Asian Firms Urged to Act up to Corporate GovernanceCompanies both in private and public sectors in Asian countries were urged to take immediate actions to carry out the corporate governance principles adopted by the Organization for Economic Co-operation and Development (OECD).The appeal came from the OECD officials who participated in the three-day Asian Roundtable which was held in Hong Kong from May 31 to June 2. Some 150 representatives from stock exchanges and international financial institutions, regulators, public sector officials and academics around the world attended the roundtable, which showed a remarkable agreement on the principles of corporate governance adopted by the OECD in May 1999. This was the second Asian Roundtable aiming to improve the understanding of corporate governance and assist in developing public policy responses in an effort to enhance investment, the development of robust capital markets and the welfare of Asian societies. Participants drew up a broad set of recommendations on aspects of governance ranging from disclosure to shareholder rights, the equitable treatment of minority shareholders, boards of directors and the role of shareholders in governance. The OECD's Deputy Secretary-General Seiichi Kondo said in his opening address that in an international context, good corporate governance is seen as one building block in the construction of a new international financial architecture aiming to diminish the risk of future financial turmoil. Participants believed that a transparent and effectively monitored market environment for international equity flows enhances the stability of these flows and serves as an early warning system for corporate and financial distress. However, good corporate governance will only produce its full results in terms of economic and social welfare if other structural reforms are undertaken, and effective competition policy is a key element of improving corporate governance, they noted. Rafael Hui, Acting Financial Secretary of Hong Kong, said also in an opening address that disclosure is the most basic of corporate governance principles. This is because potential investors and shareholders must be given sufficient information to make informed decisions about their shareholdings and safeguard their interest in any given company, Hui explained. Kondo believed that corporate governance is a concern for those who want to make sure that corporations have access to capital they need for viable investment. That is why policy-makers, regulators and the business community care about the quality of corporate governance in their respective countries, he said. In his interview with Xinhua, Kondo said that state-owned enterprises like those in China also have to have appropriate corporate governance in order to get access to low-cost capital internationally. To ensure the successful reforms of SOE, Kondo said that it is quite important to build up a sound social security system, since the globalization forces these enterprises into severe competition and the society and the government have to take care of the losers and encourage them to go back in the competition. Michael Klein, director of the World Bank's private sector advisory services, said that he has noticed the Chinese government, in principle, is taking a number of steps to move towards some new forms of financial arrangements. Particularly, Klein said, China has encouraged some of its state-owned enterprises to be listed on the stock exchanges, and in fact, it has at least introduced certain elements of exposure to shareholders. "The capital market is now starting to look and see if it trusts these people, if they make profit, or if they give a fair turn, so by listing on stock exchanges, listed companies can expose themselves more to pressures to adopt good governance," Klein said. Many of the participants shared the similar view on China's SOE with Kondo and Klein, and were optimistic that the reform program would be successful. |
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