By ALIFAH ZAINUDDIN
The Malaysian Institute of Management (MIM) urges small and medium enterprises (SMEs) to adopt international standards of corporate governance and compliance to enhance their marketability in the global supply market.
As listed entities around the world are forced to observe stricter regulations imposed by stock markets, Malaysian SMEs need to educate themselves in order to successfully navigate through the governance and compliance maze, said MIM CEO Sivanganam Rajaretnan.
“In their role as suppliers to major global corporations, smaller firms are increasingly being asked to fulfil stringent criteria to prove their reliability as a business partner.
“Now, more than ever, they must provide clear and verifiable evidence of good corporate governance,” Sivanganam said at MIM’s pioneer conference on SME Corporate Governance titled “Stepping up Corporate Governance, Compliance and Anti-Corruption Practices” held at the Pullman Hotel in Bangsar, Kuala Lumpur, yesterday.
The half-day event was organised in collaboration with the Basel Institute on Governance and German think-tank, Konrad Adenauer Stiftung.
Among the panel speakers were Basel Institute’s Compliance, Corporate Governance and Collective Action Unit head Gemma Aiolfi, as well as UK-based Nestor Advisors economist, director and partner David Risser.
The conference aimed to increase the effectiveness of governance and compliance with the Malaysian SME sector — which currently contributes 37% to the country’s gross domestic product.
Discussions revolved around manners in which organisations should be constituted and structured for corporate governance, examples of anti-corruption compliance best practices and ways to effectively promote good governance, compliance and anti-corruption measures in support of the Malaysian government’s initiatives.
“As the national management organisation, MIM is committed to promoting management skills and exposing Malaysian companies to best practices from all corners of the globe,” Sivanganam said.
In a recent interview with The Malaysian Reserve, Risser noted the importance of corporate governance not only in inculcating good management habits but also to raise funds, decide on succession plans and sell a company in times of conflict.
“Corporate governance is particularly important to the shareholders of unlisted companies. In most cases, such shareholders have limited ability to sell their ownership stakes and are therefore committed to staying with the company for the medium to long term,” he said.
Studies by development institutions showed that two-thirds of non-performing portfolios among SMEs were the result of weak governance.
Risser said despite the findings, the majority of SMEs around the world still view corporate governance with scepticism.
He said most SMEs viewed corporate governance as an additional cost and find it difficult to open their doors and minds to external opinions, as they are required to be transparent.