KUALA LUMPUR, May 7: Asia must improve its corporate governance standards to face the challenges of globalisation and to win over foreign investors, officials said on Tuesday.

Kuala Lumpur Society for Transparency and Integrity president Tunku Abdul Aziz Ibrahim said Asia’s attempts to reform corporate governance was perceived as half-hearted and as a public relations exercise to deflect criticism.

Speaking at the Pacific Basin Economic Council meeting, he said the business sector must institutionalise a system of check and balance, and the government review the legal framework to support corporate reforms.

Victor Apps, executive vice-president and Asia general manager for Manulife Insurance, said corporate governance in the Asian industry was poor in the absence of the basic rule of law, faulty regulatory regimes and restrictive entry rules.

Governance and transparency relating to regulatory regimes vary greatly among the various jurisdictions in Asia but in general terms, the position is very poor, he told the meeting.

Apps said Manulife, which operates in eight Asian countries, had faced an “extraordinary problem” in Indonesia in last 18 months amid an attempt to extort 40 million dollars from the company. He did not give details.

The sad truth is that, if offered enough money, certain police and judges will do just anything, he said.

The ministry of finance, our regulator, is powerless to intervene and the government of Indonesia is unable to stop the criminals. The rule has broken down in Indonesia.

A crooked judge can declare any company bankrupt and can grant absurd rulings against any company. This is a very sad situation indeed.

Apps said governance was also “particularly weak” in Japan, which has the largest life insurance industry in Asia.

He said Japanese life insurance companies, abetted by the regulators, have failed to meet many of the good regulatory criterium, did not provide cost of future likely losses and have weak solvency margin calculations.

For years, the government allowed insolvent insurers to sell new business because they did not want to face up to this reality, he said, adding this had led to the failure of many companies.

Similar failures to focus on solvency also led to bankruptcy for many life insurance firms in South Korea and Indonesia, he said.

Apps said licensing was also used in many cases to protect local insurers and keep out international insurers such as in China but added the situation was improving.

Unfortunately good corporate governance is unlikely to improve until the governments improve their governance, he added.

Manulife, which manages funds totaling 142 billion ringgit worldwide, has 4,000 staff and 20,000 sales agents in Asia including Japan, Hong Kong, Shanghai and Vietnam.—AFP