The World Bank (WB) is urging the Philippines to institute deep and rapid reforms in corporate governance practices, a WB official said yesterday.
In a speech during a conference on corporate governance and related reforms sponsored by the Institute of Corporate Directors of the University of Asia and the Pacific, WB vice president for East Asia and Pacific region Jemal-ud-din Kassum said these reforms are integral to current efforts in various part of the government.
Kassum cited the reforms being done in the judiciary, the legal framework for the securities markets, accounting and disclosure standards, and in enhancing banking supervision.
At the same time, the WB official lauded local authorities for their commitment to pursue such reforms, which are vital for the furher strengthening of the financial and corporate sectors.
"We underscore the commitment of the Philippine government and the business community to the ideal of having among the most modern corporate government regimes, characterized by fairness, accountability and transparency, in East Asia," he said.
According to Kassum, these corporate governance reforms are necessary since the external develpments suggest that an external demand shock for this region cannot be ruled out.
"Meanwhile the challenge is whether or not today's recovery can be transformed into a sustained expansion," the WB official said.
While the World Bank acknowledges that there is some kind of recovery in East Asia from a steep plunge during 1997-1999, "there is a danger that the pace of reforms may slow as ebullient economies may mask the need for continued reform progress."
"These efforts (corporate reforms) nevertheless are significant in that they lay strong foundation for sustaining the recovery over time and for getting back much more firmly on the road to rapid and sustained growth," he said.
Among the recent reform efforts in East Asia, he said, are those designed to bring corporate governance reforms to the forefront. This is very important, such reforms secure microeconomic strength and provide a base for macroeconomic stability, with improved safeguards to manage risks that inevitably arise from open interaction with the global economy.
"Through East Asia, there is a window of opportunity for corporate governance reforms that several economies have taken advantage of," he said.