FOREWORD

Asia thrives on a diet of constant change. Big new undertakings draw governments and the private sector together in constructive ways. They encourage experimental give-and-take. That is the case with corporate governance, which is increasingly seen as a crucial instrument not just for enterprise reform, but more so for sustained economic growth.

In an Asian context, good corporate governance means unlearning pre-crisis corporate practices, getting concentrated ownership under control, keeping shareholders and consumers satisfied, and keeping stakeholders constantly informed. In a region as varied as Asia, that is not an easy task to do.

Within the Asian Productivity Organization alone, a variegated club of 19, the member countries may share the same corporate governance goals only in general terms. The notion of countries assembling together on a theme as important as corporate governance in different formations is surely inevitable. Some adopt the shareholder model of corporate governance, holding shareholder rights as inviolable; most embrace the stakeholder model, which holds that the interests of the community are as important as those of the shareholders. Yet practically all are still wedded to a relationship-based system, although that has not stopped many from pursuing avant garde forms that are more associated with the market-based, at-arms length system. Such is an Asia of diverse groupings, moving in different directions and at different speeds, with many countries hard at work at catching up with the region s leaders. Indeed this is a healthy trend, a source of pluralism and innovation within the region.

Despite the differences, the common ground among the APO member countries seems to rest on a consensus to adopt principles of corporate governance that hew more closely to generally-accepted global benchmarks. Whether widely-held or closely-held (by families), Asia s listed firms are heading toward a convergence that is going to make them better equipped to make their way in the global corporate market. This globalizing trend is shifting the balance of interests between private owners, shareholders and society at large. Tensions have flared around key public policy concerns. Asian countries face huge challenges when re-designing and implementing corporate policy at all levels. As the policy options for these nations to use corporate governance in support for their broader growth and productivity strategies are being rapidly narrowed down, many experts are questioning the one-size fits all approach to corporate discipline and are advocating a rebalancing of the corporate regime.

Asian nations as a whole will emerge the stronger for all this, if good corporate governance principles encourage them to push harder for national policies that make the firms work better. For those with threadbare institutions, their interests should lie in insisting on policies that keep the costs of business low, barriers to transparency down, and markets accessible.

The world has always wanted to keep investing in Asia. The task now is to keep investors excited about the prospects for corporate reform in the years ahead. Asian firms do want changes in rules every now and then, since it is the only way they can keep up with a constantly shifting global environment.

And change will happen, one way or the other, especially now that economies in Asia are enjoying growth again, although slowly. In order to sustain this momentum, the urgent need is to constantly assess recent developments in corporate governance in the region. As this publication shows, there is more to corporate governance than simply adherence to a code of good conduct: it is the sine qua non for improving corporate productivity and performance.

To say that corporate governance reforms only bring uncertainty runs counter to the evidence presented in this book. They are the very engine of stability and continued progress for Asian firms.

The APO is grateful to all contributors in this book for conveying this important message through their research studies. Special thanks are due to Dr. Eduardo T. Gonzalez for editing this present volume. It is our hope that the basic research study on corporate governance with its modest findings will provoke firms and policy makers to undertake corporate governance reforms that will yield business excellence and higher productivity.

– TAKASHI TAJIMA, APO Secretary-General, Tokyo, March 2004