Tuesday 2 July 2019

Governance And The Modern Society

I was invited to share my views on governance and its importance in a modern society at Masjid Al Iman, Kemensah. This was my second appearance in a masjid to discuss about governance and integrity, topics which are rarely discussed from the societal perspectives in mosques.


Given the audience, I thought it was appropriate to simplify my thoughts into the following points:
  • A modern society relies heavily on the services provided by various agencies, organisations and institutions in the public and private sectors such as utilities, education, health and security;
  • The quality of leadership, management and governance practices in these organisations would determine the policies and strategies they formulate, the service levels they offer and the prices charged or cost recovered from the public;
  • The government is not an alien structure but a representative body elected by the Rakyat to govern and administer our funds, resources and affairs on our behalf;
  • Government's funds consist of taxes which we pay, proceeds from our assets which they sold, royalties etc from resources extracted from our lands and borrowings made on our behalf. Hence, if development and operating expenditures are not made prudently, we may need to pay more taxes or government may need to borrow money to pay for these additional expenditures;
  • Borrowings by the government involve cost, the interest or financing charges paid. For example, if government's borrowings are RM 100 billion, cost on these borrowings wound be approximately RM 4 billion, which is a huge sum of money and is deducted from the amount otherwise would be spent for the benefits of Rakyat;
  • Governance in the public sector is equally important as in the private sector although the Code on Corporate Governance was conceived in 2000 for the application in the capital market;
  • Management involves activities and processes to move organisations towards their missions and visions. This include strategy formulation, operations, marketing, financial management, talent management and development as well as compliance with rules and regulation;
  • Governance on the other hand is the process to oversee management and the running of organisations and to ensure their objectives are met and risks managed. This involve stewardship, roles and functions of the board, risk management, internal control, assurance and culture;
  • While governance and management could involve the application of various systems, processes and policies, their effectiveness is dependent upon the people who are given the trust and responsibilities;
  • Corporate governance failures occur not due to the lack of people with knowledge, skills and values required to perform their duties but when they do not have the courage to do the right thing at the right time. Good people simply look the other way when transgressions happen; and
  • Doing the right thing requires courage and the willingness to confront the adverse consequences which come with it.
I appealed to the audience to continue to demand good governance for the sake of their children and our future generations.