Corporate governance in Asia

OECD Observer

The Asian Roundtable on Corporate Governance, organised by the OECD in partnership with the World Bank, met in Kuala Lumpur, Malaysia, in March to establish regional reform priorities and to develop a White Paper on Corporate Governance in Asia.

Scheduled for release in Tokyo on 11 June 2003, the White Paper will set forth a common policy agenda for corporate-governance reform in the Asian region.

The 26-28 March meeting in Kuala Lumpur (the fifth in a series of OECD-organised roundtables, which began in 1999) gathered 28 regulators from 13 Asian countries, plus 35 regional and international policy makers, experts and business leaders.

Four areas were identified for priority reform: minority-shareholder protection, bank governance, improved enforcement and enhanced corporate-governance culture.

For instance, the prevalence of closely-controlled businesses in Asia places minority shareholders at risk of exploitation. Such exploitation occurs when controlling shareholders and managers strip assets from the company through abusive self-dealing, pay themselves excessive compensation, engage in insider trading or act in their own interests to the detriment of the company.

Meanwhile, good bank governance, apart from encouraging good corporate practices, increases returns to the bank’s own shareholders too, as well as promoting stability in the financial system.

One problem is that improving corporate-governance laws and regulations has proven to be easier than enforcing the laws and regulations. In fact, a widening gap is opening up between rules and implementation in many countries.

Using the OECD Principles of Corporate Governance as a framework, the forthcoming White Paper on Corporate Governance in Asia will identify remaining challenges and make concrete recommendations to guide policymakers and technical assistance providers.

“The White Paper’s recommendations will carry weight because they represent the views of leaders from the region,” according to Datuk Ali Abdul Kadir, Chairman of the Securities Commission, Malaysia, co-host of the Kuala Lumpur Roundtable.

©OECD Observer April 2003




Economic data

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