MANILA, Philippines – The Philippines will work hard to become the third best – at the least – in corporate governance in Asia, the president of the Institute of Corporate Directors (ICD) said Tuesday, December 4.
The Philippines was second worst in terms of corporate governance in a ranking of 11 Asian countries by the Asian Corporate Governance Association this year.
The Philippines got a score of 41 points in the survey, only 4 points above Indonesia, which was at the bottom.
“Our target is to bring Philippines to upper third which means we need to improve by about 15 to 20 points from 41. Thailand, which is ranked third is scoring 58 so we’re about 17 points behind. If Thailand was able to make an improvement of 11 points in 5 years time then so can we,” ICD President Rex Drilon II told reporters during a briefing.
Corporate governance broadly refers to the framework by which a company meets ethical and legal standards, and makes sure various stakeholder interests are balanced.
In recent years, corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officers.
Drilon said the Philippines has taken various measures to improve its corporate governance standards.
He lamented the country’s low ranking in the governance survey, and said some of the scoring may have been unfair.
“Our central bank is considered world class in terms of enforcement of regulations and for us to score a 0 in enforcement in some of those areas is a bit unfair. We strongly feel the Philippines should have gotten 4-5 more points than what it gave us,” he said.
Nevertheless, he said the country aims to improve its ranking.
Drilon said there has been a lot of improvement in the regulatory environment in the country as far as the securities and insurance regulators are concerned.
But he said “we don’t have a regulatory body to monitor the quality of our auditors.”
ICD’s suggestions to improve the country’s corporate governance ranking include:
- offering more support to Securities and Exchange Commission in terms of resources
- enforcing the independence and effectiveness of Capital Markets Integrity Corp, the body that monitors and polices market trading activities
- revising regulations relating to pre-emption rights
- publishing more detailed data on enforcement and a deeper archive of company releases and documents
- speeding up the release of audited accounts behind regional and global standards
- improving disclosure of director’s remuneration
- encouraging the splitting up of chairman or CEO roles.