The FINANCIAL — IFC, a member of the World Bank Group, and Lao Securities Commission Office signed a memorandum of understanding today to improve corporate governance, which will strengthen the country’s capital markets and boost sustainable growth.
IFC will help Lao Securities Commission Office conduct a country-wide corporate governance assessment to identify gaps and challenges in Lao’s regulatory framework, covering areas such as shareholder rights, corporate board practices, disclosure, and transparency. This assessment will pinpoint an action plan leading to the development of a corporate governance code to establish good practice standards, with which Lao companies must comply, according to IFC.
“Lao PDR needs to have a sustainable capital market that is capable of attracting companies and investors,” said Saysamone Chanthachack, Acting General Secretary of Lao Securities Commission Office. “Improving corporate governance standards and practices is a prerequisite to achieving that goal, as better corporate governance helps build trust among market stakeholders. IFC’s support to Lao Securities Commission Office will help us further improve the transparency and competitiveness of Lao public companies.”
IFC will also help Lao Securities Commission Office raise awareness among Lao companies about the importance of good corporate governance and the governance practices of their peers in neighboring countries. As part of the efforts of the Association of Southeast Asian Nations (ASEAN), which includes Lao PDR, to harmonize practices across its markets and promote ASEAN as an attractive asset class for regional and global investors, Lao companies are expected to raise the bar in corporate governance.
“Sound corporate governance – the responsibility of stakeholders toward each other – contributes to sustainable economic development by enhancing company value and long-term growth,” said Kyle Kelhofer, IFC Country Manager for Lao PDR, Cambodia, and Vietnam. “Our cooperation with Lao Securities Commission Office will help raise governance standards in Lao’s emerging corporate sector, improving operations and increasing transparency, making them more attractive to outside capital and investment.”
IFC has contributed to the development of 48 corporate governance codes in 32 countries worldwide. In East Asia and the Pacific, IFC developed the first corporate governance manual for Vietnam companies and produced an annual corporate governance scorecard for the top 100 biggest Vietnamese listed companies. It has also partnered with China’s Shenzhen Stock Exchange to enhance corporate board performance, and has helped Indonesia’s financial services authority, OJK, develop its Corporate Governance Roadmap and Code.
IFC’s support to Lao Securities Commission Office is delivered in partnership with Switzerland’s State Secretariat for Economic Affairs (SECO).