Governance key for ASEAN

Corporate governance forms an important policy priority in the efforts to strengthen ASEAN’s overall business ecosystem and to ensure growth in the region remains sustainable in the long term.

In a keynote address to delegates at the annual Australian Institute of Company Directors’ conference in Kuala Lumpur, Datuk Ranjit Ajit Singh, chairman of the Securities Commission Malaysia, said the ASEAN region could learn from developed markets such as Australia when it came to developing corporate governance policy.

“Policymakers continue to face significant challenges in this regard, the most persistent of which being the broad perception that corporate governance is first and foremost a regulatory agenda,” he said.

“An unfortunate corollary is that efforts to drive improvements in corporate governance tend to be top-down and government driven, [so there is a] propensity by the private sector to opt for compliance in form rather than substance.”

Singh added that what the ASEAN region could learn from developed markets such as Australia is how this perception may be addressed to ensure that corporate governance will be embraced as a bottom-up, private sector-driven market agenda.

“Voluntary practices such as ‘black-sheeping’ of poorly governed firms are important in building a genuine and enduring culture of good governance and cannot be coerced into existence by sheer regulatory might,” he said.

In order to encourage greater corporate governance practices and attract greater investment in the region, Singh said the Malaysia Corporate Governance Blueprint has been created proposing the importance of three self-reinforcing pillars of governance, namely regulatory discipline, market discipline and self-discipline.

In addition, he added that the ASEAN Capital Markets Forum has introduced the ASEAN Corporate Governance Scorecard, which enables well-governed regional companies to be showcased to investors and provides an avenue for public listed companies to assess their own adherence for good corporate governance practices.

“Malaysia and ASEAN are open for business and we strongly encourage Australian businesses to explore the opportunities that we have to offer, not only commercial linkages, but also the sharing of knowledge and best practices in building a vibrant private sector,” he added.