IFC urges Vietnam’s listed firms to improve governance

The Corporate Governance Scorecard for Vietnam 2012 report reviewed the corporate governance practices of the top 100 companies listed on the Hanoi and Ho Chi Minh stock exchanges.

The results showed that the average corporate governance score dropped 2.2 percentage points to 42.5 per cent from last year.

“That’s why I’m disappointed,” IFC corporate governance consultant Anne Molyneux, said while she launched the report in Ho Chi Minh City November 23.

The results indicated that Vietnamese companies needed to step up their efforts in the push for better governance as they expanded their businesses amid a tough economy, she added.

The report found that existing corporate governance rules and regulations in Vietnam are often insufficiently implemented.

IFC urged companies to further raise their awareness of the importance of good governance practices, such as paying more attention to protecting the rights of shareholders and stakeholders, improving the company’s disclosure and transparency, and making the board accountable for risk oversight.

Molyneux also pointed out some corporate governance issues in Vietnam, such as poor or inaccurate financial reporting, weak financial oversight, non-compliance with laws and regulations, inadequate companies policies, poor shareholder treatment, cross shareholdings and concentration of shareholdings.

This is the third IFC corporate governance scorecard produced in partnership with the State Securities Commission of Vietnam (SSC) and the governments of Canada, Finland, Ireland, Japan, the Netherlands, New Zealand and Switzerland.

The SSC acknowledged the scorecard results and warned that next year’s results were likely to be lower than this year because 2012 saw more scandals than 2011, said Bui Hoang Hai, from SSC’s Department of Issue Management.
 
Vietnam’s scorecard results over the three years are 43.9 per cent (2009), 44,7 per cent (2010) and 42.5 per cent (2011). To compare, Malaysia’s results during the past three years were 52, 55.6 and 57.2 per cent, respectively; Thailand  78, 80 and 77 per cent and the Philippines 72, 73 and 77 per cent.