Bismillahirrahmanirrahim

Assalamualikum wa Rahmatullahi wa Barakatuh

Salam Sejahtera, Salam 1Malaysia and a very good morning,

Yang Berbahagia Datuk John Zinkin, Ladies and Gentlemen.

I feel so excited to address a group of PETRONAS executives, who are not only based in Malaysia but from all over our global operations. Welcome to the ‘Essentials for Directorship’ programme, which is the foundational programme of the PETRONAS Board Excellence suite.

2. You will learn throughout this 2-day programme on your role as a board member to understand your fiduciary roles and accountabilities as well as keeping abreast with the latest development in matters related to governance and policies. Skills and knowledge to prudently manage risks, champion governance, embrace diversity and investing in human capital effectively in our journey to push ourselves beyond what we are today. I am pleased to see your willingness to invest the time so that you are able to shoulder the ‘Amanah’ as directors more effectively. This, I am certain, will enable progressing our Organisation to much greater heights.

3. I am therefore, very delighted to be here today amongst you, to do the context setting on a learning that is very crucial for senior executives as well as board members across PETRONAS Group of Companies to be equipped with. It is also an opportunity for me to see so many good timber in our PETRONAS forest, some coming as far as South Africa, South Sudan, London; but also the local heads of Kertih and many more. This is also a great opportunity, for me to share my views to an important, responsible, and I trust, responsive audience, on a number of issues which I am passionate about and important for us to think ahead.

Ladies and Gentlemen,

4. We have just released our Quarter 3 financial result last week and I take great pride on the performance of PETRONAS. With the current modest oil price trajectory, I am confident with all our collective efforts working in concert and in harmony, we will be finishing 2017 strong. Taking a leaf out of the 1-2 finish of the Mercedes AMG PETRONAS team in Abu Dhabi.

5. With that in mind, we must always lead by example. Because as leaders, as members of various boards at various locations within the Group and as senior executive of our own outfit, we must first and foremost, live by the PETRONAS code and standard. We must set and drive the tone at the top for our organisation. And we must be conscious of these because our action or inaction in these areas will mean something to our people. Matters pertaining to INTEGRITY and HSSE we must strictly have Zero Tolerance for non-compliance. Correspondingly, we must also catch and appreciate those who demonstrated excellent values and behaviours of what I refer as The Ten Commandments. They are:
i. Customer Focus
ii. Sense of Urgency
iii. Complaint is a Gift
iv. Collaboration
v. Seeking Knowledge and Continuous Improvements
vi. Courage to Speak
vii. Engagement
viii. Integrity

6. In the past, decisions to shut down our plants due to HSSE concerns would have been brought up to the highest level of authority in PETRONAS, that is, the ELT, to make the call. Our front liners in the plant were worried how would shutting down the plant affect their respective production KPIs. More so towards the end of the performance review period, like now.

7. Less than 2 weeks ago, on Sunday, 19 November, the leaders at MLNG plant took the bold step forward to quickly act and decided to shut down the plant due to propane leakages in its heat exchanger for MLNG’s Module 1. This took place at a time when the raw gas supply is at its optimum level compounded with the high LNG cargo demand due to winter season in the northern hemisphere, with good selling prices. And it is end of the year where KPIs are being appraised. Leakages of propane is very high risk for the plant as late or inaction would have caused explosion at our PETRONAS LNG Complex.

8. Alhamdulillah, our leaders are beginning to be courageous in taking bold decision although the shut down could have a potential loss of 0.7 BCe (Big Cargo equivalent) which represents RM 67 million. I like to relate this. It clearly demonstrates that HSSE is our top priority. Even though it is better financially, at least in the short term for the operation to continue, in PETRONAS the safety of our people and our reputation, are more important. We want to ensure that all employees of PETRONAS, be it in the plants or at Twin Towers, get to go back see their loved ones. And this is an encouraging event.

9. The PETRONAS Board, which I have the privilege to chair, applauds decisions and actions such as this. Such as cross sectoral and interdisciplinary collaborations in addressing a major fire at Melaka Refinery in February this year. In the firm action on transgressors, including collaboration with SPRM! That is the tone from the Top. You all too, must embrace that.

10. Setting the right tone at the top goes a long way for our organisation. Externally, it becomes the benchmark for others to follow. That is why I really like our Trailblazing No Gift Policy. We were the first in Corporate Malaysia to do so and it has now set up the standard for others to follow. Not only in Corporate Malaysia in the likes of PNB and others but also in government ministries and departments, such as in the Ministry of Finance.

11. Tun Zaki Tun Azmi in his authorised biography “No Nonsense” stated inter alia that his best innings were on the Board of PETRONAS where he lasted 18 years and was cut because of his appointment to the Federal Court. He was a good official friend and is a close personal friend. He told me that his experiences as a PETRONAS Board member as well as Chairman of the Audit Committee assisted him in reforming Malaysia’s judiciary administrative processes when he was Chief Justice.

12. So as you can see, our impact goes beyond the borders of PETRONAS. We are the trailblazer in pushing the standards of Board performance! It is so very important that we in PETRONAS, in leadership positions particularly, must have those in our heart, more than emblazoned in the foyer of the Twin Towers.
Colleagues,

13. Less than 2 weeks ago, Elon Musk continued to mesmerise the world when he introduced the Tesla Semi Truck – their all-electric freight truck that can travel between 480 km to 800 km per charge. A distance that could easily displace the current fuel-based transportations with the black smokes chiming out of these heavy duty vehicles that connects Kuala Lumpur to anywhere. Bukit Kayu Hitam is 476 km away, JB – 329 km and Kota Bharu – 438 km. With just one additional charge, this truck can cover the distance between Kuching and Kota Kinabalu (1,044 km). Definitely a lot easier once the Pan Borneo Highway is ready in 2022. Add on all the expensive cost in maintenance of these fuel-burning engines, it makes a no brainer for logistics companies to queue up the reservation line. The world has yet to come to terms with the introduction of Tesla’s Model S, Model X, Model 3 and its latest Roadster, and here we are faced with another disruptive train – at full speed – coming our way.

14. Of course, we can argue that this has yet to come to production. The Tesla Semi Truck is scheduled to hit the road only by late 2019 or maybe later. Given production problem with Model 3, it could just have the same problem for Tesla Semi Truck. The key point is somebody, somewhere is working hard to get these EVs out. If not Tesla, it could be GM or other companies who have made big investments into EV production lines.

15. The key question for us – as leaders at the Board level – how do we steer our Company forward? What’s the future of oil production? Future of PETRONAS Dagangan retail stations – more so given the momentum around the world against new gasoline and diesel cars in their push for cleaner environment?

16. To me, that is why we must bring the 27th century mindset forward to today. We must make every effort to think deep and hard, for us to step up or step out for tomorrow, TODAY. I am comforted to see that we’re making inroads into the realms of unfamiliarity as highlighted by Tan Sri Wan Zul in his recent monthly message to “step out” into Renewables, truly the uncharted waters for a predominantly Oil and Gas company. And the PETRONAS Board is certainly behind this move. Correction: In front of this move. All of you must take heed, moving forward.

17. In tandem with these global developments, just over a week ago, we kicked off the TN50 Oil and Gas, Energy and Environment (OGEE) workshop with all relevant stakeholders. They include EPU, MOF, KeTTHA, MITI, NRE, MOSTI, Bank Negara Malaysia, Energy Commission, Akademi Sains Negara; as well as industries representatives from TNB, Sarawak Energy, Shell, Petron, Dialog, Sapura Energy, MOGSC, MIGHT as well as academicians from UKM, UTM, UTP; and many more. This is where all parties present are already thinking beyond their remit to see what’s best for the country. After all, all of us, even in this room today, certainly want what is best for our children and the generations to come. The Government designated PETRONAS to lead the OGEE sector for the TN50 Agenda. In this endeavour or for other endeavours, we must always think of what is the greater good. BEYOND OUR OWN.

18. In similar fashion, each one of you here represent different businesses – some from Corporate, others from Downstream or Upstream. To me, what is more important is that we are united in our greater purpose! Beyond the territories of our OPU or our business. And today, we have in this room a variety of leaders with diverse background and experience that would be beneficial when you share your experiences and ideas. Leverage on each other and I am sure there’s so much to learn. This to me, is one of the biggest value of attending such programme as it will further expand our horizons and thinking. For the GREATER GOOD of PETRONAS. AND, BEYOND – FOR THE GREATER GOOD OF OUR COUNTRY.

Ladies and Gentlemen,

19. Earlier this month, as the Chairman of MDEC, I had the opportunity join their Immersion Program in Silicon Valley, California together with a group of Malaysians, mostly young, start-ups and tech-entrepreneurs. I am convinced that the key take away from this trip is that Silicon Valley is not about the place or where it is located. Silicon Valley is all about the MINDSET. This was highlighted by countless personnel that I met in Silicon Valley. That is why Silicon Valley is hard to be replicated elsewhere. Hard, but not impossible. And I believe the mindset can be replicated in this room, in the Twin Towers and in Tronoh.

20. The Silicon Valley mindset is a mental make-up of wanting faster, better and newer way of solving problem – solving somebody’s pain points. They also acknowledge that they do not know everything and would collaborate with external companies who knows better, knows best. Despite its glorious technological advancement, with humility, they contextualise their solutions by using simple language when communicating with their stakeholders because they understand their market – that is – with the viral power of social media, their products and services can reach out to the market almost instantaneously. They are not bothered about being perfectionist. They build their products to the best of their ability and will refine along the way. This iterative process sets the pace of products and services coming out of Silicon Valley.

21. The citizens of Silicon Valley also portrays the thinking of possibilities where everything, anything is possible. For instance, at X – the moon shot factory of Google, they actively embrace failures because by making mistakes, they proved it can’t be done and they pivot elsewhere to make progress. In many ways, each idea they worked on either gets stronger or discarded for them to move on to new ones. That is a fresh perspective on how one should view failures. Rather than weaken, it actually made them stronger and bolder.

22. Another one that captured my attention is the ‘Pay It Forward’ thinking where success breeds more successes. The mentors and advisors are willingly spending time with budding start-ups and entrepreneurs, and became role-model to one another. In fact, they have the belief that wealth creation is to be emulated, not to be envious about. It is the spirit of “if he or she can do it, I can do it too!” These brought about the culture of risk-takers and strong collaborations. Companies that demonstrate resilience, resourcefulness and build network to learn from the best are the ones that will succeed. I hope and believe the more successful among us will mentor the up and coming startups among us in PETRONAS.

23. As a Fortune Global 500 company, these are attributes that we must emulate in PETRONAS to ensure our business sustainability and lasting presence. In addition, this Silicon Valley mindset will enable us to push ourselves out of our norms and comfort zone. To explore the world of possibilities in coming out with great innovations, we must be disruptive in our innovation process and be open for strategic collaborations with others, to stay ahead of the curve. In my mind, this is what PETRONAS Cultural Beliefs is all about in substance. It must be in our DNA to continuously challenge the status quo – for the benefit of PETRONAS in the long run. And, more importantly, beyond PETRONAS, for the country.

Ladies and Gentlemen,

24. I would like to now speak about gender diversity. Globally the trend is increasing over the last three years, with Malaysia setting its target of 30 percent women participation. PETRONAS must take the lead in this. Women participation at the Board level in the PETRONAS group has shown positive development. We have grown from 15.4% in 2016 to 31.4% as at November 2017 with 72 women directors out of total of 229 directors in PETRONAS Holding, Upstream and Downstream – both in the listed and non-listed companies. This must be sustained. It should not only be at Board levels. It must encompass all levels so that there will be ready women talent to be considered for future appointments to Management and later on pitch in to the funnel at Board level. Having said so, all these must be on the basis of merit as our true north.

25. Of course, diversity does not stop at gender alone. We must be have the diversity across age, ethnicity and certainly industry. I am sure as some of you who sits on the board of our joint ventures or overseas entities would certainly have experienced the benefits from the diversity and inclusivity of board deliberations and discussions. It is not always easy to hear differing opinions but herein lies the beauty of “hierarchy of ideas”. As leaders, we must ensure that it is safe for people to have differing views. In fact as leaders we must reward people who give views that differ for ours but makes more sense!

Ladies and Gentlemen,

26. All programmes under the PETRONAS Board Excellence suite are testaments to our continuous pursuit to be relevant. I was informed that we have started to infuse the case studies with real life situations as experienced by our own PETRONAS teams such as the one in South Sudan case in your pre-reading pack. This we ought to do more. Given our 43 years of existence, there are a lot of untold stories to be discovered and more importantly to be learnt, even at board levels.

27. I want to stress again the criticality of providing a safe environment for each one of us to openly and frankly discuss critical issues. Not only here, but as a way of life.

28. I am confident, with our feet firmly on the ground, we will be successful in our pursuit of Board Excellence through strong foundation and understanding of fiduciary responsibilities that will be learnt and discussed in the next 48 hours. Insya Allah, PETRONAS will continue to stand tall, sustainable and relevant, and may the learnings, and practice, enable each one of us to leave a lasting legacy for many generations to come.

Thank you.

Monday, 7 August 2017

Bismillahirrahmanirrahim

Assalamualaikum wa Rahmatullahi wa Barakatuh

Salam Sejahtera, Salam 1Malaysia and a very good morning

Professor Dr. Randel Carlock, Ladies and Gentlemen,

I very much look forward to having this conversation with you today. This is because all of you, with the exception of Dr Carlock, are in an executive position with PETRONAS and/or its subsidiaries; and all are on the board(s) of PETRONAS-related entities. More importantly, you all are on the upswing. I see that a number of you are already in Datuk Wan Zul’s position in your respective area.

2. I know that I am here to do the context setting for your 1-day event today. One that is related to Board of Directors and being a Director of the Board, covering the subject “Best Practices for Board Excellence”. However given your dual roles, I cannot resist saying this: “Best Practices for Board Excellence” is the same as learning about “Best Practices for Management Excellence”.

3. You will learn or has learned that one important responsibility of any Board is related to succession planning. Therefore an event like today, although short, gives a window for me to see so many good timber in our forest. And, an opportunity for me to give my views to an important captive audience on a number of issues which I think are important for us to share.

4. I am therefore very pleased to be here today amongst you – the leaders of PETRONAS – to do the context setting on a learning that is crucial for senior executives as well as board members across PETRONAS Group of Companies to be equipped with. Skills and knowledge to prudently manage risks, champion governance, embrace diversity and investing in human capital effectively in our journey to push ourselves further. Our personal growth. Pushing our Organisation to greater heights.

5. I take great pride, as I am sure you do too, of PETRONAS’ achievements. And what we stand for: the SOUL of PETRONAS. But in a 52-thousand persons entity surely there must be strays and lapses. There must be ZETO for these. On INTEGRITY, on HSSE.

6. So all of you, all of us, jointly and severally, as members of Boards and as senior management, must set and/or drive THE TONE AT THE TOP.

The tone is not only about the NO NO.

We must also set the tone on the YES YES. Such as:
• Sense of urgency
• Collaboration rather than silos
• Trust and consultation.

7. As leaders WE MUST LEAD BY EXAMPLE. And, if we have 2 standards, the standard for us MUST BE HIGHER.

Ladies and Gentlemen,

8. Just 2 weeks ago, we woke up to the news of Britain’s plan to ban the sales of new gasoline and diesel cars starting in 2040. Britain is not alone in pushing for cleaner environment. At least 3 other countries have announced similar plans – France by 2040 as well, India by 2030, Norway by 2025. Another 10 countries: Austria, China, Denmark, Germany, Ireland, Japan, the Netherlands, Portugal, Korea and Spain have all set their electric car sales targets in place.

9. What comes to mind immediately: Growth demand for fossil fuels, our core business, will certainly be impacted. Questions will be asked – for instance, what will our 1,000 plus PETRONAS Dagangan retail stations be selling by 2040? And beyond? What are we going to do with our oil fields when demand is no longer there? These are some questions and scenarios that might just come knocking on our doors not too far away from now. But why wait? If ICE is going to be out, surely other users of oil that we now know may also in time follow suit. And, if “fossil” is so bad, can we not “de-fossilise” ourselves?

10. That is why I am very pleased that the National Blue Ocean Strategy (NBOS) Summit, chaired by YAB Prime Minister, appointed PETRONAS to lead the Transformasi Nasional 2050 (TN50) agenda for the Oil & Gas, Energy and Environment (OGEE) sector. It is an excellent opportunity for us in PETRONAS to demonstrate that the PETRONAS SOUL is beyond the silo of the company’s interest. That we care for the country and for the world. And that we are capable, able and willing to bring the 27th century mind-set forward to today. We must strive to think and act for tomorrow, TODAY.

11. With the aspiration for Malaysia’s OGEE to have a progressive energy market, premised on energy efficiency, sustainability and low-carbon economy, PETRONAS will need to harness key stakeholders such as EPU, KeTTHA, MITI, NRE, MOSTI, Energy Commission, industries representatives as well as academicians – where all of us must think ahead for what’s best for this country – for the sake of our children and generations to come. We in PETRONAS are very familiar in the Oil and Gas but may not be the most competent in other areas of Energy and Environment. We cannot afford to be territorial like a little Napoleon protecting his or her turf. Everybody is expected to go beyond their remit and must be able to see the bigger picture!

12. Likewise, for each one of you here, regardless if you’re from Corporate, Downstream or Upstream, we must leverage on each of our strengths and learn from one another for the greater good of PETRONAS. More so for some of you who would have external peers from differing organisations and industries especially in our Public Listed and Partly Owned entities. We must be united in our greater purpose. Beyond our remit – beyond our OPU or our business. For the COMMON GOOD.

Colleagues,

13. In 10 days’ time we will be celebrating our 43rd anniversary. For many years now, PETRONAS has been a formidable anchor in the nation’s corporate scene. The successes that we have enjoyed to date are testaments to the strong foundations laid by our founding fathers and unifying Shared Values that has been instilled into each one of us in PETRONAS all these years. This has transformed PETRONAS from just a domestic regulator into a reputable and respectable organisation, not just within our region but globally too.

14. To be Malaysia’s one and only Fortune Global 500.

15. Having said so, in the latest Fortune Global 500, PETRONAS’ ranking is now at 184th spot. A massive drop of almost 60 places from last year’s ranking at 125. I believe this ranking will deteriorate further if the price of oil, which is not within our control, remains at the current level.

16. What is more important to me however is the behaviour and mind-set of a Fortune Global 500 Company! That to me is far more important than the ranking itself. And, that is within our control. With CACTUS transformation journey as well as the PETRONAS Culture Beliefs already embarked on and in place, there has to be a sense of urgency in all of us to disrupt ourselves RATHER than us being disrupted! We will go far, whether as individuals or organisations if we always challenge the status quo. It must be in our DNA to always find better, faster solutions. For example leading on Going Digital.

17. Likewise, an effective Board must have similar qualities too. One that encourages conversations with candour that will result in the Board making the best informed decision based on timely access to information that could influence and impact the Board’s views. This is what I and Datuk Wan Zul and the PETRONAS Board are doing. And, encouraging and hectoring everyone in our universe to do. This is the ecosystem that will continue to spur on behaviours and actions of Board members that shall lead PETRONAS towards long term sustainable development.

Ladies and Gentlemen,

18. Last year in 2016, we increased the diversity of our Main Board with the addition of two new Board Members representing the State of Sarawak and the State of Sabah. So when YB Tan Sri Datuk Amar Hj Mohamad Morshidi responded on a call for PETRONAS to show a “more convincing level of seriousness when treating Sarawak’s demand” just in April recently, I thought we are reaping the benefits of diversity and inclusiveness in our Main Board. This, we ought to do more!

19. Given the greater demand for all of us to ‘step-up’ our game, it entails the need for directors who can offer differing views and independent oversight especially in critical areas such as risk and strategy. Diversity can also bring in experience in innovation or having the capability to drive innovation. With more diversity, we are able to appreciate the different opinions or perspectives that will be instrumental for us to arrive at what is best for PETRONAS. It also helps us to see our blind spots and with their inputs we can work towards eliminating or at least reducing the blind spots. Diversity is applicable across gender, age, ethnicity and industry. In this respect, I am glad that PETRONAS has rigorously reshuffled membership to include directors from differing businesses. Without a doubt, the leadership pipeline must remain flowing for future appointments of Board members – in the Main Board as well as its subsidiaries.

20. Specifically on women participation at the Board level, we must make conscious efforts in increasing the participation of professional women in higher roles and functions throughout PETRONAS Group. At the moment, we have only 42 women representation or 9.5% out of total 446 directors across PETRONAS Group of Companies. But it should not only be at the Board level. It is important that there be sufficient pool of ready women talent to be considered for future appointments to Management and to contribute to the funnel at Board levels. I firmly believe that all of us can be instrumental in increasing the women participation, in diversifying our thoughts and views. And, while remaining true to our compass of merit! This tone at the top, we must set.

Ladies and Gentlemen,

21. I sincerely hope, you will make full use of today’s safe learning environment to have an open, frank and constructive discussion with Professor Dr Randel Carlock and everyone here. I strongly urge each one of you to actively seek and give feedback on today’s program for continuous improvement, in line with the spirit of “Tell Me”. The organising team consisting of the Group Secretarial & Board Governance, Malaysian Directors Academy (MINDA), and PLC strive to ensure the program are constantly relevant and comprehensive. Help them, to help us to receive the best learning.

22. I am confident that we will be successful in our pursuit of Board Excellence through the best practices that will be shared and discussed today. This will benefit us so that we can collectively fulfil our Amanah, leaving a lasting legacy for this national treasure. And future generations of our Country.

Thank you.

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.