T

he Financial Services Authority (OJK) has kicked off training sessions for publicly listed companies on good corporate governance practices in anticipation of fierce competition in the ASEAN Economic Community (AEC).

The training sessions for 400 representatives of 200 listed companies cover areas such as transparency and disclosure, risk management and shareholders rights. The OJK aims to train all of the country'€™s more than 500 listed firms in separate sessions.

'€œThe AEC will involve fierce competition, especially as there will be free flow of capital in the market. Good governance will hopefully boost the publicly listed companies'€™ competitiveness,'€ OJK commissioner for stock market Nurhaida said in her remarks on Monday.

Indonesian companies'€™ good corporate governance (GCG) has been deemed to be still lagging, with issues including late payments of dividends for shareholders, lack of anti-corruption policies and programs, ownership structures that are poorly disclosed, according to the 2013-2014 ASEAN Corporate Governance Scorecard report.

The report, which assessed publicly listed companies in six major ASEAN countries, ranked Indonesia'€™s average good governance at 54.55 on a 100-point scale. A score still '€œunsatisfactory'€ for other participating countries '€” it noted. Malaysia'€™s score was 71.69.

Nurhaida said that the Indonesian GCG requirements have been similar to the regional level '€” involving principles such as fairness, responsibility, transparency and accountability of shareholders and boards of directors (BoD) and commissioners (BoC).

'€œWhat'€™s left is whether the publicly listed companies will comply or not,'€ she added, putting the companies'€™ compliance under the spotlight.

The training session also serves as a follow-up to the launching of the GCG roadmap in February 2014 by the OJK along with the World Bank'€™s financing arm for the private sector, the International Finance Corporation (IFC).

The roadmap lists five core components that need to be addressed, including corporate governance framework, shareholders'€™ protection, stakeholders'€™ roles, transparency of information, as well as the roles and responsibilities of the BoD and BoC.

The OJK has issued five regulations this year based on the roadmap, including a regulation regarding the transparency and publication of banking'€™ financial reports and a regulation on publicly listed companies'€™ websites.

The capital market supervisor claimed that it had supervised company compliance sufficiently; citing as an example the sanctioning of companies that have submitted late disclosure of quarterly or annual financial performance. It automatically charges Rp 1 million (US$74.02) for every day of delay.

Bad corporate governance practices implemented by Indonesian companies were alleged to have exacerbated the impacts of the 1997/1998 Asian financial crisis on Indonesia. This then prompted regulators to collaborate with the private sector to strengthen the regulatory and corporate governance framework in the country.

Corporate secretary of publicly listed automotive parts manufacturing company PT Selamat Sempurna, Lidiana Widjojo, said that the company had tried to keep up with the regulation issued by OJK on corporate governance.

'€œWe have complied with the regulation to have an auditing committee, and also on the rules regarding BoC and BoD on our shareholders meetings. Going forward, we'€™ll also adjust our website to comply with the new rules,'€ Lidiana said.

The company also deemed it important to have good corporate governance as it had a big number of foreign shareholders. '€œThey are very concerned about it,'€ she said. (fsu)