It will help improve stakeholders’ confidence, brand reputation
PETALING JAYA: Private companies should adopt best corporate governance practices to improve stakeholders’ confidence and brand reputation, say panelists at the Women’s Institute of Management (WIM) Conference on Integrity and Governance.
Jason Ng and Partners managing partner Datuk Edward Ng Boon Siong, in his keynote address on Corporate Governance Practices in Private Sector, said while both private and public sector firms shared similar activities, private firms should take one step ahead and voluntarily carry out best corporate governance practices for the interest of shareholders and stakeholders.
“Stakeholders are the people firms deal with on a daily basis and these include, among others, suppliers, vendors and even their employees.
“Therefore, protecting their interest, aside from shareholders are equally important for the company to perform better,” said Ng when explaining the roles of independent directors in a company.
He said despite the emphasis on good corporate governance by Bursa Malaysia, there were still cases of insider trading and false reporting.
“This indicates that corporate governance is not being practiced. The private firms’ awareness on good corporate governance now is pretty impressive and important to the community. It’s a tool for success in the national economy development,” he added.
KPJ Healthcare Bhd director Tan Sri Datin Paduka Siti Sa’diah Sheikh Bakir concurred with Ng and said that both the private and public sectors have their roles to play in enhancing the values for shareholders and stakeholders.
While it is a mandatory now for private firms to be engaged in corporate social responsibility activities and offer somewhat similar services as the public sector, Siti felt that it was pertinent for firms to have transparency, disclosure and integrity.
“One example is the public sector here do not practice the double-entry accounting method as opposed to our western counterparts. We do not know where the resources have gone to or to what it has been allocated for. Whereas in the private sector, whatever that’s entered in the balance sheet cannot be removed easily,” she explains.
Therefore, changes should be made to address the best governance practices in the public and private sectors in order to enhance the overall company’s performance and the country to a larger extent.
As there is no one safe system that could guarantee that the board can perform to market expectations, Ng suggested that directors should keep abreast with current developments and undergo internal training or courses catered to the nature of the business and the industry itself. These include industry’s legal requirement or even healthcare regulations.
To a question on how new company directors should be screened and recommended to the board, Ng said there wasn’t any specific rules to indicate how a director should be appointed or nominated, but the candidate should at least have some expertise, skills or even knowledge on financial accounting and economics.
Malaysian Economic Association deputy president and former Bank Negara Malaysia assistant governor Datuk Latifah Merican Cheong noted that Malaysia subscribed to global standards and measurements of good governance, but performance was uneven across sectors and institutions.
This, she said, was based on its declining ratings, worsening ranking in corruption perception index and global investigations into transactions and activities of illicit monies, among other factors.
Latifah said based on World Bank’s presentation, Malaysia has twin dynamics of strong growth but the emergence of poor governance threatened growth potential.
The conference was organised for company directors and senior management officers in various public and private sectors, where Star Media Group Bhd is the media partner.