Operationalizing Transformation to achieve

BIG FAST RESULTS

Most Governments have great strategies and plans but fail to operationalise them into detailed programme for implementation…

How do we operationalize transformation to achieve Big Fast Results?

• 3 Transformational Leadership Qualities

• 8 Step Methodology

3 Transformational Leadership Qualities

#1 Transformational Leaders who pursue the Game Of the Impossible

Transformational Leaders make “impossible” happen

• Stand-based future – managing the present from the future

• Set Olympic targets - very few precedence,

difficult to justify

• Conquer the fear of failure

• Create a game so large, it will consume you

93 – ‘02 2003 2004 2005

RM-1.4 bil

RM10 mil

RM265 mil

RM500 mil

Shell Middle Distillates: Game of the Impossible

Explosion!

93 – ‘02 2003 2004 2005

RM-1.4 bil

RM10 mil

RM265 mil

RM500 mil

Shell MDS: 6 months turnaround and record profits

#2 Transformational Leaders whose priorities are Anchored on True North

Anchoring on the True North and on the right Key Performance Indicators

• To achieve true north, sharp focus and ruthless prioritization of limited resources on what really matters

• In a corporate world, decompose the corporate P&L into the lowest segmented level e.g. product P&L, customer P&L, route P&L

• Identify profitability levers to turn around each of these segmented P&L

NUMBERS DO NOT LIE

MAS: Anchoring on Profitability

180 routes losing money

52 routes were profitable

110,000 flight P&L statements

RM-1.23 bil

2006 2005 2007 2008 2009 2010

RM-74 mil

RM840 mil

RM264 mil

RM491 mil

RM282 mil

MAS: 1 year turnaround to record profit

Record High Oil Price

Global Financial

Crisis

#3 Transformational Leaders who are “hands on operationally”

We built a house in 3 days for Ahmand bin Udin and family in Batang Kali

Results and Achievements: The Malaysian story

In 2010, PM launched our National Transformation Programme

3.3 million ADDITIONAL

JOBS

GNI

USD523b Per Capita USD15,000

INVESTMENT USD444b

92% Private 8% Public

73% DDIs 27% FDIs

ETP’s True North

Malaysia’s Vision 2020: New Economic Model

• High Income economy • Inclusive society • Sustainability • Quality of life

Malaysia is no longer “stuck in the middle income trap”

2010 2014

World Bank’s High-income threshold

Malaysia’s GNI per capita

33%

16%

USD 12,276

USD 8,200

USD 10,760

USD 12,736

2.5X growth in Private Investment

ETP Launch

We promise to create 3.3 million jobs in 10 years

To date, 1.8 million jobs

Steady Growth Amidst Low Inflation

Source: Central Bank of Malaysia

2015 GDP Forecast

4.5% - 5.5%

5,6%

6,3%

4,8%

-1,5%

7,4%

5,2% 5,6%

4,7%

6,0%

3,6%

2,0%

5,4%

0,6%

1,7%

3,2%

1,6%

2,1%

3,2%

-2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014

GDP at Constant 2005 Prices Real GDP Growth Rates CPI

(RM bil)

Government Revenue Less Dependent On Oil Revenue

Source: Economic Report 2014/2015, Ministry of Finance

Note: 2014 figures are the revised estimates and 2015 figures are budget estimates

Global Financial Crisis

36,8% 36,5% 39,7% 40,3%

35,4% 35,8% 33,7% 31,2% 29,7%

26,3%

-80,00%

-60,00%

-40,00%

-20,00%

0,00%

20,00%

40,00%

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2006 2007 2008 2009 2010 2011 2012 2013 2014 revised est 2015 budget est Exploration (including MTJA and non MTJA) Export Duty Petroleum Royalty & Gas PETRONAS Dividen PITA % of Total Govt Revenue

Source: Ministry of Finance

(RM mil)

61.572 69.396

82.138 78.375 79.009

102.242 116.937 120.523

133.148 135.646 25.058

25.772

30.760 28.129 30.507

32.643

34.706 35.429

38.622 47.732

2006 2007 2008 2009 2010 2011 2012 2013 2014 Revised Estimate

2015 Budget Estimate

Direct Taxes Indirect Taxes

Government Revenue Increasing, Tax Collection is Up

We implemented inclusive measures for rural folks

5 million Rural people benefited from rural infrastructure projects

We implemented inclusive measures for low income people

6.8 million Low income households and individuals benefited from BR1M (cash transfer)

168,843 Individuals participate in the 1AZAM programme

2.9 million Lifted out of poverty due to minimum wage policy

We implemented inclusive measures for urbanites

455,728

Public transport AM Peak ridership increased to

-6,4%

-5,3%

-4,7% -4,3%

-3,8% -3,4% -3,2%

2009 2010 2011 2012 2013 2014 2015 2020

Still On Track To Fiscal Balance

Note: Based on GDP in 2010 prices

Source: Ministry of Finance, Economic Planning Unit

(% of GDP)

2020 TARGET Balanced Budget

2015 Revised Target

Malaysia is in the fiscal “safe zone”

OECD forecasts that Malaysia is ahead of other ASEAN countries, China and India in becoming high income country

Note: Based on World Bank’s criterion for classifying economies, high income countries are defined as having GNI per capita above USD12,000 in 2013. Growth prospects in this simulation are in line with MPF-2014

Best scenario simulation of estimated time required to become high income countries for selected Asian middle income countries (years)

India

Vietnam

Philippines

Indonesia

Thailand

China

Malaysia

in 2059

in 2058

in 2051

in 2042

in 2031

in 2026

in 2020

Malaysia’s international rankings have been steadily improving

Ease of Doing Business

OUT OF

189 2014

20(6*)

2016

18

World Competitiveness Yearbook

2012

14 OUT OF

60 2013

15 2014

12

Global Competitiveness Report

2012

25 /144

2013

24 /148

2015

18 /140

*Pre-DTF Methodology

2015

14

2015

18

2014

20 /144

8 Steps Methodology

Step 1: Strategic Direction Workshop

• Leadership commitment on “Game of Impossible”

• Agree the top 10 priorities

Malaysian Cabinet had multiple strategic workshops

Step 2: Conduct Labs on all agreed priority areas

INVESTMENT

USD444b 92% Private 8% Public

73% DDIs 27% FDIs

133 EPPS

USD247b

EPPs are catalytic in effect

ETP: Expected GNI contribution and job creation by project

39

Palm oil and rubber

Greater KL/KV

Oil, gas, energy

Financial services

MYR 230.9bn

MYR 190bn

MYR 131.4bn

MYR 121.5bn

Business Services MYR 78.7bn

Tourism

Communications

MYR 66.7bn

MYR 57.7bn

Wholesale and retail

Electrical and Electronics

MYR 55.4bn

MYR 54.4bn

Healthcare MYR 35.3bn

Education

Agriculture

MYR 33.6bn

MYR 28.9bn

41,600 jobs

320,000 jobs

52,300 jobs

275,400 jobs

245,000 jobs

49,000 jobs

43,162 jobs

454,190 jobs

157,000 jobs

181,000 jobs

535,000 jobs

109,335 jobs

Sector GNI contribution in 2020 Job creation

MYR 59.7bn

MYR 171.9bn

MYR 113.3bn

MYR 65.2bn

MYR 30.0bn

MYR 136.6bn

MYR 30.3bn

MYR 67.1bn

MYR 66.7bn

MYR 11.9bn

MYR 19.86bn

MYR 18.9bn

Investment

GREATER KL EPP4 Mass Rapid Transit (MRT) Line 1

Current Overall Progress: 62% Completed Expected Phase 1 Completion: December 2016

Expected Full Line Completion: July 2017

OIL, GAS & ENERGY EPP13 Pengerang Integrated Petrochemical Complex (PIPC) Creating Value-Added Downstream

PALM OIL & RUBBER Progress Upstream & Downstream

EPP5 • Encourage mills to install biogas facility in tandem with

environmental objectives. • 66 completed, 13 under construction and 150 under planning

EPP1 and 2 • 434,211 ha* replanted and new planted between 2011 – 2014 • 14% of 5.4 mil ha palm oil land in Malaysia belongs to independent

smallholders • 27.6% of total palm oil area has been certified with 1 or more

standards

EPP6 and 8 • RM3.1b commitment in oleo derivatives & food & health segments

up to 2014. • 12 clinical trials to expand palm-based food and health

applications & markets.

Downstream

Midstream

Upstream

PALM OIL: RM3.1 bil committed investment in donwstream

• Note: 434,221 ha of replanting and new planting = 6 X the size of Singapore Approximately 50 mil trees based on 120 trees per hectare

52,106,520 palm oil trees were planted

Step 3: Conduct Town Hall to get public buy in

Step 4: Publish transformation Roadmap

Step 5: Assign KPIs to leadership

Step 6: DMS Implementation

Do it relentlessly

Monitor it constantly

Solve problems recursively

Do it relentlessly Work on it “as if your life depends on it”

49

To achieve this KPI, the ministry TRANSFORMED immediately and as a result, Sabah achieved

SAIDI of 687 minutes in Dec 2010, surpassing the target set of 700 minutes

2005 2006 2007 2008 2009 2010

3,996 4,030

1,987 1,867

2,867

687

-76%

SAIDI in Sabah (2005 – 2010)

Monitor it constantly Weekly dashboard

Solve problems recursively Problem-solving meetings and Putrajaya Inquisition

Step 7: Validate and confirm results

Step 8: Assess performance of Ministers and Publish Annual Reports

Examples of 2014 ETP KPI results

96% 108% 103%

Thank you