DHAKA NEWS
Dhaka, Apr 21 Corporate governance should be practised not only for the sake of companies but also for society, feels head of Global Corporate Governance Forum Philip Armstrong.
"The board of a company that follows corporate governance is not only sensitive to shareholders but also to society," Armstrong told the in an exclusive interview.
The Forum is a multi-donor trust fund co-founded by the World Bank Group and the OECD to promote global, regional and local initiatives. The initiatives aim to improve the institutional framework and practices of corporate governance in developing and emerging markets.
A company, according to Armstrong, has many stakeholders and a well-governed board understands market, competitors, customers and is very sensitive to rules and regulation.
"It understands its duties and responsibilities very well."
Mid-income country
The Global Corporate Governance Forum chief believes Bangladesh is poised to become a middle-income country by 2021 and it needs corporate governance ever than before to reach the target.
"The country needs investment to grow and one good solution is foreign direct investment or raising funds in the international market and for both the cases, Bangladesh needs corporate governance," Armstrong said.
"FDI is sensitive to market and reputation and there is more chance to get the investment where business environment is more corporate governance friendly," he added.
"I am not saying corporate governance is the only factor of FDI but is one of the important determinants of business decision," the expert said.
Attracting capital is very competitive as many countries especially in Asia are competing for it and Bangladesh needs to do more to attract it and establishing corporate governance can be a decisive factor, he added.
He said Bangladeshi companies must meet international standards to raise fund from global market, where interest rates are low, as it would have to compete with other global companies.
"If a local company wants to raise fund from London or New York market, then the investors will compare the company with other British or US companies," he explained.
"The more the Bangladeshi company follows and practices corporate governance, the more there is chance to raise fund at lower interest."
Cost of corruption
Armstrong said the cost of corruption is huge and it has few benefits than the cost incurred.
"It ultimately put a heavy burden on the whole country," he said, "Public and private sectors should sit together to find out a mechanism to fight it."
"It can't be eliminated overnight."
He said Siemens in Germany or Worldcom or Enron in the US are good examples.
"The government must have the ability to try corrupt people so that a check and balance is established."
He, however, said private sector should also assist the government.
Role of IFC
International Finance Corporation, Armstrong said, was working with the government, institutions and firms to establish corporate governance in Bangladesh.
"The IFC consults with the government about rules and regulations of corporate governance and share other countries' experiences, which can be replicated," he said.
"It also engages itself with different institutions to explain the importance of corporate governance to different firms."
"These institutions can be think-tank or universities or any other organisations."
In the third level, IFC directly works with individual firms to help them establish corporate governance, said Armstrong.
"The board of a company that follows corporate governance is not only sensitive to shareholders but also to society," Armstrong told the in an exclusive interview.
The Forum is a multi-donor trust fund co-founded by the World Bank Group and the OECD to promote global, regional and local initiatives. The initiatives aim to improve the institutional framework and practices of corporate governance in developing and emerging markets.
A company, according to Armstrong, has many stakeholders and a well-governed board understands market, competitors, customers and is very sensitive to rules and regulation.
"It understands its duties and responsibilities very well."
Mid-income country
The Global Corporate Governance Forum chief believes Bangladesh is poised to become a middle-income country by 2021 and it needs corporate governance ever than before to reach the target.
"The country needs investment to grow and one good solution is foreign direct investment or raising funds in the international market and for both the cases, Bangladesh needs corporate governance," Armstrong said.
"FDI is sensitive to market and reputation and there is more chance to get the investment where business environment is more corporate governance friendly," he added.
"I am not saying corporate governance is the only factor of FDI but is one of the important determinants of business decision," the expert said.
Attracting capital is very competitive as many countries especially in Asia are competing for it and Bangladesh needs to do more to attract it and establishing corporate governance can be a decisive factor, he added.
He said Bangladeshi companies must meet international standards to raise fund from global market, where interest rates are low, as it would have to compete with other global companies.
"If a local company wants to raise fund from London or New York market, then the investors will compare the company with other British or US companies," he explained.
"The more the Bangladeshi company follows and practices corporate governance, the more there is chance to raise fund at lower interest."
Cost of corruption
Armstrong said the cost of corruption is huge and it has few benefits than the cost incurred.
"It ultimately put a heavy burden on the whole country," he said, "Public and private sectors should sit together to find out a mechanism to fight it."
"It can't be eliminated overnight."
He said Siemens in Germany or Worldcom or Enron in the US are good examples.
"The government must have the ability to try corrupt people so that a check and balance is established."
He, however, said private sector should also assist the government.
Role of IFC
International Finance Corporation, Armstrong said, was working with the government, institutions and firms to establish corporate governance in Bangladesh.
"The IFC consults with the government about rules and regulations of corporate governance and share other countries' experiences, which can be replicated," he said.
"It also engages itself with different institutions to explain the importance of corporate governance to different firms."
"These institutions can be think-tank or universities or any other organisations."
In the third level, IFC directly works with individual firms to help them establish corporate governance, said Armstrong.
