OECD supports corporate governance in Laos
OECD supports corporate governance in Laos
The third meeting of the Organisation for Economic Cooperation and Development (OECD-Southeast Asia) Corporate Governance Initiative took place in Vientiane this week.
The two-day meeting aims to increase awareness of corporate governance, identify policy which will improve corporate governance of enterprises, spur capital market development, and attract foreign investment.
The meeting was hosted by the Lao Securities Commission in collaboration with the OECD and supported by the government of Japan.
In her opening remarks, Deputy Governor of the Bank of the Lao PDR, Ms Vatthana Dalaloy, said corporate governance is an essential aspect of global and regional economic development within Cambodia, Laos, Myanmar and Vietnam (CLMV).
“With the lessons learned from the recent financial crisis, the main problem of financial institutions' bankruptcy is poor corporate governance,” she said.
Ms Vatthana said a number of well-known companies in America had poor risk management, conflict of interest, and insider trading while some renowned companies in Europe faced financial fraud and bribery. Similar companies in Asia faced financial scandal and problems with risk management as well.
“These failures create huge financial losses and damage companies' reputations. In severe cases some companies become bankrupt which affects public confidence and the financial system's stability,” Ms Vatthana said.
She added that Laos is one of the CLMV countries and corporate governance is an important aspect of its capital market development. GDP growth of 7.90 percent from 2011-2015 was also influenced by the capital market.
Meanwhile the Deputy Commissioner for International Affairs from the Financial Service Agency of Japan, Mr Masato Kanda, said economic growth in Laos was about 7 percent per annum and depends heavily on natural resources, mainly hydropower and mining.
“Heavy dependence on natural resources must be mitigated by a more diversified economy. This meeting will cover crucial areas in Laos such as the legal and policy framework needed for investment and development of the capital market,” Mr Kanda said.
Senior Policy Analyst, Ms Fianna Jurdant, said OECD's goal is to offer decision makers the opportunity to discuss policy challenges, exchange experiences, identify good practices, and to develop consensus based on international standards.
“Our objective is to support better policies for better lives and to promote policies that improve the economic and social well-being of people around the world,” she said.
Ms Jurdant said OECD is in Southeast Asia because it is one of the most dynamic economic regions in the world, representing 8.8 percent of the world's population, with a combined GDP of over US$2.6 billion.
“Laos is not only an Asean member country but is already integrated within the region and the world,” she said, adding that the corporate governance initiative aims to support the CLMV countries so they can develop a vibrant capital market and enhance corporate governance standards in the region.
Along with local and international experts, meeting participants come from government agencies, state-owned and private enterprises, and international organisations.
The Lao government hopes that corporate governance will enhance economic growth when incorporated in the 8th National Socio-economic Development Plan.
