ASEAN Corporate Governance Scorecard

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Jun. 11 – The ASEAN Capital Markets Forum (ACMF) and the Asian Development Bank recently established a joint initiative called the ASEAN Corporate Governance Scorecard. Corporate governance refers to the system of governance which controls and directs corporations, and monitors their actions and policies.

The stated objective of the ASEAN Corporate Governance Scorecard is to:

  • Raise the corporate governance standards and practices of ASEAN publicly listed companies (PLCs);
  • Give greater international visibility to well-governed ASEAN PLCs and showcase them as investable companies; and
  • Complement other ACMF initiatives and promote ASEAN as an asset class.

The Scorecard judges five key principles of corporate governance in each nation:

  1. Rights of shareholders (10 percent);
  2. Role of stakeholders (10 percent);
  3. Equitable treatment of shareholders (15 percent);
  4. Disclosure and transparency (25 percent); and
  5. Responsibilities of the board (40 percent)

The percentages indicate the allocated weight of each principle in determining the Scorecard of each country.

The ASEAN countries that participated in the initiative include Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Please find below a summary of how the ASEAN countries fared.

The complete report can be found here.


  • Average corporate governance score: 43.4 percent
  • Maximum score: 75.4 percent
  • Minimum score: 20.8 percent

Average corporate governance score by sector:

  • State-owned enterprises (SOEs): 62.2 percent;
  • Banks: 58.9 percent;
  • Non-banks: 40.4 percent; and
  • Private Companies: 39.9 percent

The higher scores listed for banks and SOEs are a result of those sectors being held under closer scrutiny by the Indonesian Central Bank and Ministry of SOEs, which significantly enhances the corporate governance practices of these companies.

The report found that a majority of PLCs in Indonesia still do not practice corporate governance at an international standard. Many of the corporate governance practices included in the Scorecard are voluntary practices, but the report details that Indonesian PLCs often only implement the mandatory practices, or the bare minimum necessary.

Furthermore, Indonesia’s corporate governance code does not have a “comply or explain” requirement, which has resulted in many PLCs not referring to the code at all. Therefore, they are potentially unaware of the other corporate governance practices that can be voluntarily implemented.


  • Average corporate governance score: 62.3 percent
  • Maximum score: 93.9 percent
  • Minimum score: 41.8 percent

The graph below illustrates the overall performance distribution of the 100 assessed companies in Malaysia.

Furthermore, the figure below shows the companies that are considered “exemplary” (companies that scored in the 80th percentile or higher) in respect to upholding the international standards of each principle of the Scorecard.

Notably, of the top 20 companies, six of them are government-linked companies (similar to how government-linked companies in Indonesia performed at a higher standard).

In 2011 the Securities Commission of Malaysia launched the Corporate Governance Blueprint with a five-year action plan to improve corporate governance. This has already resulted in the release of the new Malaysian Code on Corporate Governance in 2012, which identified broad principles and specific recommendations on both structures and processes to improve corporate governance.

Overall, however, companies in Malaysia frequently adhered only to the minimal requirements of the corporate governance laws, rules and regulations.


  • Average corporate governance score: 48.9 percent
  • Maximum score: N/A
  • Minimum score: N/A

It must be noted that the report deemed that the Philippine’s score is “essentially a trial score” due to the lack of prior education PLCs have received on corporate governance. This is also why there are no maximum and minimum scores present.

The following graph outlines the scores listed by category.


  • Average corporate governance score: 56.1 percent
  • Maximum score: 81.4 percent
  • Minimum score: 37.4 percent

The overall average score received by the 100 largest PLCs in Singapore is 56.1 percent. Only six companies received a score of more than 75 percent, while 31 received a score of less than 50 percent. The average score for the 50 highest-ranked PLCs amounted to 64.1 percent.

The regulatory framework of corporate governance for PLCs in Singapore is comprised of the following corporate governance rules, principles and recommended practices that are administered by the relevant regulatory bodies:

  • Companies Act of 1967 (and subsequent amendments);
  • Securities and Futures Act of 2001 (and subsequent amendments);
  • Listing Requirements (Rulebook); and
  • Singapore Code of Corporate Governance of 2001 (and subsequent revisions).

Most of the principles and recommended practices for good corporate governance for PLCs are listed in the Singapore Code of Corporate Governance, which operates on a “comply or explain” basis.

The Singapore Code of Corporate Governance was most recently revised in May 2012.


Average corporate governance score: 67.7 percent
Maximum score: N/A
Minimum score: N/A

Thailand achieved the highest average total corporate governance score out of the six ASEAN countries listed in the report. Much of this success can be attributed to the country’s corporate governance framework that has been established through the following important legislations:

  • The Public Limited Act (1992);
  • The Securities and Exchange Act (2010); and
  • The Civil and Commercial Code (2011).

Compliance with corporate governance standards in Thailand operates on a “comply or explain” basis.

Furthermore, in 2002 the Stock Exchange of Thailand issued the “15 Principles of Good Corporate Governance”, which were amended in 2006. These principles have since been further revised, and will take effect in January 2015.


Vietnam’s Code of Corporate Governance, which was issued in March 2007, initially brought corporate governance concepts and issues into the public eye with regard to PLCs. It was revised in July 2012 to include a main focus on board responsibilities and disclosure and transparency requirements.

The graph below illustrates the average performance of Vietnamese PLCs in each category as well as the highest and lowest scores in the country.

The country’s performance in the “Disclosure and Transparency” category should be especially noted as the assessment is based on information that is publicly available and accessible. However, conversely, a company in Vietnam may actually practice good corporate governance but may fail to report its practices through public information channels such as annual reports, websites and regulatory filings.

In addition, the poor scores are attributed to minimal investor communications in English as most Vietnamese PLC investor communications are held solely in the Vietnamese language.


The corporate governance report provides immense insight for potential foreign investors into the corporate governance of ASEAN-based companies. Strong corporate governance correlates to a positive effect on company performance due to greater transparency, increased efficiency and liability.

Notably, the report lists that Thailand (67.7 percent) and Malaysia (62.3 percent) scored highest on the corporate governance scorecard with signs of further improvement to come.

Well-governed firms have been noted to significantly outperform poorly governed firms by up to 15 percent a year. Since better corporate governance is correlated with better operating performance, the constant working of ASEAN-based companies to raise their standards will provide the region better results and increase investor confidence.