Corporate Governance Crucial to Attract Investments

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  • 11 Jul 2017 12:00 AM
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Corporate Governance Crucial to Attract Investments

KUALA LUMPUR: The International Corporate Governance Network (ICGN) annual conference 2017 kicked off on Tuesday on a strong note to focus on the importance of corporate governance in attracting investments and investors.

At the three-day conference, the delegates would examine the best practice in relation to investor stewardship obligations, policies and processes to enhance overall financial market stability and economic growth.

ICGN executive director Kerrie Waring said the ICGN, an investor-led organisation has its mission to promote effective standards of corporate governance and investor stewardship globally.

At a press conference, Warning said the ICGN had made a few changes in the ICGN Global Governance Principles (GGPs) following the engagement with its members this year.

Areas that will be of interest to institutional investors will include among others issues concerning board effectiveness, remuneration policy and one-share-one-vote.

Retirement Fund Inc (KWAP) chief executive officer Datuk Wan Kamaruzaman Wan Ahmad, who was at the press conference, said Malaysia had its fair share of corporate governance issues.

However, he pointed out and the Securities Commission had taken a positive step to address the issues by revising the guidelines.

"The changes include issues relating to board independence, board diversity and board experience," he said.

That said, Wan Kamaruzaman said it is vital for Malaysia to align itself with global standards since ICGN have come up with new guidelines in GGPs.

He said it was also pertinent for institutional investors such as KWAP, Khazanah Nasional Bhd and the Employees Provident Fund to play their roles as active shareholders.

"Notably, as institutional investors, we realise that some listed firms do not have enough independent directors and some have been in the board for too long," he noted, adding that these issues have been pointed out.

Wan Kamaruzaman said foreign investors' participation has improved this year, as at end May 2017, foreign holdings in the Malaysia's capital market stood at 27.1% for local equity market. This is the highest level of holding since January 2013.

He said RM195.1bil was invested in debt securities and sukuk, which in May, marked the second consecutive monthly increase in foreign holdings this year.

"This is a reflection of the confidence that foreign investors have on our capital market, made possible through sound implementation of corporate governance in all facets of our economy and conduct," he added.

That said, there needs to be some synergy in both public and corporate governance to reflect good governance.

The conference was organised by ICGN and hosted by KWAP in premier partnership with the Minority Shareholder Watchdog Group.

The ICGN members are investors drawn from more than 45 countries, who are responsible for assets under management in excess of US$26tril.

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