Corporate governance ‘needs to spread’

The Nation (Thailand)
By Apinya Munchoy
June 13, 2013

Thailand has yet to do more in terms of good-governance improvement despite achieving a higher position in the latest Asean Capital Markets Forum’s (ACMF) rankings, as such good practices are concentrated only among the country’s largest companies, former prime minister Anand Panyarachun said yesterday.

Meanwhile, the government is doing worse in applying such transparency initiatives and has failed to promote equivalence in society, he said. [EXPAND Read more]

At the “Board Leadership Evolution” seminar, held by the Thai Institute of Directors, Anand, who is board chairman of Siam Commercial Bank, delivered a speech on the challenge for Thailand in pursuing good corporate governance. He said the development of good corporate governance in the private sector was still concentrated at large and leading business organisations, while other companies, especially small and medium-sized enterprises, remained weak in applying such initiatives as they were often still operated by and belonged to the family.

Meanwhile, as to state enterprises, their operation has been regulated by the closed system without any clear disclosure being made about their working process.

If those business enterprises were transparently regulated, the country’s outlook in terms of corporate governance would be totally improved, he suggested.

Anand said that besides questions concerning good governance in the private sector, also of concern was the matter of good governance in government agencies, which was worse, as reflected by the interference of politicians, who create their own connections and networks in order to benefit from government projects.

“With problem of good governance in the government sector, the country’s overall picture will be affected as it will lead to a lack of equivalence in society. In the past, there was a wide gap between poor and rich people. But nowadays, there is also a gap between the rich and the middle class, as well. This is a problem that needs to be solved urgently by the government,” he said.

“The major problem is that politicians and authorities do not understand the phrase ‘conflict of interest’. The government sector needs to be transparent and to disclose any information needed to be known by the public,” he added.

He said the government should allow the people the power of decision-making and a self-development capability. What the government needs to learn from past experience is the need for transparency and working responsibility, such as the disclosure of the country’s public debt and the discipline they have in managing the national budget.

Anand said government good governance would be successful if based on three main pillars: the government has to commit to managing the country based on what is actually wanted by the people; the process of any information disclosure should be conducted transparently; and the evaluation should be accepted by the public.

Securities and Exchange Commission (SEC) secretary-general Worapol Sokatiyanurak said the ranking results forAsean listed companies’ good corporate governance, compiled under the ACMF’s “Asean CG Scorecard” project, showed that listed firms in Thailand had the highest scores in Asean, excluding Vietnam.

The average corporate-governance score of Thailand is 67.66 per cent, with about 20 of the country’s listed companies ranking in the top 50 in Asean.

He said the SEC would focus on improving the role and responsibility of boards of directors at listed companies by increasing the number of independent directors on a board to 50 per cent, up from one-third based on current regulations.

This would be better accepted by foreign investors, he added.

Rongruja Saicheua, executive vice president of the Institute of Directors, said that to maintain their high ranking on good governance, business organisations in Thailand needed to show further improvement in terms of stakeholders’ roles and directors’ responsibilities.

The next challenge is to implement the ACMF’s good-governance policy so that there are concrete results, with reports being made to the public for transparency. [/EXPAND]