Bright spots for governance emerge
More than ever governance is very important for Thailand: Better governance is needed in both the government and the private sector. Recently, Prime Minister Prayut Chan-o-cha expressed concerns about governance by the next government, indicating that corruption continues to be a major problem despite determined government efforts to tackle the problem.
On the government side, despite talk of reform, not much has been achieved practically as the bureaucracy is adamantly resistant to reform, either to change the way it functions or improve its governance. In the private sector, corporate governance also remains a challenge. Pressured by profit motives, the slow economy, the weak rule of law, and the failed ethics of business leaders, scandals continue to make headlines even in our large and well-established companies. Recent cases of bribery and insider trading involving Thailand's large private and state companies are good examples.
Are improvements in governance possible? Can we ever hope to meet the governance challenge in both the public and the private sector so as to have better businesses, better government, and better Thailand? Can our large listed companies lead by example and set the tone for the rest of the private sector? Can better governance in the private sector spearhead momentum of change in public governance?
These are all important questions we need to address in Thailand. My view is that, in spite of many negative headlines, bright spots for better governance are emerging -- at least in the private sector.
Now globally, since the onset of the global financial crisis in 2008 with its devastating impact, we have been in an unprecedented era of corporate governance. It is an era marked by increased recognition of the importance of corporate governance as the foundation for better and sustainable business. It is an era where the focus of corporate governance has shifted from shareholders to stakeholders to take better account of the far-reaching and dire consequences that poor governance can cause beyond the impact on the company itself. It is also an era whereby the momentum for better governance is driven not only by regulators and market players, but also by companies that see corporate governance as key to upholding their competitiveness and the trust of the stakeholders, to ensure business sustainability and long-term survival.
In Thailand, similar momentum and bright spots are also visible. Our regulators are increasingly active and see better corporate governance as key to preserving the integrity of Thailand as a marketplace and to avoiding systemic risk.
Seeing poor governance as investment risk, our investor community has also been vocal against insider trading, bribery and non-compliance. And our companies increasingly recognise the benefits of good governance as a basis for better and sustainable business and are thus willing to commit more time and resources to it. This last point is evidenced by a continued improvement in the corporate governance scores of listed companies assessed annually by the Thai Institute of Directors, by the growing interest of company directors and executives on governance and director training, and by an expanding network of companies -- now numbering 838 -- voluntarily joining the Collective Action Coalition of the Private Sector Against Corruption to promote clean business and fight corruption.
These are positive changes. They are Thailand's bright spots in our quest for better governance. The challenge for us now is to keep the momentum going, in spite of the slow or lack of similar progress in the public sector and increased risk and uncertainty in global business. For Thai business leaders, a key task now is to steer companies and rise to the challenge of today's business in terms of performance while upholding corporate governance.
Visiting Professor at Hitotsubashi University
Bandid Nijathaworn is president and CEO of the Thai Institute of Directors and visiting professor, Hitotsubashi University. This is an abridged version of an article featured in the book 'Bretton Woods, The Next 70 Years', published by the Reinventing Bretton Woods Committee, 2015.