Yang Berhormat Dato’ Seri Ahmad Husni Hanadzlah, Minister of Finance II, Malaysia
Yang Amat Berbahagia Tun Mohamed Dzaiddin Hj. Abdullah, Chairman, Bursa Malaysia
Your Excellencies
Members of the Corporate Governance Consultative Committee
Distinguished Guests,
Members of the media,
Ladies and Gentlemen
Assalamualaikum.
- It is my pleasure to welcome you to the Securities Commission for the launch of the Corporate Governance Blueprint 2011, which marks another significant milestone of the SC’s continuous efforts towards excellence in corporate governance. Before I proceed, I wish to thank Yang Berhormat Dato’ Seri Ahmad Husni Hanadzlah, Minister of Finance 2 for his presence this morning and for graciously accepting our invitation to deliver the keynote address and to launch the Corporate Governance Blueprint.
- The last decade has been one of transformation for the Malaysian capital market. Since 2000 the growth of the Malaysian capital market had outpaced the economy, with the size of the capital market expanding from RM718 billion to RM 2 trillion or at an annual compounded rate of 11%. We now have a sizable and comprehensive market with a bond market ranking third in Asia benchmarked to GDP complementing a well-established stockmarket which facilitates equity financing to almost one thousand public listed companies. We have also grown a significant investment management industry and an Islamic capital market that takes its place amongst global leaders.
- The Capital Market Masterplan 2 will further expand the role of the capital market in financing the growth of the economy. However the concerns on the efficacy of markets following the global financial crisis need to be addressed. Thus the growth process must factor in the need for a greater understanding of the risks associated with investing and the ability to manage these risks. Growth must be underpinned by a sound system of governance and accountability if it is to be sustainable.
- We must learn from the lessons of past and recent crises. The Asian financial crisis exposed weaknesses in the overall corporate governance standards and was a catalyst for reforms to increase transparency, strengthen internal controls and ensure adequate investor protection. Malaysia was among the firsts in the region to implement reforms with the introduction of the Malaysian Code of Corporate governance in 2000. This was subsequently followed by initiatives to strengthen the responsibilities of boards of directors and audit committees as well as the introduction of whistle blowing provisions. In tandem with this, the civil and administrative powers of the SC were broadened.
- We have over the years laid the building blocks for a strong regulatory framework that provides robust safeguards to protect the interests of investors and the stability of the market. These building blocks underpin the Malaysian corporate governance ecosystem. However, establishing an effective corporate governance framework is a dynamic process. While there must be fundamental imperatives to ensure investor protection, efficient and fair markets, and reduction in systemic risk – the process requires continuous review and re-examination to ensure suitability and efficacy in the light of the changing conditions in the global financial and regulatory landscape.
- Continuous strengthening of corporate governance remains one of our key thrusts to reinforce market confidence. The launch of this Corporate Governance Blueprint 2011 is an affirmation of the SC’s commitment to achieve nothing less than excellence in corporate governance. In this regard, we have undertaken a major review and devoted great efforts towards recalibrating the necessary controls that will ensure that Malaysia’s corporate governance framework remains robust, relevant and effective.
- This Blueprint is also significant as it is our first major deliverable pursuant to the CMP2 that was launched recently. The Blueprint sets out the policies and strategic direction as well as detailed recommendations for strengthening corporate governance in the Malaysian capital market over the next 5 years. It is obvious that regulation is no substitute for the need for market participants to govern themselves responsibly. This Blueprint is therefore aimed at complementing regulation by reinforcing self discipline and market discipline to promote greater internalisation of the culture of good corporate governance.
- The Blueprint’s priorities and recommendations aim to close gaps, elevate standards, foster buy-in of good corporate governance practices, and inculcate a good corporate governance culture. In this context, the Blueprint encapsulates a wider range of accountability and expectations with a view to encouraging the integration of principles, ethics and values into the decision-making process of a business. Our objective is to assist the competitive positioning of Malaysian public listed companies by strengthening their governance practices. We believe that good governance makes good business; it contributes to good performance and confidence in the market.
- You will therefore note key differences in the approach and objectives of this Blueprint compared with the approach pursuant to the High Level Finance Committee Report on Corporate Governance published in the aftermath of the Asian financial crisis. The rigorous efforts undertaken to build a robust, internationally benchmarked regulatory framework over the last ten years, have enabled our market to remain resilient during the recent global financial crisis.
- But as the financial market and regulatory landscape changes arising from the crisis, expectations in regard to governance have heightened. Greater scrutiny on conduct and performance leaves no room for complacency and neglect on the part of boards of public listed companies on the need for strengthening integrity and accountability in the discharge of their roles and responsibilities. It is imperative for all members of the board to have a comprehensive understanding of their roles and to possess the necessary competence to discharge their responsibilities effectively – engaging management, asking questions and demanding answers, and not signing off until they are satisfied.
- It is also necessary for shareholders to be much more aware of their rights and to be empowered to exercise those rights effectively. Shareholders must be more assertive in demanding greater corporate accountability. This includes the need for institutional investors to play a greater leadership role in exercising their rights as share owners and to be the leading voice of shareholders in demanding corrective action.
- It is the goal of the Blueprint therefore to emphasise the importance of self-regulation and market regulation, thereby reducing the regulatory burden by making companies more self reliant and empowering shareholders and the market to share in the responsibility for promoting good corporate governance.
- Today, what investors and the public need most, over and above compliance with the rules and regulations, is assurance and accountability in the broadest sense; and this includes taking into account the company’s continuing viability as an enterprise, conduct which embraces moral and ethical considerations, understanding and management of risks and the creation of sustainable value. In other words, investor and public confidence are premised on a strong and viable corporate culture that focuses on the best long-term interests of the company and its ability to return value to shareholders while preserving the interests of all other stakeholders.
Ladies and gentlemen,
- In order to ensure that the recommendations in the Blueprint are sufficiently robust to bring about positive changes to the Malaysian corporate governance landscape, the recommendations were benchmarked against international best practices and standards. Intensive syndication and engagements were carried out with local and international stakeholders to test the efficacy of the recommendations and to contextualise the recommendations to our own landscape.
- The formulation of the Blueprint was a collaborative effort from the start. The Corporate Governance Consultative Committee (CGCC) was established to ensure that the Blueprint benefitted from the perspectives of a diverse membership. The CGCC comprises national and international members from both the private and public sectors. I would like to express my sincere appreciation to the members:
- Tan Sri Dr Wan Abdul Aziz Wan Abdullah, Secretary-General, Ministry of Finance; • Tun Mohamed Dzaiddin Haji Abdullah, Chairman, Bursa Malaysia; • Dato’ Azmi Ariffin, Chief Executive Officer, Companies Commission of Malaysia;
- Tan Sri Dato’ Azlan Zainol, Chief Executive Officer, Employees Provident Fund;
- Dato’ Sri Nazir Razak, Group Managing Director and Chief Executive Officer, CIMB Group; • Tan Sri Megat Najmuddin Megat Khas, President, Federation of Public Listed Companies Malaysia;
- Dato’ Seri Johan Raslan, Executive Chairman, PricewaterhouseCoopers Malaysia; •
- Ms Fianna Jesover, Senior Policy Manager, Organisation for Economic Co-operation and Development;
- Mr Peter Elston, Strategist, Aberdeen Asset Management Asia Limited; and
- The late Khun Charnchai Charuvastr, President and Chief Executive Officer, Thai Institute of Directors’ Association.
At the working level, I would like to extend a special thanks to the Corporate Governance Working Group members, which consisted of representatives from
Bursa Malaysia, ACCA, CFA, MAICSA, the legal fraternity, MSWG, MACD and other proponents of corporate governance in the industry. My appreciation also goes
to the very committed team from the SC led by Dato Dr Nik Ramlah and Goh Ching Yin.
3.This Blueprint is a culmination of the collaboration and common vision of all stakeholders who share a passion and commitment to good corporate
governance. The support and co-operation of all stakeholders in the implementation of this Blueprint is imperative if we are to realize our goal of achieving
excellence in corporate governance. I therefore look forward to their commitment, contribution and co-operation in implementing the recommendations of this
Blueprint.
Ladies and gentlemen,
- I thank you once again for your presence this morning. And I want to express my sincere gratitude and appreciation to Yang Berhormat Dato’ Seri Ahmad Husni Hanadzlah for being here to deliver the keynote address and to launch the Corporate Governance Blueprint 2011.
Thank You
