011/SOM1/EC/WKSP1/00 Advancing Good Corporate Governance by Promoting Utilization of the OECD Principles of Corporate Governance Submitted by: PECC Workshop on Advancing Good Corporate Governance by Promoting Utilization of the OECD Principles of Corporate Governance Washington, D.C., United States March 011
Advancing Good Corporate Governance by Promoting Utilization of the OECD Principles of Corporate Governance Eduardo Pedrosa Secretary General Pacific Economic Cooperation Council Disclaimer: the views expressed here are the author s alone and not necessarily those of the PECC nor its members What is PECC? PECC is a network of individuals from academia, business and government (in private capacity) organized into 6 member committees committed to enhanced Asia-Pacific regional cooperation for mutual economic benefit We establish task forces to address issues we think important to peoples, governments, regional organizations, and businesses in the Asia-Pacific region Official observer of APEC 1
PECC and Corporate Governance 1999 PECC General Meeting established Peer Assistance and Review Network (PARNet) 001 PARNet Core Group on Corporate Governance Guidelines for Good Corporate Governance Focus on role of the board and directors Consistent with OECD principles GDP Growth in APEC region 10 8 APEC Newly industrialized Asian economies ASEAN-5 6 0 - - -6-8 -10 1989 1991 1993 1995 1997 1999 001 003 005 007 009 Sources: Statistics APEC, IMF WEO
APEC and Corporate Governance Origins of APEC work on corporate governance APEC FMM 1998 initiative to examine ways to strengthen th corporate governance and learn lessons from financial crisis APEC FMM 1999 Report on Strengthening Corporate Governance in the APEC region notes OECD work on CG principles APEC LAISR (00) regulatory reform; competition policy; public sector governance; corporate governance; and strengthening economic and legal infrastructure APEC New Strategy for Structural Reform (ANSSR) (010) PECC 010 Survey Over 00 opinion-leaders polled on variety of issues Please rate the importance of the following components of structural reform in your economy (scale of 1-5, with 1 representing not important and 5 very important) 1. Corporate governance. A transparent legal environment 3. Financial sector reform. Enhanced social safety nets 5. Competition policy 6. Labor market reform 3
Importance of elements of structural reform agenda in the APEC region 5 3.76 3.7 3.58 3.56 3.53 3.7 3 1 0 Corporate governance A transparent legal environment Financial sector reform Enhanced social safety nets Competition policy Labor market reform Ranking of corporate governance differs among sub-regions 5 3.76.18 3.9 3.79 3. 3.9 3 1 0 All SE Asia S America NE Asia N America ANZ
Assessing Corporate Governance Reform 005 PECC macro corporate governance scorecard project, two elements: a stock-taking exercise to take note of on-going reforms in corporate governance rules and regulations. perceptions of the implementation and enforcement of corporate governance rules as seen by fund managers and analysts. The results show that there is no significant difference in the rules and regulations among these economies, but that there is a significant difference in term of market perception of their corporate governance practices. APEC Economic Policy Report APEC Economic Policy Report (AEPR) 009 Regulatory Reform 008 Competition Policy 007 Public Sector Governance 006 Structural Reform in APEC AEPR 010 Corporate governance and sustainable growth Legal and institutional foundations of corporate governance in APEC economies Individual economy reports 5
Portfolio Equity Flows: %Increase from 001 to 009 10% 100% 100% 97% 9% 9% 91% 97% 80% 60% 76% 76% 75% 66% 55% 73% 66% 63% 57% 79% 70% 65% 7% 8% 50% 63% 0% 0% 0% Australia Brunei Darussalam Canada Chile China, P.R. Hong Kong Indonesia Japan Korea Malaysia Mexico New Zealand Papua New Guinea Peru Philippines Russia Singapore Chinese Taipei Thailand United States Vietnam APEC Source: IMF, Coordinated Portfolio Investment Survey: http://www.imf.org/external/np/sta/pi/datarsl.htm AEPR APEC Economic Policy Report Better corporate governance can start with a single company In large companies, poor governance can generate a shock wave of failure that cascades throughout a sector. 6