Effectively addressing the issue of corporate governance in Thailand requires us to look at the broader picture of governance in the public as well as private sectors. The first occasion I spoke on this issue goes back as far back as 1998. At that time, the country was in the throes of the Asian Financial Crisis. I had attributed the 1997 crisis specifically then to the failure of institution-building.
The establishment of the Thai Institute of Directors Association and the subsequent development of a corporate governance framework were a direct response to that experience. Thanks to the substantial efforts made in training thousands of company directors, and in promoting corporate governance awareness, many Thai companies - from banks to manufacturers - have made remarkable strides in enhancing their professionalism, and management and governance structures.
Yet we must acknowledge that significant gaps remain, both in the private and the public sectors. Improvements in corporate governance have been generally limited to listed companies, and even in that category, more can and needs to be done.
Amongst the listed companies, improvements are concentrated in the top echelon of companies that have diversified ownership or shareholder structures. Outside of these companies, corporate governance remains relatively weak, especially in the following three groups:
First, the large listed companies which are family-owned;
Second, the listed government-controlled state enterprises whose governance practices are becoming more and more worrisome;
The third - comprising the largest group of listed companies - is the mid-size listed companies whose gaps in corporate governance are the greatest.
The challenge before us is to instil a more uniform and widespread adoption of corporate governance best practices amongst these Thai listed companies.
I would like to turn now to another worrisome trend - that is the state of public governance which, in recent years, has been deteriorating.
This is evidenced by the decline in national competitiveness that has been driven by a large drop in public sector performance and what appears to be increasing political interference, cronyism, favouritism and other forms of unacceptable behaviour that occur when the line between public service and private interests gets blurred.
To this end, past efforts to adopt new constitutions and enact new laws to increase checks-and-balance mechanisms and ensure a fair degree of social justice have failed to make the expected impact because of obstacles in their enforcement.
So, while the Thai economy seems to be going well, and has even proved resilient to the effects of external shocks, and while many leading Thai companies have made a name for themselves on the world stage, overall as a country, we have not fared so well.
Of most concern is our unstable and polarised politics. Our politics has not served the country and our people well. The pursuit of power and personal interest over the public interest continues to dominate Thai political life.
Very much related to this issue are the increasing inequalities in Thai society - not just between the richest and the poorest, but also between the richest and the middle class.
According to a reliable estimate, Thailand's Gini-coefficient - a widely accepted measure of income distribution - increased from 42 in 2002 to 54 in 2009. The rising income and wealth disparities threaten the fabric of society and have the potential to fuel social unrest, as we have seen in other regions of the world.
Against these developments, I have to say the current situation gives me cause for concern and discomfort.
While the economy may yet again be on a high growth path, this growth is unsustainable. It is fuelled by cheap foreign money, unchecked public spending and a lax business ethos.
This is a lethal combination, posing risks that have proven fatal in the past, and which could set the stage for another financial crisis.
Like much of Asia, we have been enjoying robust growth in recent years. But we must not be complacent. We should learn what lessons we can from the latest financial crises in the US and Europe, particularly with regard to excessive credits, runaway budget deficits and rapid build-up of public debts.
Why, in such a short space of time, have we come to this state of affairs?
The answer, I believe, lies squarely with our failure to use the crisis in the late 1990s as an opportunity to undertake thorough and meaningful reforms of our institutions and power structures. With weak institutions and ineffective rule of law, the capacity of the people to determine their own future is reduced.
Another reason, I believe, is the contradiction, self-inflicted by all of us, between the outward-looking and market-based economic doctrine that we have sought to promote on the one hand, and the inward-looking and narrowly based politics on the other.
Over time the contradiction has ossified into institutional inertia and, worse, has morphed into entrenched patronage networks and cronyism, through which the country's resources are now unfairly allocated.
Such a modus operandi breeds inefficiency, rent-seeking and corruption, a sure recipe for national disaster.
It is clear that for the future of Thailand, this contradiction has to stop.
One of the key reforms to change this course is a rigorous push for better governance in all sectors of society. We must advocate good governance in all areas and levels of society, be it government, business or civil society.
For the business community, directors of companies must see it as a core duty. They must push for good corporate governance.
In doing so, they must focus on real substance that will change attitudes, behaviour and culture, not just "form".
Good governance is crucial to better management of human and capital resources, and to greater efficiency and balanced and sustainable growth and development.
At the national level, good governance must be built on three pillars:
The first and most crucial is that government must respond to, and serve, the real needs of the people.
The second pillar is an open and transparent decision-making process.
And the third is the system of checks and balances, based on accountability and active participatory roles for private individuals and civil society.
Rebuilding our country's governance must take place at all levels. It calls for leadership grounded on the values of integrity, accountability and performance.
We need a public sector that is responsive to the people's needs.
The private sector too must do its part by promoting clean business and adhering to ethical codes of conduct.
And private individuals must engage in good citizenry, which means recognition of what is "right" and "wrong". According to Theodore Roosevelt all citizens "shall be able and willing to pull his or her weight". So, we must all pull our weight, do our part, and tackle head-on the country's most important and urgent task.
Thailand is again at a crossroads. We have a task ahead of us - to rebuild the country's governance. Failure to do this can, and will have, devastating consequences for our future as a nation.
Edited excerpts from the keynote address on 'Thailand's Governance Challenge' by former prime minister Anand Panyarachun and chairman of Siam Commercial Bank Public Company Limited at the 2nd National Director Conference 2013 on June 12, 2013.