Asia needs stronger corporate governance<\/p>\n
SINGAPORE (Dow Jones): Many Asian firms have taken steps to
\nstrengthen corporate governance in the wake of the region's
\nfinancial crisis, but standards in Asia still fall far short of
\nthose in leading countries, officials said on Wednesday.<\/p>\n
"The argument for reform in Asia remains strong," Seiichi
\nKondo, Organization for Economic Cooperation and Development
\nsecretary general, said in opening a conference on the subject.<\/p>\n
Good corporate governance is essential to ensure the smooth
\nflow of capital that Asia needs to weather the current global
\neconomic slowdown, he told participants at the conference
\nsponsored by the OECD, World Bank and Asian Development Bank.<\/p>\n
Corporate governance, a term that covers a wide range of
\nsubjects such as the appropriate roles of directors, executives
\nand shareholders; accounting and financial reporting standards;
\nand managerial performance and is considered weak in many Asian
\ncompanies.<\/p>\n
Achieving such reform in Asia will be tough because it not
\nonly require changes in regulations, but "a change in the mindset
\nof companies," Kondo added.<\/p>\n
In Singapore, where standards for corporate governance are
\narguably the strongest among the world's emerging markets, the
\ncity-state must do more, Finance Minister Richard Hu said.<\/p>\n
"We know that we must not rest on our laurels. I believe the
\ncorporate governance standards in Singapore are still not
\ncomparable with those in leading jurisdictions, such as the U.S.,
\nUK, and Australia," he said.<\/p>\n
Olivier Fremond, a member of the World Bank's corporate
\ngovernance unit, said it was the 1997-98 Asian financial crisis
\nthat highlighted just how weak corporate governance standards
\nwere in the region.<\/p>\n
"Corporate governance has become a central issue of concern
\nfor the World Bank," he said.<\/p>\n
The conference is the third in a series of five in the region
\naimed at producing reforms that can be carried out in Asian
\ncountries through programs administered by the World Bank and
\nADB, Kondo said.<\/p>\n
Some observers have noted that the prospects for corporate
\ngovernance reforms in Asia are "rather gloomy" given some of the
\ndeeply entrenched practices, such as the dominance of family
\nshareholders, said Jamie Allen of the Hong Kong-based Asian
\nCorporate Governance Association.<\/p>\n
"It's a fair point," he said. "People say they see a lot of
\nform but not much substance in the area of reform."<\/p>\n
There are signs, however, that Western-style corporate
\ngovernance practices are beginning to filter through to Asia, he
\nadded.<\/p>\n
Allen cited the example of pension funds in Japan starting to
\nvote their shares following years of poor returns from companies.<\/p>\n
In South Korea, elections of outside directors are now being
\ncontested in some cases, and in Hong Kong investors are forming a
\ngroup to represent the interests of minority shareholders, he
\nsaid.<\/p>\n
"We're also seeing more shareholder activism in Indonesia that
\nwasn't there before," he said.<\/p>",
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"sponsor": "Okusi Associates",
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