Philippine BOVESPA, Race to the Top

The Philippine Stock Exchange Tuesday said it has secured the support of the International Finance Corp. to establish the Maharlika Board, a listing segment for companies to voluntarily commit to corporate governance practices beyond those required by law.

The IFC, the investment arm of the World Bank, is helping the PSE set up the Maharlika Board through IFC’s Global Corporate Governance Forum. (Philippine Bourse Corporate Governance Project Gets World Bank Support)

To the best of my knowledge, Brazil pioneered this approach. In 2000, the Sao Paulo Stock Exchange, BOVESPA launched three new market segments: “the Special Corporate Governance Levels 1 and 2” and the “Novo Mercado,” with each market segment requiring progressively stricter standards of corporate governance. Adoption of this approach around the world could create a race to the top.

Corporate governance is a health check for business, according to Philip Armstrong, head of the Global Corporate Forum of the International Finance Corporation.

In an interview with Business Nightly on Tuesday, Armstrong shared that the Philippines received only $2 billion out of the over $60 billion in foreign direct investments in the region largely because of perception that governance standards here are not as high as in other competing markets. (Corporate governance a health check for business: IFC rep,, 3/23/2011)

These new efforts could improve that situation.

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