Corporate Philippines has modestly improved its standing on a regional watchlist compiled by investment house CLSA Asia-Pacific Markets as the Aquino administration ushered in much-needed governance reforms, tackling government corruption and improving transparency and accountability.
Based on the report “CG Watch 2012 Corporate Governance in Asia” dated September 10, the Philippines’ overall score improved by 4 percentage points to 41 percent this year, rising a notch from the bottom of the list. This year’s cellar dweller on the CLSA’s CG Watch list is Indonesia.
“It is tempting to state that the improvement in our survey is a result of a concerted effort among government, regulators, NGOs [nongovernment organizations] and companies alike to improve standards. Indeed, there is evidence that our candidly accurate assessment of the dilapidated state of governance under the Arroyo regime, along with the reformist impetus from President Aquino’s new administration, galvanized interested parties into positive action that has borne some fruit,” said the report, which is published by CLSA every two years in collaboration with the Asian Corporate Governance Association.
The Philippines is still in the bottom half of the CG Watch list, joining the ranks of India (51 percent), South Korea (49 percent), China (45 percent) and Indonesia (37 percent). The higher-ranked markets include Singapore (69 percent), Hong Kong (66 percent), Thailand (58 percent); Japan and Malaysia (both 55 percent) and Taiwan (53 percent).
Since issuing its last CG Watch report in 2010, the CLSA noted that “cracks” in Asian corporate governance have become more apparent, resulting in lower scores for some of the countries like Japan, which declined by 2 percentage points; Taiwan, down 2 percentage points; China, down 4 percentage points; and Indonesia down 3 percentage points.
The CLSA report favorably noted how in June 2011, the government passed the Governance Act, which created a new body to oversee 157 government-owned or -controlled corporations. It also noted how a new bankruptcy law was enacted.
“What is still lacking, however, is solid evidence among many companies that their approach to corporate governance is more than a compliance exercise imposed on them by regulators, who still lack the resources and firepower to enforce better corporate behavior,” the report said.