
UEM Group and having been the CFO of TM before
made me feel relatively comfortable to take on the
CEO task. The mandate was clear; the people and
the business were familiar to me. TM had its origin
as a government department that was corporatised
and subsequently listed on the then Kuala Lumpur
Stock Exchange (KLSE) in 1990.

Although by then TM had been listed for
more than 14 years, its corporate culture was
still not as competitive as one would expect of a
large public listed telecommunications company.
An all-round transformation was needed. The
purpose was to turn TM into a competitive regional
telecommunications company; the Malaysian
flag bearer across Asia. Organisationally, we
streamlined management structure, brought in new
talents to complement the existing technical staff
and strengthened the performance management
system balanced scorecard. Culturally, we removed
the traditional morning and afternoon tea breaks,
normally associated with the public sector and
implemented a five-day week with extended
working hours, normally associated with the
private sector. Many people thought removing tea
breaks was an impossible task back then but the
staff and Union officials were very receptive as
they appreciated the need for cultural change and
the benefits it will bring to TM and its people. This
proved the point that when there is a clear purpose,
you can expect to get an all-round support. We
improved customer service and revamped our
outlets, Kedai Telekom, into a more customercentric network of outlets called TM Points backed
by better trained staff, more efficient processes,
upgraded IT systems, competitive products and
a more pleasant environment. Business wise, we
expanded our mobile operations into Singapore
and Indonesia and strengthened our presence in
Cambodia and Sri Lanka.

After eighteen months, we realised that while
we have made significant progress overall with
improved financial performance and higher
contribution from our international operations, our
domestic operations were not doing that great. The
traditional fixed line business was growing much
slower than anticipated due to migration to mobile
communications. At the same time, Celcom the
domestic mobile communications subsidiary of TM,
despite registering higher revenue and profit, was
losing market share to rivals Maxis and DiGi. We
understood that one cannot succeed as a regional
champion if one’s home base is weak. Realising this
worrying trend, the TM Board and management
formulated and executed a holistic performance
improvement programme that enabled TM to grow
its data business and Celcom to regain market
share. The fundamental improvements in customer
service, distribution channels, network quality,
business expansion and financial performance
were reinforced by a global rebranding of TM
into a competitive, private sector driven regional
communications company.

Having addressed the fundamentals of the
business and as part of the efforts to enhance
shareholder value, it was decided that the TM
Group would be better off being demerged into
two separate listed entities. TM International (now
known as Axiata Group) with Celcom and other
regional mobile communications business under its wings were successfully demerged and listed
on Bursa Malaysia in April 2008. That leaves TM
being repositioned as the National High-Speed
Broadband (HSBB) champion spearheading the
national HSBB deployment in Public Private
Partnership with the Government of Malaysia.
The demerger “unleashed” Axiata Group to grow
further across Asia.

Purposeful Leadership 3: Humanising Financial Services

I was in the midst of planning for the TM demerger
exercise in May 2007 when I received a proposition
from the then Chairman of TM’s competitor Maxis
Communications, Tan Sri Megat Zaharuddin, who
was also a board member of Maybank. The initial
plan was for me to join Maybank on June 1, 2008
with a one-month break and one-month handover
from the then retiring CEO. As it turned out later,
Tan Sri Amirsham was appointed as a Minister in
the Prime Minister’s Department in charge of the
Economic Planning Unit (EPU) in March 2008.
That necessitated me to join Maybank one month
earlier than scheduled on May 1, 2008. In the
three months prior to my arrival, Maybank had
finalised three major acquisitions; An Binh Bank
in Vietnam, Bank International Indonesia (BII) and
MCB Bank in Pakistan. However, many investors
did not appreciate the valuation and decided to sell
their Maybank shares.

I had to face three major challenges in the
first few months at Maybank. First was to follow
through on the three major acquisitions costing
some RM11 billion and to raise the necessary equity
and debt capital required to fund the acquisitions.
Second was to deal with the global financial crisis
that was unfolding with the collapse of Lehman
Brothers, among others, in September 2008. And
third was to improve the financial performance
of Maybank. Although Maybank was the largest
bank in Malaysia, it was growing by only 5% pa
between 2003 and 2008 while its competitors
such as Public Bank, CIMB and RHB were growing
by some 20% pa in terms of assets and profits. If
nothing was done and if the trend was to continue,
Maybank could have been overtaken by both CIMB
and Public Bank in terms of profit within a matter
of two years (i.e. by 2010). In fact, the investment
and media community had already anticipated that
happening when Maybank’s market capitalisation
dropped below that of Public Bank’s and CIMB’s
in March 2009.

The acquisition of BII was particularly complex
with many twists and turns. I recall that Maybank
Board met twenty-four times in my first year in
office, mostly to deal with the BII acquisition issues.
After vigorous renegotiation, Maybank managed to
complete the BII acquisition at RM1 billion lower than the original price. BII is now an integral part of
Maybank’s regional presence and strategy. While
the corporate finance team was busy completing
the three acquisitions, the rest of the management
and staff members were busy implementing the
performance improvement programme called
LEAP30 – a series of 30 initiatives identified to
improve Maybank’s performance and restore its
market leadership. After being put on a “burning
platform”, Maybankers collectively resolved not to
allow Maybank to be relegated to number three
in the market. The team worked very hard and
after about eighteen months, their efforts paid off.
Assets and deposits grew faster, customer service
enhanced, asset quality improved and profit after
tax bounced back to a record RM3.8 billion for
the financial year 2010. Maybank was back as the
number one bank in Malaysia and the most valuable
company listed on Bursa Malaysia.

Whilst the team, the board and shareholders
were happy with the outcome; we were concerned
about its sustainability. Maybankers were working
very long hours due to the need to work around
the existing processes and organisational structure;
some were already experiencing professional
fatigue. Personally, more than half of the time, I
would still be in the office beyond midnight. We
knew this was not sustainable without addressing
the organisational structure and revisiting the
mission. We then gathered the top 1,000 managers
and leaders of Maybank at a “Tiger Summit” in
Putrajaya and agreed to adopt a new mission or
purpose for Maybank of Humanising Financial
Services.

This mission of Humanising Financial Services
means: to provide people with convenient access
to financing; on fair terms and pricing; advising
customers based on their needs and; being at the
heart of the community. This was not just a rallying
call but a clear purpose or reason for being for the
40,000 Maybankers in Malaysia and across Asia.
Organisationally, we created a new “House of
Maybank” with three business pillars – Community
Financial Services, Global Wholesale Banking,
and Insurance & Takaful; with Islamic Financial
Services and International Operations straddling
across the three business pillars. With the new
mission and new “house”, Maybank continued to
extend its leadership not only as the number one
bank in Malaysia but also as one of the top regional
banking groups with presence across all ten ASEAN
countries.

Building a Global Leader in Islamic Finance

One of the dilemmas facing me and the other
Muslim Maybankers was how to mitigate riba
or usury element in our personal income. One suggestion that surfaced was to work on a strategy
that will result in the majority of Maybank’s
financing business being Shari’a-compliant. This
became the purpose for me and my colleagues; to
turn Maybank in a global leader in Islamic finance.
We then came up with the “Islamic First” strategy
where Maybank customers will automatically be
offered Shari’a-compliant products whenever
they wish to open an account, or seek financing to
purchase a house, a car, or to fund their business.
Should they wish to opt for a conventional product,
then Maybank will offer that too.

The analogy adopted was that of a supermarket.
If one were to go to the Tesco supermarket at
Brompton Road, London, one will find a small halal
meat section and the rest of the supermarket is
not necessarily halal. However, if one were to go
to the Tesco supermarket in Malaysia, one will
find a small pork and liquor section and the rest
of the supermarket is halal. This strategy enabled
Maybank Islamic to grow faster such that with total
assets of RM225 billion as on December 31, 2018.
Maybank Islamic is now the largest Islamic bank in
Malaysia (three times larger than the pioneer Bank
Islam Malaysia Berhad) and the fifth largest Islamic
bank in the world.

Lessons learnt

So, what are the lessons learnt? Please
allow me to focus on three areas:

First is corporate leadership and management.
Be clear on your mandate. Perform a full
diagnosis of the company. Establish the strengths,
weaknesses, opportunities and threats. Match
the tasks required with the management talent
internally before bringing in reinforcements to
fill the gap. Revisit the vision and mission to
ensure relevance. Articulate a clear purpose or
reason for being. Formulate strategies and action
plans together with the management team and
syndicate them with all stakeholders including the
board, shareholders, employees, regulators and
business partners, where relevant. Communicate
your plans with all levels of employees, and
update them regularly. Set clear and measurable
short term and long-term targets with clear
timelines and accountability. Implement balanced
scorecard/performance management system.
Align the interest of the management with that of
shareholders. Share the rewards not just with the
management colleagues but with all performing
employees.

Second is the management principles; always
focus on the fundamentals. Address the core
issues of customer service, product innovation,
competitive/optimal pricing, effective delivery
channels and profitable market shares. Be clear on the costs and benefits of every venture, product,
initiative or plan. Beyond the four quadrants
of Corporate Responsibility and Sustaiity (i.e
Workplace, Marketplace, Community and the
Environment), for public listed companies, the
bottom line is about shareholder value creation
(i.e. more profit, higher dividends and better share
price in the medium to long term). Don’t worry
about short term market fluctuation. Don’t over
spin. Once you have achieved the fundamental
improvements, then you can complement it with
branding or rebranding as the case may be. Form
without substance will not get you anywhere. But
when you combine substance with form, you will
go a long way. This applies to personal branding
too.

Third is the personal leadership skills and
attributes. A good leader must have a clear
purpose in life; be articulate, authentic, engaging,
a visionary, and have unquestionable integrity. You
don’t have to be the typical “loud” corporate leader
to be effective. In fact, it can be counterproductive.
Gone are the days when the CEO just needs to tell
people what to do. In large organisations, CEOs are
now expected to be more hands on and provide
appropriate guidance on how things can be done.
Be professional, honest, sincere and truthful to your
board, management colleagues and employees. Do
not hesitate to admit your mistakes and apologize,
and learn from them. We are human beings after
all. Focus on the job at hand and do not worry
about your next career move. Your reputation will
precede you.

Eight Thoughts on Organisational Sustainability

I have shared with you how, based on my
personal experience, purposeful leadership has
enabled the three organisations I have led as CEO
to be successful. In the Global Leadership Forecast
2018; DDI, The Conference Board and EY found
that purposeful organisations (where leaders bring
the stated purpose to life through behaviours)
perform 42% better than the market. The challenge,
however, is how to ensure such performance is
sustainable for the organisation beyond the tenure
of a particular leader. This brings me to the second
part of my lecture on some of my thoughts on
organisational sustainability. There are many aspects
of leadership and succession that I can touch on.
But perhaps I can confine them to eight.

First is the need to select the right leaders for
our respective organisations. Many people have
been asking, what does it take to be a good and
sustainable leader? According to me, beyond
working hard and working smart, there are three
prerequisites to becoming a good and sustainable leader: unquestionable integrity; competency; and
humility. Integrity is about “doing the right thing
even when no one is watching”. A competent
leader with unquestionable integrity and who
works very hard will enjoy a reputation that will
precede him. Competency is about having the
necessary knowledge and skills to do the job
well. Whilst humility is about treating people with
mutual respect, about staying grounded to our
roots and about being cognisant that we all serve a
greater purpose in life rather than our self-interest.
Humility is also about knowing that you don’t know
everything and that you need a team in order to
succeed.

Second is the need to put into place a proper
succession planning and talent review process to
cover key positions. Not just for the CEO and CEO-1 positions but also for CEO-2 and even CEO-3 positions for large
organisations. For each position, identify 3 potential candidates,
their state of readiness (whether they are ready now or within 2, 3
or 5 years) and what is the intervention required to prepare them to
succeed the incumbent. For such succession planning efforts to be
successful, it needs to be driven from the top i.e. by the board and
the management alike. The best practice is for the management to
conduct a talent review session twice a year.

Third is the need to strike a right balance between internal talent
and external hires. I personally believe in the importance of nurturing
our internal talent or ‘grow your own timber’. This is important to
provide the employees with good career progression opportunities.
However, it is also important to bring in external talent from time to
time to refresh the organisation and bring in external perspectives.
My hypothesis is that all things being equal, one in every four or five
senior positions should be filled externally. That means 75%-80% of
the positions should be filled by internal promotions.

Fourth is the need for rejuvenation. Whilst long serving CEOs
provide stability to the organisation, there is also the risk of the
leader and his organisation slipping into complacency. I believe there
is enough empirical evidence to suggest the performance of many
companies whose CEOs have been at the helm for more than 10
years would not be as good as the CEO’s performance in the first 10
years. Therefore, I subscribe to the belief that as a rule of thumb, no
one should be in the same role for more than ten years, whether as
a head of department or a CEO. If he or she is good, then give him
or her a bigger role or give him/her the opportunity to lead a bigger
organisation. I am therefore in favour of imposing time limits on the
tenure of CEOs and board members. This will instill greater discipline
on the CEOs to identify and prepare his successor. Of course, there
are exceptions to the rule but they need to be appropriately justified.

Fifth is the need for diversity. I always believe in diversity as a source
of strength for any organisation. Diversity in terms of skills, gender,
ethnicity, age and even nationality for multinational organisations.
Organisations that embrace diversity tend to perform better and
more sustainably. I am encouraged that most public listed companies
have heeded the call for greater gender diversity at board level. In
the Malaysian context, we now have women as the chairperson of
important institutions such as Bank Negara Malaysia, PNB and Bursa
Malaysia; proving that there is no glass ceiling for women in Malaysia.
For public listed companies, the time has come for such diversity to
be broadened further to cover ethnic and age diversity not just at the
board level but also at the management level.

Speaking of diversity, some organisations get very defensive when
we highlight the lack of diversity in their organisations. They would
immediately claim everything is based on merit. This brings me to
the sixth point, the need for us to be conscious about the “AffinityFavouritism-Cronyism-Prejudice Continuum”. Well, we are all human
beings and it is only natural for us to have affinity towards people
from the same school, same university, same profession, same State,
same clan, same ethnicity, same religion, and same nationality. But if
we do not contain our affinity, it can easily become favouritism. And
if you don’t control it further, it will become cronyism. Eventually, it
may even result in being prejudice. I have worked in an organisation
where a large number of CEOs in the Group were from the same school. I also came across a Kuala Lumpur based
company where a significantly large proportion
of the senior management members were from
the same state. In such a situation, you may be
depriving your organisation of quality talent to
propel your organisation forward. At the same time,
you may also be depriving the deserving candidates
the opportunity to excel in their career. So, it is
useful for us to be conscious of the diversity in our
organisation (or department) and ensure we do not
practice favouritism or cronyism.

Seventh is giving young people the opportunity
to lead. I was fortunate to be given the opportunity
to be the CEO of UEM Group when I was 37 years
old. Dato’ Abdul Rahman Ahmad, the current CEO
of PNB, was 32 when he was appointed as CEO
of MRCB. Likewise, Tan Sri Mohd Bakke Mohd
Salleh, the newly appointed Chairman of Felda, was
35 when he was appointed as CEO of a property
company. Dato’ Shahril Ridza Ridzuan, the current
CEO of Khazanah Nasional, was 32 when he was
appointed as CEO of MRCB. Renowned corporate
leader Tan Sri AzmanYahya, was 30 when he was
made CEO of an investment bank Amanah Merchant
Bank. Yet many of us now regard executives in their
30s and 40s as being too young to be CEOs. I have
even come across some board members opposing
the appointment of someone as CEO for being too
young. That CEO was 50 years old! The time has
come for us to renew our commitment to nurture
future leaders and have the courage to give some
talented young managers, with the prerequisites of
being a good leader of course, the opportunity to
lead an organisation as CEO.

The eighth point is the need to develop quality
leaders in sufficient quantity. Many organisations
complain about how their managers and executives
are being poached by competitors and other
organisations. I tend to take a more liberal view on
this. Surely when your organisation is the market
leader, you can expect other organisations to regard
the people you have trained as being good and
talented and will provide them with a ready pool
of talent to poach from. So, instead of complaining,
what if you were to hire and train more people so
that you will still have enough talent even after half
of the people you have trained left you after say ten
years? These people whom you have trained will be
your ambassadors and reference points in the future.

Islamic Finance and Sustainability

Over the past thirty years, I have been fortunate
to have been exposed to Islamic finance. From
being involved in arranging the first Islamic bonds
or sukuk issued by Shell MDS in 1990, to the
introduction of Islamic factoring by Amanah Factors and development of the ‘Islamic first’ strategy
at Maybank. I hope to broaden and deepen my
knowledge in Islamic finance during my upcoming
tenure as a Visiting Fellow at the Oxford Centre for
Islamic Studies.

As a prelude to my fellowship, I did a quick poll
among some renowned Islamic finance practitioners
on what are the first things that come to their minds
when I mentioned the word “Sustainability”. The
answers were varied but some common themes that
emerged include justice, benevolence, wellbeing,
ESG, Maqasid al Shari’a, the role of human beings
in protecting the world and environment we live
in, a balanced ecosystem, sustaining a productive
and healthy ecosystem for the earth’s plants and
creatures to support the well-being of humans
sustainably, doing economic and social activities
that do good and are not harmful in the long term,
using resources responsibly taking into account the
needs of future generations.

For me personally, Islamic finance in its truest
form is indeed sustainable finance. It is supported by
a legitimate transaction, formalised via a legitimate
contract or ‘akad’, not speculative, and is not
harmful to mankind, society nor the environment. I
am heartened that such thinking is being embraced
globally with central banks playing their role in
promoting Islamic finance as sustainable finance.
For example, Malaysia’s central bank, Bank Negara
Malaysia, and the Islamic financial institutions have
been working on Value Based Intermediation (VBI)
since 2018 with the issuance of three guidance
documents namely;

The Implementation Guide for VBI, which
provides guidance on practical value-based
banking practices. It also outlines the phases
of implementation, key implementation
challenges and some pragmatic solutions;

The VBI Financing and Investment Impact
Assessment Framework, which facilitates
the implementation of an impact-based
risk management system for assessing the
financing and investment activities of Islamic
financial institutions in line with their
respective VBI commitments; and

The VBI Scorecard, which provides
an overview that covers purposes, key
components of assessment and measurement
methodology

The application of VBI practices will
contribute towards better facilitation for
entrepreneurs, community wellbeing, sustainable
environment and inclusive economic growth without compromising on shareholder returns.
These outcomes are similar to the objectives of
Environmental, Social and Corporate Governance
(ESG) framework, Sustainable, Responsible Impact
Investing (SRI) and ethical finance frameworks.
Speaking of Islamic finance and sustainability
within the context of people’s wellbeing and
inclusivity, one organisation that comes to mind
is PNB. Established in 1978, PNB’s purpose was
to address the socio-economic imbalance facing
the majority Bumiputera community who in
1970 collectively own only 2.3% of equity in the
corporate sector. The idea was to mobilise funds
from the community via a mutual fund to be
invested professionally into the equities market. The
concept was subsequently broadened to include all
Malaysians. PNB now manages some RM300 billion
mobilised from 14 million-unit holders.

I had the privilege of being appointed as the
third Chairman of PNB on August 1, 2016 with the
mandate to enhance the corporate performance
of PNB. By November 2016, PNB’s President and
CEO Dato’ Abdul Rahman Ahmad and I unveiled
PNB Strategic Plan 2017-2022 named Strive-15
aimed at building PNB to be a distinctive world class
investment house. Fifteen initiatives were rolled out
under three strategic pillars of enhancing sustainable
returns, effective funds management and driving
operational excellence. With rigorous execution of
the various initiatives by the PNB team, we were
able to achieve significant outcomes within the first
year of implementation in 2017. These include, inter
alia, improved financial performance with 16.8%
increase in 2017 net income to RM17.7 billion;
Transformation of strategic companies resulting
in RM39.5 billion increase in market capitalisation.
This represents total shareholder returns of 26.0%,
double the total KLCI returns of 13.2% for 2017;
successful migration to a new IT system which
enabled PNB / ASNB to launch its online portal; and
recognition of investment in PNB managed mutual
funds as “Harus” or permissible by the Selangor and
Penang State Fatwa Committees in 2017, in line
with the national edict issued in 2008.

Contributing towards the Education sector
It has been eight months since I assumed the
Chairmanship of the National University of Malaysia
(UKM). I must say it has been very enlightening to
be involved in the education sector. On my part, I
hope to be able to add value, among others, in the
following three ways:

To bring private sector’s perspective into the
University in enhancing its performance and
governance as well as strengthening the
organisation structure and human capital
development;

  1. To assist in efforts to enhance the
    University’s financial sustainability via
    increasing private and international
    students’ enrolment, expansion of
    the University’s core competency
    (such as healthcare services) and
    commercialisation of real estate and
    other assets;
  2. To enhance industry-academia
    collaboration, among others:
    • through strengthening our various
    faculties with the appointment of
    industry practitioners and corporate
    leaders as lecturers, fellows and
    adjunct professors;
    • increased contributions from the private
    sector in the form of endowment,
    research grants and commercialisation
    of research findings;
    • enhancing graduate employability
    through curriculum development,
    industrial attachments and leadership
    development.

Back to the theme of Purposeful Leadership and
Sustainability, I believe it is important for us to instill
sustainability, purpose, and leadership values in our
people from a young age. This means starting from
parenting at home to early education in schools and
later at the institutes of higher learning. When such
universal values are ingrained in our people and
society, the outcome will be more pronounced and
sustainable.

Conclusion

Let me close by expressing my gratitude to Dr.
Humayon Dar, Dr. Sofiza Azmi and the Cambridge
Institute of Islamic Finance for inviting me to deliver
this lecture. Coming from a poor household, I was
fortunate to have been given a good education at
a boarding school MRSM Seremban and awarded
a scholarship by the Bumiputera empowerment
agency MARA to pursue professional accountancy
qualification (ACCA) in the United Kingdom. My
ambition was to be the CFO of a large organisation,
but I ended up with more than what I asked for.
I am grateful to God Almighty for His blessings,
and to my parents for raising me and instilling the
universal values in me. I am grateful to my country
Malaysia for the opportunity made possible by
the then New Economic Policy; a policy with twin
objectives of eradicating poverty irrespective
of race and eliminating the identification of race
with any particular economic activity. A policy
with the purpose of providing equitable growth
and opportunity for the people. This is what
sustainability is all about; not only caring for the
environment, but being responsible for the people
too.

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