Directors discuss AEC opportunities, pitfalls [Bangkok Post, Thailand]

July 13--As the Asean Economic Community (AEC) arrives in 2015, corporate governance (CG) will become a key tool for Southeast Asian firms to attract foreign investors and ensure long-term profits, experts say.

Participants at the Thai Institute of Directors Association (IOD) conference yesterday noted that in a globalised world, especially with the AEC set to remove taxes in the region, Asean firms are expected to have similar cost structures.

Investors will thus look at CG to gauge competitiveness and choose where to invest.

CG is the way companies operate by taking into account the environment, social welfare and all stakeholders.

"By doing things with greater care, transparency and accountability, it will be more prudent for the companies to perform in the long term," said Bandid Nijathaworn, the IOD's president and chief executive.

CG also creates trust among partners and stakeholders that companies are looking beyond just short-term benefits, he said.

A working group of representatives from six Asean countries is working on a "CG scorecard" to show how firms measure up to regional standards.

The first draft is expected by year-end.

Compared with regional peers, Thai companies must improve in the areas of benefits to stakeholders, Dr Bandid said. Board responsibility has room for improvement as well.

Khunying Jada Wattanasiritham, the IOD's chairman, said the consequences of not following CG standards are "real and expensive" for companies, for the societies in which they operate and for the executives themselves.

Major scandals unfolding daily show how malpractice at one major bank in Britain, Barclays, has a huge impact on an entire industry, carrying a heavy cost for countless customers.

CG standards must be kept updated in line with the issues and risks at hand, said Khunying Jada.

Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development, said stricter rules should be enforced with regard to information disclosure, especially for banks.

Some banks cannot be allowed to collapse because it would cause a vast impact not only to shareholders but to the public, and the government would inject public money to help them survive.

There are many banks in Europe whose status is not different from US banks that have already gone bankrupt, said Dr Supachai.

Veerawat Korphaibool, a director of Thai Storage Battery, said the role of directors is vital for a family business with limited financial resources.

The maker of 3K batteries has taken directions from its board to decide where to invest in Asean.

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