TEOH CHIA KHEE A151469

Building Sustainable Institutions: Good Governance Matters

Syarahan Canselor Tuanku Muhriz
05.10.2016
Dewan Censelor Tun Abdul Razak (DECTAR UKM)

Nowadays, weak governance in both the private and public sectors have resulted in poor
investment decisions, excessive risk-taking and irregular practices. In a country,
sustainability through good governance will guarantee institutions, especially the
regulatory and enforcement agencies, function in accordance with the objectives of their
establishments, based on standards, regulations and the law. The highly dynamic and fast
changing global economic landscape is generating continuous uncertainties in both the
private and public sector. Building sustainable institutions in central to achieving a robust
and enduring economy which is resilient and able to weather the more challenging future
environment. In the case of the larger corporations and entities, such government failures
have witnessed large scale destruction in wealth, collapse in financial markets and the
erosion in confidence that has resulted in costs that are detrimental to the economy of
country. Good governance is thus imperative, whether it is for a small or large and
complex conglomerates, or for entities in the public sector. The lecture had discuss about
the key aspects and important dimensions of what good governance encompasses in an
environment in which risks have become more intricate and complex. Additionally,
governance arrangements needs to evolve to reflect the new realities of the world we live.
It also particularly distinguishes governance in the public sector where the goals to be
achieved are not confined efforts by multiple agencies and authorities. It also discuss the
key features and elements in the design of governance arrangement in our new
environment and the issues that need to addressed in such the governance arrangements.
Firstly, there are important dimensions of what good governance encompasses in
an environment in which risks have become more intricate and complex. The global
experience over the last two decades had highlighted the consequences and costs of
governance failures, whether in the public or corporate sector. In the case of larger

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corporations and entities, such governance failures had witnessed large-scale destruction
in wealth, collapse of financial markets and the erosion of confidence that resulted in
costs that were detrimental to the economy of the country. Weak governance in both the
private and public sectors have resulted in poor investment decisions, excessive risktaking and irregular practices. In the public sector, the consequences of getting it wrong is
even greater, given that its repercussions are far reaching across the entire nation.
Governance is about the process of governing. Governance refer to the rules and structure
and manners that regulated. It is about who has the authorities in decision making and the
accountability that is associated with this power and it is also about how others to make
their voice to be taken account. Governance arrangement are necessary whenever when a
group comes to gather to achieve a specific objective or to resolve a collective problem.
Some governance need to encompasses problem in beyond check and balance
mechanism. But that will also incorporate the value of the corporation in the particular
culture of integrity and ethics. They provide the foundation for doing what is right and
given the dynamic nature of our current and future environment governance arrangement
will also need people to respect and reflex the new realities of the world we live.
Secondly, this is important to distinguish governance in the private and public
sector where the goals to be achieved are not confined efforts by multiple agencies and
authorities. Governance may take different forms and different degree of formality
depends of the motivation. Institutions building needs to involve strong governance to
provide the structure foundation not only achieve success but also survive in more
challenging future. For public sector, corporate governance is about the management
arrangements and holding goals and decision making power to be accountable. For public
sector not only concerns governance of the operation of public corporation but also the
governance arrangement for policy decision making. Corporate governance can be define
by formation of rules and practices by which a board of directors to ensure accountability,
fairness and transparency in a company relationship with its state holder. State holder not
only being state holder but also the employee, creditor, competitor, regulation, financer,
customer, government and communities. The fundamental of duty of care, means that
those in charge of corporate must be diligent, need to be inform and must be attentive at
all the times. The duty of canvas to being honest and transparent. The role and

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accountability of the public sector differ from the private sector, public sectors need to
ensure their organization also have national goals to be achieve or a social missions.
Private sector, financial measures are generally are not the indicator of performance of
such agencies in the public sector, the action taken by public sector maybe far reaching
implication. Public sector is all about bringing value and benefit to the citizen to improve
health, education, transportation and other to sustain improvement. Public trust and
accountability is to entrust to achieve the manners of those being serve by the
government.
Lastly, the key elements in the design of governance arrangement in our new
environment and the issues that need to addressed in such the governance arrangements.
Capability of its institutions and organisations needed to be strengthened and the
governance arrangements to be commensurated with the developments unfolding. As an
emerging economy in Asia, Malaysia needed to pursue the middle ground and that which
is contextualized to the environment. The frame work of government and what does the
government does is totally important of an organization. Having a comprehensive
government is insufficient because it should be review and value from time to time. The
employee should be always integrity in doing their works and doing it when people are
not watching also and to be responsibility. Value must be conduct to produce outcome
that been looking for.
Given the highly dynamic environment, governance arrangement need to involve to
reflect the new reality of the world that we live in. It also need to take into account the
shifting landscape and the new risk that had become more complex. The transformation
from rule based approach to principle based approach had been widely implemented in
the world. However principle based approach focuses on outcome that matters, the
prescription of rules that has compliance has given a way to a more flexible approach in
which a board of set of principles of set up by the authorities giving the regulated entities
a room to determine the manners in which the way to implemented. Similarly in
corporate governance a principle based system thus allowed a greater flexibility in the
governance process. Corporate culture is important element in this arrangement, research
had shown that the motivation that is given by value is more important in promoting

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behavior and extensive factor. The rules based approach has been criticize that they only
simply apply the rules without understand the process, the consequence function of the
rules.
In my opinion, from the speech from Dr. Zeti, we can see that how important to
have good governance in both public and private sector to a country.