MANILA - The Organization for Economic Cooperation and Development (OECD) is calling on the Philippines to strengthen corporate governance practices as the global economy starts to recover from the crisis.
According to OECD Deputy Secretary General Pier Carlo Padoan, the country needs to work on governance of renumeration of directors, risk management, functions of board directors, and on the exercise of shareholder rights.
"The general lessons from this crisis is that there are loopholes in the corporate governance systems, particularly in the areas of risk management and shareholder transparency," Padoan said in a briefing for the 10th Asian Roundtable on Corporate Governance on Wednesday.
In the same forum organized by the Institute of Corporate Directors (ICD) and the OECD, the Bangko Sentral ng Pilipinas (BSP) said universal and commercial banks scored 84% in corporate governance practices.
Citing the Corporate Governance Scorecard, BSP Governor Amando Tetangco said the banks scored highest in "control environment and processes" or risk management. This, he said, reflected the overall strength of the Philippine financial industry.
"The top 3 banks that participated in the scorecard (got) 94%, while the bottom 3 registered 66%. The margin is 28%, and we aim to bring that down to 15% in the near term," Tetangco said.
The universal and commercial banks scored markedly higher than the publicly listed companies' record of 72%. According to officials of the Philippine Stock Exchange and the Securities and Exchange Commission (SEC), shareholders and independent directors play a crucial role in maintaining good corporate governance
"What's important is for the shareholders to be educated and not to be afrraid of asserting their rights in the shareholder meeting," SEC Chairperson Fe Barin said, adding that independent directors need to exert effort to make their voices heard.
For his part, ICD Chairman Estanislao stressed that companies have to strike the balance between officials and shareholders for corporate governance to be effective.
"The big issue is whether all companies are willing to adapt corporate governance practices quickly. We have to move away from the American style of imposing rules and regulations and really make corporate governance a part of our books. It pays to do good corporate governance," he said.