By FIL C. SIONIL
Domestic firms with good corporate governance will have better chances of accessing cheaper cost of funds to for its capital outlay and other expansion program.
"Many companies in the Philippines are realizing that it pays to promote good corporate governance to gain better access to capital and draw investment premiums," said Vipul Bhagat, IFC country manager for the Philippines and Thailand.
He explained that good governance leads to more transparency in the firm’s operations, which, in turn, will be reflected in its balance sheet/financial statements.
Visiting Washington-based IFC Corporate Governance Unit Head Mike Lubrano pitched that borrowing will not only come cheap but more importantly, foreign investors will be captivated by firms strictly adhering to corporate governance.
Lubrano pointed out it is not only about the risk management but also the checks and balances required in the paradigm.
It is stressed that a firm that is well-governed is one that is accountable and transparent to its shareholders and other stakeholders such as employees, creditors, customers and society, at large.
"Good corporate governance won’t just keep companies out of trouble. A commitment to good corporate governance makes a company more attractive to lenders and investors and more profitable," Lubrano said.
According to Bhagat, Philippine companies with better corporate governance practices will gain better access to capital and partners. "Improved practices helped companies become more competitive in local and global markets."
To further prove the hypothesis, Bhagat cited Banco de Oro Universal Bank (BDO) and Bank of the Philippine Islands (BPI) as two locally-incorporated-listed banks known to have strict compliance to good governance.
"BPI and BDO are listed banks with probably the strongest corporate governance," which is reflected by its increasing trading multipliers, Bhagat said.
Relative to this, Bhagat said IFC, the investmentarm of the World Bank, is looking to encourage banks to work with their forward looking small and medium enterprises clients to adopt practices in corporate governance appropriate to their level of development.
IFC believed that corporate governance is relevant, especially for firms, reaching a point in their development that requires capital from local and global sources. These include family-owned companies in transition and firms seeking to conduct initial public offerings.
Corporate governance, along with environmental and social sustainability, is one of the pillars of IFC’s efforts to promote longterm growth.
http://www.mb.com.ph/BSNS2006040260349.html
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