Awareness of GCG improves, but lacks public support<\/p>\n
Sudibyo M. Wiradji
\nThe Jakarta Post
\nJakarta<\/p>\n
The implementation of good corporate governance (GCG)
\npractices in Indonesia has shown positive progress since its
\nintroduction five years ago, despite the lack of support from the
\ngovernment and the general public.<\/p>\n
According to the National Committee for Corporate Governance
\n(NCCG), a number of GCG principles have now become mandatory for
\npublicly listed companies.<\/p>\n
\"When it was introduced here in 1998, GCG was conceived only
\nas 'knowledge', but now many companies have applied GCG
\nprinciples in their business practices,\" NCCG chairman Nyoman
\nTjager said.<\/p>\n
The former senior official of the Capital Market Supervisory
\nAgency (Bapepam) said that all public companies were obliged to
\nadopt GCG principles through a regulatory approach.<\/p>\n
Among the mandatory GCG practices for public companies are the
\nappointment of an independent commissioner, an independent
\ndirector and an auditing committee.<\/p>\n
\"Almost all of the companies listed on the local stock
\nexchanges have appointed an independent commissioner to their
\nsupervisory board since the introduction of the GCG principles in
\nIndonesia,\" Nyoman added.<\/p>\n
The GCG principles are generally defined as a set of rules
\nthat define the relationship between shareholders, managers,
\ncreditors, the government, employees and other internal and
\nexternal stakeholders in regards their rights and
\nresponsibilities.<\/p>\n
These principles guarantee the rights of shareholders; the
\nequitable treatment of shareholders; the role of stakeholders;
\nthe timely and transparent delivery of information on all matters
\nmaterial to company performance, ownership and stakeholders, as
\nwell as the responsibilities of the board and management; the
\nsupervision of the management and the accountability to the
\ncompany and shareholders.<\/p>\n
Applying GCG practices have long-term benefits for companies,
\nsuch as easier access in raising capital, a lower cost of
\ncapital, improved business performance and a good impact on share
\nprices.<\/p>\n
In Indonesia, the GCG concepts were introduced in 1998 at the
\npeak of the country's economic crisis. Poor GCG practices and
\nwidespread corruption in the government partly contributed to the
\neconomic crisis.<\/p>\n
Nyoman said the government has also required state-owned
\ncompanies to apply the GCG concept to their activities,
\nespecially those principles related to transparency and
\nsupervision.<\/p>\n
\"Based on a recent assessment conducted on 16 state-owned
\ncompanies, it can be concluded that there is a growing awareness
\namong state company executives about the benefits of applying GCG
\nprinciples,\" he said.<\/p>\n
Nyoman, who is now a senior official at the office of the
\nstate minister of state enterprises, said that NCCG had produced
\nthe Code for Good Corporate Governance in Indonesia.<\/p>\n
He acknowledged that the lack of government and public support
\nimpeded the flourishing of GCG in Indonesia, for example, as seen
\nin the existence of red tape at government offices.<\/p>\n
He said GCG should run parallel to public governance in the
\nsense that each party in the public sector should also perform
\nits role, function and task according to good governance.<\/p>\n
In the context of regional authority, for instance, local
\nregents, governors and mayors should support companies wishing to
\noperate a business in their areas by simplifying the bureaucratic
\nprocedure. \"In return, the company concerned should also conduct
\ncommunity development activities,\" he said.<\/p>\n
Executive director of the Indonesian Institute for Corporate
\nGovernance (IICG) Dadi Krismantono shared Nyoman Tjager's views,
\nsaying that the companies' full commitment to implementing a GCG
\nsystem would rely heavily on the macro-environment and thus, also
\nrequired the government to apply good governance.<\/p>\n
Implementing a GCG system cannot be separated from the
\nenvironment where companies operate. \"How can a company implement
\na GCG system properly when the macro-sector is not conducive to
\nthe system,\" he said.<\/p>\n
The widespread red tape at the government level, for instance,
\nhas caused many companies to doubt whether they could adopt the
\nGCG principles in their business practices, he said.<\/p>\n
At the regulatory level, for instance, many public companies
\nhave questioned Bapepam's lack of consistency regarding the
\nsanctions it imposed on public companies found to be in violation
\nof the regulation.<\/p>\n
It is thus unfair to blame companies for not fully
\nimplementing a GCG system in their businesses. \"Both the
\ncompanies and the government should apply governance,\" he said.<\/p>\n
The latest survey on GCG ratings by the Indonesian Institute
\nfor Good Corporate Governance (IICG) disclosed that only a few
\npublic companies that implement GCG were fully aware about the
\nbenefits of GCG.<\/p>\n
\"Most public companies implement the GCG because they are
\nobliged to do so,\" he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/awareness-of-gcg-improves-but-lacks-public-support-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}