Lao businesses learn about corporate governance
Lao businesses learn about corporate governance
Local businesses and various government sectors gathered in Vientiane yesterday for a seminar on corporate governance arranged by the Lao Securities Commission Office and the International Finance Corporation.
Almost 100 local business and government officials learned new facts about various aspects of corporate governance to prepare themselves for the Asean Economic Community.
Head of Office of the International Finance Corporation (IFC) in Laos, Mr Phomsavanh Phomkong, delivered a basic overview of corporate governance, saying that it is a programme to reduce the risk profile of businesses.
“A basic example is that if a company is weak on corporate governance, banks will only grant loans with high interest rates but if they are strong, they will be able to get a long-term loan with a low interest rate,” he explained.
The IFC already works on the corporate governance programme in several countries in Asia including China, Indonesia, and Vietnam. Yesterday it launched the seminar in Laos and is seeking to expand the programme to other countries in the region.
The corporate governance programme will benefit businesses' shareholders and also offer long term benefits for the companies concerned as well as the general market.
“Some of the major crises occurring in the world today are the result of poor governance. For example a recent oil spill was attributed to weak corporate governance,” Mr Phomsavanh said. “Preparing for the AEC means preparing for business competition. Companies need to understand that we are about to become part of the AEC and therefore we should know how to compete.”
“Laos is still not strong enough to compete in the regional market head to head so I am advising local business units to prepare to be partners until their business is stronger,” he added.
As an example, he said no one would be better in the agriculture market than companies like CP, so a partnership would be the best way forward.
“We have to prepare ourselves to be a partner so we have to dress ourselves properly in terms of corporate governance so that when they come they are confident about working with us,” Mr Phomsavanh said.
Deputy Secretary General of the Lao Securities Commission Office, Mr Soulysak Thamnuvong, said regional countries see the importance of corporate governance because it will spur business integration.
“If somebody is considering investing in you, they won't pick you because you have a lot of money - they will pick you because of your strong corporate governance,” Mr Soulysak explained.
The meeting stressed the importance of corporation governance and its relevance to Asean countries. Attendees raised questions to share their experiences and discuss potential benefits for their businesses.
