Good corporate governance practices in Indonesia have shown robust development in the past decade, paving the way for the country to attract more foreign investors to realize its 6 percent economic growth target, an expert says.
World Bank lead economist Subham Chaudhuri said Friday that the positive trend would help Indonesia to boost investors’ confidence.
He added that the good momentum had to be utilized to deepen and expand the country’s capital market.
“The situation in Indonesia is improving, but is still a bit behind other major Asian countries such as India, Malaysia and Thailand,” he told the launch of the result of the World Bank’s assessment on corporate governance practices in the country.
He suggested that Indonesia strengthen its legal frameworks and institutions to improve good corporate governance practices in the country. Publicly listed companies should fully disclose information related to its corporate governance and comply with all prevailing regulations.
“The awareness of shareholders also requires improvement in the future,” he said.
The bank’s senior private sector development specialist, David Robinett, explained that in 2009, Indonesia’s score in its ability to protect shareholder’s rights was 77 of 100, jumping significantly from only 56 in 2004.
“For transparency and disclosure of necessary information, the country scores 73, increasing from 60 in 2004,” he told the audience attending the launch of the assessment.
In the other assessment component on board responsibilities, Indonesia scored 66, rising only 6 points from 60 in 2004, suggesting publicly listed companies in the country had not given sufficient independence to their board of commissioners and directors, Robinett said.