Thai listed firms raising the bar for governance in Asean

Thailand has come a long way in corporate governance since the Asian financial crisis of the late 1990s. In hindsight, one positive development after the crisis has been an increased awareness in the importance of corporate governance by companies.

The private sector had not paid adequate attention to corporate governance prior to the crisis. To put this right, many efforts were launched, including setting up the Thai Institute of Directors (IOD) to provide director training and promote good corporate governance.

Almost two decades on, Thai companies have now acknowledged and appreciated the significance of corporate governance. In fact, top-tier Thai listed companies have done so well that their governance practices have become a positive example that regional firms look up to.

At the Asean Corporate Governance Awards held in Manila in November by the Asean Capital Markets Forum (ACMF), I witnessed a memorable moment when two Thai listed companies, PTT Global Chemical Plc and Samart Corporation Plc, both earned Top 5 Asean PLC Awards while a total of 23 Thai listed companies were among the top 50 Asean companies that achieved the highest Asean CG scorecard ranking.

In fact, Thai listed companies have continuously dominated the top 50 Asean companies for four successive years. Of the remaining Top 50 for this year, 11 companies were from the Philippines, eight from Singapore, six from Malaysia, and two from Indonesia.

These awards recognise the efforts of companies that continuously implement good corporate governance in their operations and board oversight. The 2015 result reflects the regional leadership role that Thai listed firms are now playing in adhering to international corporate governance standards.

The Asean CG Scorecard is a programme initiated by the ACMF and sponsored by the securities and exchange commissions of each Asean country. Its purpose is to evaluate corporate governance practices of listed companies within the six Asean markets: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

In today’s borderless business environment, good corporate governance and transparency are particularly important for conducting business, maintaining trust among global counterparts, and ensuring sustainable business. Companies with robust governance have numerous advantages as good governance can help reduce major risks while investors would use it to guide their investment decision. Governance also allows companies to gain easier access to funds at a lower cost.

Going forward, it is therefore essential that Thailand, and the whole Asean, continue to maintain good corporate governance standards in order to attract investment into the region. In addition, continued adherence to governance practices in the private sector will eventually reduce corruption or sovereign risk, perceived as a key obstacle to growth in regional economies.

In the case of Thailand, notwithstanding satisfactory improvement in governance standards of top-tier listed firms, it is important that the IOD should look to spreading good governance beyond listed companies to the larger business segment of non-listed companies, SMEs, and not-for-profit organisations. Such a move is needed for Thailand to ensure an economy-wide impact in the country’s overall governance.