KUALA LUMPUR, Jan 27:
Malaysia’s laws on corporate governance fare far better than generally perceived, according to a report by The Iclif Leadership and Governance Centre, an international centre of excellence.
Director of BPA Australasia, Chris Bennett, who co-wrote the report, said: “There is an external perception that Malaysian companies are not good.
“But surprisingly, the standard is really good when you compare it with the external perceptions. We do better in Malaysia than we think.”
Co-author Associate Prof Mak Yuen Teen added: “Sometimes you look at some countries and because of their reputation, everybody assumes that a company’s governance is good.
“Unfortunately, Malaysia sometimes suffers from perception issues unfairly.”
To counter such perceptions, Bennett said Malaysian companies and regulators need to continue with regulation efforts as well as promote these more.
“Keep doing what you’re doing because Malaysia already has an excellent regulatory framework, it just needs to keep telling people about it.
Mak added: “A good example of Malaysian corporate governance would be the professional development of directors where there is actually quite a strong culture for board members and directors to undergo training.
“They have met a lot of pressure by regulators for them to go for professional development, ongoing training and so on.
“Among other countries in Asia, Malaysia is probably one of the countries with the strongest culture in terms of promoting director development but sometimes people don’t recognise that at all.”
Iclif chief executive officer Rajeev Peshawaria said: “We have a lot of participants in our programme from other countries, and every time they sit with our Malaysian directors, they are surprised as to how much focus there is into director development in Malaysia and how the regulators started very early on it.”
Both Bennett and Mak still feel that Malaysia, as with other Asian Pacific countries, need to work on other aspects of corporate governance – especially in the transparency of remuneration and performance assessment.
“Malaysia needs to be a bit more transparent about remuneration and how you evaluate the performance of your directors.
“There is no reason not to be more transparent in some of these areas as performance assessment of directors is important.
“Companies need to avoid stuff like only just downloading a questionnaire, have their directors do it and reflect that in the annual report.
“I think if you really do a performance assessment well it could really be an important contributor to board effectiveness,” commented Mak.
Bennett said: ”The two key pillars in good corporate governance are transparency and accountability. You can’t have transparency unless you tell people things and without that, there’s no accountability in corporate governance.
“I think the interesting thing about disclosures is that quite often companies seem to ask what is the minimum we have to tell rather than what is the minimum we have to keep secret.
“I think that actually turning that question around would make a big difference.”