25/09/2014-Hong Kong, Singapore Take Lead in Asia Corporate Governance

Hong Kong and Singapore held on to the top spots in a new ranking of corporate governance in Asia while Japan advanced to third place, knocking Thailand down.
The ranking compiled by a non-profit Asian Corporate Governance Association and brokerage CLSA Ltd. evaluates a range of governance related subjects, ranging from rules and practices, enforcement, political environment, to accounting and auditing.
Although Hong Kong and Singapore both claimed the top spot, their scores worsened from the previous ranking in 2012 because of domestic conflicts over governance regulations.
The report said the positive trajectory seen in Hong Kong over the past two years “took a sharp dive” last year amid a debate over whether or not the local exchange should loosen the listing standard to attract e-commerce giant Alibaba Group Holding Ltd.
Singapore, which solely secured first place two years ago, has lost some ground due in part to lackluster progress on enforcement. The report said the government has shown less consistency in its approach to corporate governance policy than in the past and that the reform process has often been slower than expected.
Japan, previously ranked fourth, advanced because the government led by Prime Minister Shinzo Abe made it a core of economic reform programs to create a bettercorporate governance environment.
The Japanese government decided in June to establish the nation’s first corporate governance code. Earlier this year, more than 100 domestic and foreign institutional investors signed up for a “stewardship code”–Asia’s first–committing themselves to monitoring how companies use their money to increase long-term returns.
How thoroughly Japan will carry out the reforms remains a concern, said ACGA Secretary General Jamie Allen.
“The fact it came third doesn’t mean it’s good. It just means it’s better than the markets below it,” he told reporters, briefing on the new report. “There are still a lot of ‘ifs’ in Japan.”

The Philippines and Indonesia remained at the bottom of the list. The report recognized Indonesia as developing a roadmap to improve many areas of corporate governance, but it says further progress “depends hugely on its political will.”

Source: The Wall Street Journal