The FINANCIAL — IFC, a member of the World Bank Group, on April 7 signed a memorandum of understanding with the Securities and Exchange Commission of Cambodia (SECC) to develop a roadmap for strengthening the country’s corporate governance policies and practices. The partnership aims to improve transparency and bolster investor confidence in Cambodia’s capital market, which will help entice more foreign investment to the country.
Under the memorandum, IFC and the SECC will assess Cambodia’s corporate governance standards and practices then devise an action plan to improve them. With support from IFC, the SECC will develop and implement a corporate governance code, which will set best practices for Cambodian listed companies to follow. More foreign investment will lead to local job creation, a stronger business landscape and improved private sector efficacy, according to IFC.
“Good corporate governance standards and practices are prerequisites to the development of a strong and sustainable capital market,” said Sou Socheat, Director General of the Securities and Exchange Commission of Cambodia. “IFC and the World Bank will help us evaluate the existing regulatory framework to enhance our corporate governance practices. We will work together to raise market awareness of the importance of good governance, which will contribute to the sustainable development of Cambodia’s corporate sector.”
Numerous studies report that investors have greater confidence in companies with good governance and in markets that are backed by sound legal and regulatory regimes. In a 2002 McKinsey survey, institutional investors said they would pay premiums averaging 22 percent to own well-governed companies in Asia and Latin America.
IFC and the SECC will organize public seminars and workshops to promote best corporate governance practices, including a roadshow to introduce the Association of Southeast Asian Nations Corporate Governance Scorecard initiative. Once Cambodian companies adopt the scorecard, they can benchmark their practices against peers from ASEAN countries.
“Our cooperation with the Securities and Exchange Commission of Cambodia will help build a stronger policy framework and raise awareness of good governance practices in Cambodia’s emerging private sector,” said Kyle Kelhofer, IFC Country Manager for Cambodia, Lao People’s Democratic Republic, and Vietnam. “This will help improve the competitiveness of Cambodian public and listed companies, thus making them more attractive for foreign investors.”
IFC has contributed to the adoption of 95 corporate governance codes, laws, and regulations in more than 30 countries worldwide. IFC’s Corporate Governance Program in East Asia and the Pacific is funded by the State Secretariat for Economic Affairs of Switzerland.
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