Human capability drives the future of Sabah’s GLCs

DISCUSSIONS about the performance of Government Linked Companies (GLCs) in Sabah often begin with a stark statistic that sets the tone for deeper inquiry. Only about one third of these entities are currently delivering dividends to the State Government. This is a strikingly low proportion when viewed against the size and significance of the ecosystem itself.

Sabah’s GLC landscape includes twenty-seven top tier state owned companies, twenty-two statutory bodies and more than two hundred subsidiaries, associate companies and joint venture vehicles. Collectively, they form an extensive network of institutions that shape the state’s economic direction. They operate in sectors that influence the lives and livelihoods of Sabahans every day. These include energy and utilities, plantations, property development, industrial land management, tourism, logistics, transport, financial services, insurance and community development. Since GLCs sit at the intersection of economic development, public service delivery and state level investment, the limited proportion of dividend contributing entities raises serious questions about capability, oversight, managerial discipline and strategic alignment.

There is a common misconception that the performance gap can be explained entirely by market conditions or by the social responsibilities carried by certain GLCs. While some GLCs do indeed serve mandates that emphasise development rather than profit, many others operate in commercially viable sectors that possess the potential to generate steady and sometimes substantial returns. Plantation entities, for example, can be profitable when estates are managed efficiently, when replanting cycles are planned well and when downstream processing is executed effectively. Energy companies can maintain stable financial positions when infrastructure is upgraded and billing systems are modernised. Industrial development entities can expand their revenue base by managing industrial parks strategically and by offering value added services to tenants. Property developers can succeed when they plan projects according to market demand and execute them professionally. The fact that only some Sabah GLCs meet these attainable performance standards suggests that internal organisational challenges, rather than systemic external constraints, account for much of the disparity.

This reality has gained the attention of Sabah’s leadership. The State Government has articulated a clear expectation that GLCs must move beyond prolonged underperformance. Companies that are unable to generate profits over a continuous period of five years, and that fail to show a credible recovery path, may face closure. This expectation represents an important shift from past practices in which non performing entities were often retained for reasons related to political considerations, legacy sentiment or reluctance among officials to make difficult decisions. The new stance signals that the state views performance as a key measure of stewardship and that GLCs must demonstrate they are viable and relevant.

However, policy directives, no matter how firm, fall short of driving genuine progress when internal capability remains weak. Performance relies on the quality of leadership, the discipline of decision making, the strength of governance systems and the competence of the workforce. These ingredients seldom emerge automatically. They must be cultivated through deliberate, structured and sustained investment in corporate training and people development. For this reason, any discussion about improving the performance of Sabah’s GLCs must place human capability at the centre. It is people who interpret financial data, design strategies, implement operations, interact with customers, manage risks and uphold the organisation’s integrity. Without sufficient skills or confidence to execute these responsibilities effectively, organisational performance inevitably suffers.

Examining the real situations encountered across Sabah’s GLC landscape helps illustrate the way capability gaps translate into performance challenges. One of the most persistent issues involves legacy companies that have survived long past their purpose. Over several decades, various entities were created to deliver specific initiatives such as agriculture programmes, small scale industrial projects, tourism attractions or community enterprises. While some achieved their intended goals and others fell short, many of the companies established for these initiatives remained in existence even after their original objectives had ended. They continued to incur recurring costs for audits, accounting, administrative functions and minimal staffing. In many cases, the cumulative cost of keeping these companies alive exceeded the value they ever generated. The persistence of such entities reveals a lack of capacity among officers to conduct systematic reviews of organisational relevance or to manage winding up processes. Proper training in corporate restructuring, legal compliance for dissolution and strategic portfolio assessment would better equip officers to make clear and confident recommendations.

Joint ventures provide further examples of capability limitations. A number of Sabah GLCs entered partnerships with private companies to pursue ventures in tourism, agro based processing, manufacturing and infrastructure. Some of these partnerships began with optimism but stagnated when market conditions shifted, when partners withdrew or when initial business models proved unrealistic. Instead of being responsibly dissolved, many joint venture companies lingered in dormancy because managers lacked training in interpreting shareholder agreements, calculating exit obligations or negotiating settlement terms. As a result, these companies remained on the books, consuming resources without creating value. A management team with training in commercial law, partnership governance and conflict resolution would be far more capable of navigating such situations effectively.

Financial literacy is another area where gaps have contributed to prolonged underperformance. In several cases, the strong performance of one subsidiary created the appearance that the entire group was stable. Meanwhile, other subsidiaries continued to accumulate losses. Without training in analysing consolidated and segmental financial statements, some board members and executives overlooked the depth of the problem. Issues such as asset impairment, cross subsidisation or declining operational margins can escape attention when financial competence is limited. With appropriate training, leaders would know the methods to interpret early warning signs, question key assumptions and insist on timely interventions.

Operational inefficiency also results from gaps in digital capability. A number of GLCs continue to rely on manual processes for payments, procurement, customer records and internal reporting. These outdated methods lead to delays, inaccuracies and unnecessary administrative burdens. Digital transformation encounters resistance not because digital solutions are unavailable but because staff lack confidence or training in new systems. Training in digital literacy, process automation and data management would help modernise operations and reduce risks. For example, a GLC responsible for housing management may face recurrent complaints about slow application processing simply because staff are manually updating spreadsheets instead of using integrated systems. Training would address this shortcoming directly.

Procurement challenges also demonstrate the way training can strengthen organisational resilience. Some GLCs have committed to projects without thorough evaluation of costs, timelines or contractor capability. Others awarded contracts without applying risk based assessments or market benchmarking. These shortcomings arise when staff lack exposure to procurement governance, vendor evaluation techniques and financial modelling. Training would equip officers to make better decisions, negotiate more effectively and protect the interests of the state.

Human resource management presents another dimension in need of training. Supervisors who lack skills in performance appraisal, communication, conflict management or employee development often struggle to cultivate accountable and motivated teams. When expectations become unclear and feedback inconsistent, productivity declines. Well designed training in people management can empower supervisors to set clear expectations, identify skill gaps, engage employees constructively and support career progression.

Customer service and stakeholder communication also benefit from training. Many public complaints arise not from the service itself but from the quality of interaction with staff. A customer may feel frustrated if instructions are unclear or if follow up is slow. Training in communication, customer handling and service recovery can substantially improve public trust and satisfaction. Even simple improvements in tone, clarity and consistency can transform the reputation of an organisation.

Organisational culture is a deeper and often more complex area where training plays an essential role. In some GLCs, cultures of caution, passivity or fear of making mistakes have developed over time. Staff may avoid proposing ideas because they lack confidence or because previous attempts received little encouragement. Training that promotes critical thinking, creativity, problem solving, teamwork and ethical responsibility can shift these entrenched behaviours. When employees feel empowered and capable, they become more willing to take initiative and more committed to organisational goals.

Taken together, these examples illustrate the central importance of corporate training in improving the performance of Sabah’s GLCs. Training strengthens board governance, enhances managerial competence and cultivates operational discipline. It deepens financial understanding, improves digital readiness and refines customer service. It helps transform organisational culture into one that values accountability, innovation and continuous improvement.

For training to be effective, however, it must be systematic rather than sporadic. Occasional workshops seldom create sustainable capability. Training requires planning, structure, consistency and alignment with organisational objectives. It must be supported by leadership at all levels and integrated into performance evaluation systems. When training becomes institutionalised, organisations develop the resilience and adaptability needed to thrive.

The expectations set by the State Government reinforce the urgency of these efforts. If GLCs are expected to demonstrate viability within a five year horizon or face closure, they must equip their people with the capabilities necessary to meet those expectations. Training serves as the bridge between policy ambition and practical performance. Without strengthened capabilities, reforms struggle to achieve their intended outcomes.

Sabah’s GLC ecosystem holds significant potential to become a strong engine of economic growth and public value. The state’s natural resources, expanding industries and strategic location offer opportunities that can be harnessed more effectively. With strong governance, competent leadership and a well trained workforce, GLCs can elevate their contribution to the state’s development. A well trained organisation is a performing organisation. As Sabah strives to strengthen its GLCs, investing in people stands not merely as an option but as a strategic necessity. The future strength of the system will rest heavily on the readiness, capability and confidence of those who serve within it.

Dr Richard A. Gontusan is a Human Resource Skills Training and Investment Consultant. He holds a Bachelor of Science Degree in Management Science. The information presented in this article is sourced from the public domain. His views expressed in this article are not necessarily the views of The Borneo Post.