The Asian Corporate Governance Association (ACGA) released “CG Watch 2012,” their sixth joint survey on corporate governance in 11 Asian markets undertaken in collaboration with CLSA Asia-Pacific Markets since 2003.
The main findings of the latest biannual survey were:
- Rising markets are mostly in Southeast and South Asia, including Singapore, Thailand, Malaysia, India, and the Philippines.
- Falling markets are mostly in North Asia, including: Japan, Taiwan and China.
- Hong Kong rose slightly, but remained second in the rankings after Singapore.
- Korea rebounded from its low base.
- Indonesia slipped back (again) to the bottom of the survey.
They continue to see a mixed picture in CG rules & practices. While many new regulations have been introduced around the region over the past decade, there remain some significant differences among countries in their basic rules on disclosure, board independence and shareholder rights. More positively, enforcement continues to improve in most markets. This is largely due to enhanced regulatory enforcement, but also to more engaged “private enforcement” in some countries.
Scores for political & regulatory environment have risen in a few markets, but are mostly flat or slightly declining—reflecting the challenges that governments and regulators face in driving CG reforms, despite the opportunities provided by the global financial crisis.
IGAAP (accounting and auditing) scores remain higher than other categories, due to the alignment of accounting and auditing rules in most markets with international standards. However, accounting and auditing practices show some weaknesses, especially among SMEs, and the regulation of auditors varies greatly around the region.
CG culture is flat overall in almost all markets. Unfortunately, progress in some areas (such as a greater willingness to meet shareholders and other stakeholders) tends to be cancelled out in others (such as poor disclosure on remuneration policies and risk management).
On balance, the systemic changes in corporate governance in Asia over the past two years are more positive than negative, reflected in the fact that seven of 11 markets increased in score in 2012 compared to 2010. There is not much room for complacency, however, since absolute scores remain low for most markets and even the top-ranked competitor, Singapore, has yet to cross the 70% threshold.
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