Bismillahirrahmanirrahim

Assalamualikum wa Rahmatullahi wa Barakatuh

Salam Sejahtera dan Salam 1Malaysia

Datuk John Zinkin,

Dato’ Richard Azlan Abas,

Members of the Boards of PETRONAS Group of Companies,

Welcome to this foundational PETRONAS Board Excellence program which is jointly designed and developed by Group Secretarial & Board Governance, PLC and Malaysian Directors Academy (MINDA). I am delighted to see each one of you making the time to be here today as you continuously invest in your development, so that, as Directors, you are able to shoulder the amanah given more effectively.

Ladies and Gentlemen,

2. Last Tuesday, November the 8th, Americans elected Donald Trump to be the next President of the United States. Almost everybody – the pundits, the media, the political observers – have not predicted a Trump win.

3. With his campaign of “Making America Great Again”, it will be interesting to see how this impacts us at PETRONAS, as well as Malaysia. The Trans-Pacific Partnership Agreement (TPPA) and USD-Ringgit foreign exchange are amongst others that could be affected. The Ringgit is already in the region of 4.40 per US Dollar.

4. In navigating through these uncertainties of the world’s geopolitics as well as adjusting to the “new norm” of the oil and gas industry, Directors of Boards have a crucial role. What can we do to equip our Directors with the essentials so that they can provide the stewardship and drive in this fast-paced and ever changing environment, for our Group of Companies to emerge ahead of the curve.

Ladies and Gentlemen,

5. Given the increased expectations for more “effective Boards”, it is very important for Directors to be on a continuous learning journey. The PETRONAS Board of Directors Development Series will focus on four key development areas, namely: Board Effectiveness, Regulation and Outside Scrutiny, Oversight of Risk Taking, and Strategy and Growth. Within these areas, it will address governance, performance, strategy, non-financial metrics, risk, top management succession planning, regulatory landscape and reputation, among others. We strongly believe that this development series is an investment in our current and future leaders. An investment that we must not compromise on, even in most challenging of times. This will definitely ensure that succession planning and the sustainability of a strong leadership pipeline is preserved.

6. These series consist of two types of programmes. The first is Foundational programme which includes today’s and tomorrow’s sessions. It is developed especially for newly-appointed Directors or for the seasoned, as refresher, to sharpen and strengthen necessary skills in Legal, Governance and Policies, Financial Literacy, Roles & Responsibilities, and Ethics.

7. The second type of programmes are Advanced programmes. This will comprise topics such as Best Practices on Board Effectiveness, Stakeholder Management, Innovations, Sustainability, CSR and Groups’ specific needs such as those of Audit and Remuneration Committees.
Ladies and Gentlemen,

8. As Chairman of MDEC, I visited Silicon Valley two weeks ago. In my mind, beyond anything else, Silicon Valley is more about mindset. One that we could learn. It is a mindset that empowers and have a big enthusiasm for openness to collaborate and connect – be it ideas, services or products. They also do not try to do everything themselves. They optimise their resources efficiently!

9. At General Electric (GE) Digital, CEO Bill Ruh stressed that the first step GE took in order to remain innovative and ahead of the curve was to shed away the arrogance of their industrial success. Indeed, they embraced new ethos that they do not know everything! With this kind of mindset, it has enabled GE to connect and learn from others. Including from their competitors. To them, they are learning from those who have better ideas, knowledge and experience – a view from different perspectives. A view that could have been in the blind spots all these while. GE collectively understand that the days that they know best are over.

10. With a workforce of more than 333,000 spanning more than 170 countries, it is no wonder that GE is ranked 26th in this year’s Global Fortune 500. It is because they have innovatively transformed themselves beyond just an OEM! And they have continuously done so from the days of their founder, Thomas Edison.

11. As Directors, this is a very powerful lesson which we must take on board. We must, from the top, set the right tone to promote and practice the spirit of continuous learning, openness, collaboration and partnership.

12. In fact, given the size of our Group of Companies, there are tremendous opportunities for us to leverage on each other’s strengths. The openness will allow us to go beyond our respective OPUs. Beyond Downstream or Upstream or PD&T businesses. Maybe, we can learn as well from other Companies. Even our Competitors.

Ladies and Gentlemen,

13. The pace and speed of companies in Silicon Valley developing their disruptive entrepreneurs and companies that will unsettle the brick and mortar companies is alarming. Be it Draper University, Plug and Play or Boot Up World, they have the mental make-up of wanting to push faster, better and newer way of solving problems through series of start up companies. If we are not able to have the foresight of these disruptive innovation, we will not even realise when the disruptive trains hit us!

14. KPMG’s September 2015 Global Boardroom Insights reported that “53% of directors say their board’s involvement in the formulation and consideration of strategic alternatives have increased in the past 2 to 3 years”. This gives a clear indication where Board of Directors can and should act as a Company’s disruption antennae. Our Boards must go beyond only ‘reviewing and concurring’.

15. It is in this context that I highly encourage you in your respective areas and Boards to voice out ideas and opinions. Innovation can only flourish if we actively encourage curiosities, questions and debates. This is where we live by hierarchy of ideas, and not on hierarchy of positions.

16. I also firmly believe that an effective Board is one that consistently arrives at an informed decision, after open and candid discussions that leverage on the diversity of its members. Where members have timely access to relevant information that could influence and impact their views on the decisions to be made. And where members recognise their responsibility as Board Members.

Ladies and Gentlemen,

17. Since its inception in 1974, PETRONAS has grown to be the only Global Fortune 500 Company in Malaysia. This was made possible by our founding fathers who had far sighted visions and wisdom, shouldering very deliberate and careful planning as well as fierce focused implementation. That had pushed our Company from only a domestic regulator to a respectable global oil and gas company. These have been achieved through a lot of sacrifices, and hard work from everybody within PETRONAS all these years.

18. We must also recognise the operational freedom given to us by our Shareholder, for us to excel. To be successful. To be where we are today.

19. I need to constantly remind us all of this. To remember where we come from. The raison d’etre for our establishment. With the provisions enshrined in the Petroleum Development Act, we were incorporated as the National Oil Company with one Shareholder, the Government of Malaysia. We are committed to our Vision and Mission, guided by our Shared Values. I strongly believe given the challenges we face, we are on the right path where we are reshaping ourselves through the PETRONAS Cultural Beliefs.

20. I recalled what Toto Wolf shared during a luncheon talk we had with him. He pointed out why MERCEDES AMG PETRONAS Formula One Team have been winning the Formula One World’s Constructors’ Championship title 2 times in a row at that time. The 3rd title was won a week later in Japan. Marvelous achievements! The simple reason is that he and his team are always focused on the next race and disregards his team’s list of accolades. He is very focused on what or how else can be improved. More importantly, he believes that success can breed complacency. To him, the team must remain agile, highly competitive, constantly adapting, looking for new advantages. They continuously learn to be better. Immediately after each race!

21. Programs such as today and tomorrow are testaments for us to continuously be relevant.

Ladies and Gentlemen,

22. I hope you all will have a constructive discussion in this programme. The session provides a safe environment for each one of us to continuously build on the existing relationships and learn from each other. So grab these golden opportunities. Exchange ideas. Listen to one another. That is the power of networking!

23. In the spirit of ‘Tell Me’, I urge you to actively seek and give feedback on the programme for continuous improvement. Help them to help all of us to receive the best learning experience.

24. As Directors, we need to lead by example and propagate what we have endorsed and approved at every opportunity we get. Our actions today will go a long way. They have the power to shape our Organisation. Our people. For years to come.

25. It is my sincere hope that you leverage as much as possible in all the learning platforms provided so that we can deliver on the great amanah as a board member to the best of our ability. Let’s ‘Own It’ together and I am confident we will have ‘Shared Success’. Ensuring our Company remains relevant in the future. And for future generations of our Country.

Thank you.

Bismillahirrahmanirrahim,

Assalamu’alaikum Warahmatullahi Wabarakatuh,

Salam Sejahtera

dan Salam 1Malaysia,

Professor Dr. Randel Carlock,

YBhg Tan Sri Zarinah Anwar,

YBhg Dato’ Raiha Azni Abdul Rahman,

Members of the Board of Directors of PETRONAS and PETRONAS Group of Companies.

2. First and foremost, I would like to congratulate all of you for setting aside your normal schedules to be here today. I am happy to see that you have demonstrated, as leaders, that learning is a continuous process, regardless of where you are in the Company. I strongly believe that one of the best investments, is always in investing in our own development. Our own growth. This will only push ourselves further. Our Company forward. Our Nation to a higher level.

Ladies and Gentlemen,

3. When we kicked off the PETRONAS Board of Directors’ Development Series back in February this year, we were about to embark on our Transformation journey. And the world that we live in today, is far much different from the times we were in 6 months ago. As cliché as it sounds, Change, truly, is the only constant.

4. We have seen a lot in the past couple of months. And, more. The unexpected Brexit! Turkey’s failed coup d’état. Pokemon Go. It’s now Hillary versus Trump. Growing security threat in our own backyard.

5. There’s also some pleasant surprises as well. A team of nobody like Leicester City displayed outstanding achievement in EPL. Who would have thought! Iceland knocked out England in Euro 2016 – what can we learn from it? Rosberg who had won many races in the first half of the F1 season is now trailing Hamilton by 19 points! Though that’s not so bad since both are in our Team.

6. Closer to our hearts, our ranking in the Global Fortune 500 dropped from 68th to number 125. We attribute this mostly to the sustained low oil price, the same that affected other major players in our industry with the likes of Shell, ExxonMobil and BP dropping in their rankings. Though they remain in the top 10!

Colleagues,

7. Given all these, there is a greater demand for all of us to ‘step-up’ our game in providing stewardship and drive in this fast and ever-changing global economy dynamics, technology disruption and geo-political uncertainty. Boards are required to be more effective in discharging their roles, increase their focus on stakeholder engagement and be vigilant in risk oversight.

8. Reports on board practices indicate that one area of focus is the diversity of boards. Tremendous changes in corporate landscape entails the need of directors with differing views and independent oversight in critical areas such as risk and strategy. Companies are addressing this need by recruiting directors of different gender, ethnicity and industry. PETRONAS too demonstrates the importance of diversity as it rigorously reshuffle membership to include directors from all of its businesses, be it upstream, downstream or holding company. In the Main Board as well as its subsidiaries. Equally important, if not more, is ensuring that the pipeline for such appointments remains flowing.

Ladies and Gentlemen,

9. Outside scrutiny has been intense over the years as stakeholders are influencing governance matters. Directors are required to engage proactively and effectively with stakeholders to understand issues that garner their interest. In this aspect, we at PETRONAS, will do well to remember our roots. To remember our shareholder and our stakeholders. The facilitative, collaborative and engaging mindset is important if we want to win over those around us.

10. Risk oversight has constantly been a challenge for organisations and boards. Directors around the globe, as stated in Spencer Stuart’s 12th Annual What Directors Think Survey, do not believe that organisations are able to ‘fully anticipate the different aspects of risk in current corporate environment’. One example in our case is with Progress Energy where we witness after much due diligence by Management and many deliberations with board, there are still many lessons for our future undertakings. In the same breath, we have a lot to learn from Brexit in itself. Who would have thought the Leave campaign would win?

11. Given the increased expectations for “effective boards” it is incumbent for directors to be on a continuous learning journey mode. Including within the Board itself.

12. To me, an effective Board is one that habitually arrives at an informed decision, after candid discussions that leverage on its diversity. A Board where all members, independent and executive, have timely access to information that could influence and impact their views on the decisions to be made.

13. In addition to the Board’s internal dynamics, training programmes serve as platforms for us to participate and continuously learn from each other, from external practitioners and peers from differing organisations and industries. We must habitually see value and actively promote cross-learning between and among our directors. The Main Board sets the policies and the tone for the Group. And they must cascade across the Group of Companies.

14. This is where we must leverage on each other’s strengths and learn from our individual and collective experiences for the greater good of PETRONAS. Beyond our OPU. Beyond our downstream or upstream business. That in these learning sessions and in deliberations across the group, we are guided by the principle of “hierarchy of ideas. Not hierarchy of positions”. Today’s session and for the coming series, provides a safe environment for each one of us to continuously build on the existing relationships and learn from each other. So grab these golden opportunities. Exchange ideas. Listen to one another. That is the power of networking!

15. I also see much value in interactions with those outside our Company. I benefitted from attending the Advanced Management Program, the AMP at Harvard in 2001. In fact all the 3 “Wise Men” in the Malaysian Civil Service when I was the Chief Secretary attended the Harvard AMP at Cambridge Massachusetts at one time or another. Later on, we brought the same Harvard Professors who conducted the AMP to do a similar program at INTAN where 100 plus of the best potential of the Malaysian Civil Service attended. I truly believe the participants benefitted from interactions with the Professors and their civil service colleagues. However, I gathered that there is a lot more value when one can get different perspective from participants from various countries and industries such as from Australia, UK and even general from Israel. That is value of openness and inclusiveness as opposed to insularity, however exclusive the inhabitants of the latter are!

Colleagues,

16. As the provider of board training for the Group, PETRONAS Leadership Centre offers a suite of solutions, dubbed PETRONAS Board Excellence that focuses on Board Effectiveness, Regulation and Outside Scrutiny, Oversight of Risk Taking and Strategy and Growth. These are the four (4) key development areas for directors. Collectively, the suite addresses governance, performance, strategy, non-financial metrics, risk, HSE, reputation regulatory landscape, among others.

17. There are two types of solutions under the suite. The first is the foundational programme or known as ‘Essentials for Directorship’ for potential and newly-appointed directors as well as those who wish for a refresher. It covers knowledge and skills in Governance, Policies, Finance, Roles & Responsibilities and Ethics. This is an investment, which we will not compromise, to ensure succession planning and the sustainability of the leadership bench strength in PETRONAS.

18. The advanced class, which is the second type under the PETRONAS Board Excellence, cover topics such as best practices on board effectiveness, Stakeholder Management, innovation and groups’ specific needs such as those of Audit and Remuneration Committees. Currently, two programmes have been designed and developed under this type which are ‘Best Practices for Board Excellence’, the programme you are attending today and ‘Effective Strategy for Stakeholder Management’, a programme to be conducted in October 2016. These two programmes cover topics which are considered as the current top 5 concerns by global directors in reports such as Deloitte’s 2014 Board Practice and Spencer Stuart’s 12th Annual What Directors Think Survey.

Ladies and Gentlemen,

19. I hope you will have a constructive discussion today with everyone as we progress. In the spirit of ‘Tell Me’, I urge you to actively seek and give feedback on the programme for continuous improvement. The programme team consisting of Group Secretarial & Board Governance, PLC and Malaysian Directors Academy (MINDA) strive to ensure the programmes are constantly up-to-date, relevant and comprehensive. Help them to help us to receive the best learning.

20. As directors of PETRONAS and its subsidiaries, we need to propagate what we have endorsed and approved at every opportunity we get. Our actions today will have the power to shape our Organisation. Our people. For many years to come.

21. It is my sincere hope that you leverage as much as possible in all the learning platforms provided so that we can deliver on the amanah as a board member to the best of our ability. Together we ‘Own It’. Together, we will have ‘Shared Success’. Leaving something better for our Organisation. And for future generations of our Country.

Thank you.