FOREWORD

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This book, written by corporate governance experts in seven APO member countries, is both a sequel to and explores a range of best practice experiences uncovered by its predecessor, Impact of Corporate Governance on Productivity: Asian Experience, published by the APO in 2004. The collection of papers in this book seeks to answer the question of how to understand and manage best practice approaches in corporate governance, which too often remain unarticulated. The book illustrates how praxis, i.e., translating theory into action, has shaped and reshaped the corporate sector in the Asian countries covered in the essays, making these countries the best they can be in specific corporate governance fields. The APO decided to publish this book to further the cause of corporate governance as a productivity instrument in its member countries. The basic premise is that generating best practice yardsticks by which corporate governance can be gauged helps promote good corporate governance principles and practices.

Corporate governance is not only a method firms use to discipline themselves while remaining profitable. It is also one of the principal ways they “make the society” in which they operate and which in turn “makes” them. If this relationship is obscured, it is because the existing policy and regulatory environment confronts firms with an apparently readymade and opaque organization of means and ends, in which compliance is necessary but over whose purpose the majority of organizations, whether companies or civil society groups, have little or no control. In their individual ways, most of the papers in this publication reflect attempts to regain the power to direct or determine the objectives of business, make the administration of means and ends more transparent, raise the bar of corporate standards, and put restraints on the power of the state to erect needless barriers against the freedom of corporate action.

In Asia, with its complicated business practices, no one country can claim superiority in all facets of corporate governance. But a number of Asian countries have made steady strides in specific aspects, and these are highlighted in this compendium of best practices. The book includes significant advances achieved by the following countries in key corporate governance areas: Malaysia, the general regulatory and institutional environment; India, public enterprise management; Japan, board effectiveness and ownership structure; Singapore, transparency and disclosure; Republic of China, network organizations; Vietnam, equitization; and the Philippines, corporate social responsibility. Considering the context in which the corporate governance efforts of the APO have been formulated? firms are the centerpiece of interventions, but backed up by strong government policies? the essays demonstrate that good governance laws and regulations, on the one hand, and good firm practices, on the other, both result in better performance and higher productivity.

It is impossible to cover more than a fraction of the good corporate governance practices that an increasingly complex Asian corporate sector requires. Readers will note that certain topics are not included: dilution of ownership, ready availability of voice and exit options for shareholders, good creditor and debtor relations, credible insolvency mechanisms, and better productivity and quality management, among others. Similarly, as noted in the introductory essay by the chief expert, it is hard to ignore the make-or-break role of institutions in shaping good governance practices. Each significant absence suggests a gulf between theory and practice, indicating the need to widen the research agenda on corporate governance.

The APO wishes to thank all the contributors to this book. We are grateful to Dr. Eduardo Gonzalez, the chief expert, for coordinating the research effort and editing this volume. Finally, while not all the contributors share the same views or agree with the inferences drawn from their essays, in a sense the significance of this publication lies not in any particular viewpoint, but in the agreement to discuss a topic common to all Asian countries.

Shigeo Takenaka
Secretary-General
Tokyo, May 2007