International partnerships drive transparency among Myanmar companies

Good corporate governance is what attracts investors, such as International Financial Corporation (IFC), for companies, according to the findings revealed by the latest transparency report. The report also points to the very poor disclosure record and absence of corporate governance by companies which are registered at Directorate of Investment and Company Administration (DICA) as “public” companies, but have not met the legal reporting and disclosure requirements.

Yangon-based Myanmar Centre for Responsible Business (MCRB) has launched the fourth Pwint Thit Sa report on Transparency in Myanmar Enterprises (the 2018 report), which assesses information disclosure on the corporate websites of 182 large domestic companies.

These include listed, and public ones. Almost twice as many companies were assessed as in the last Pwint Thit Sa report, published in 2016, using twice as many dimensions and criteria.

The 2018 report, although based on the same principle of rating online information disclosure by companies, adopts a different scorecard from the previous three reports. The scoring is based on the ASEAN Corporate Governance Scorecard.

The top three companies in 2018 scoring highest for disclosure are First Myanmar Investment (FMI) Group, City Mart Holdings (City Mart), and Serge Pun & Associates (SPA). While these companies have consistently featured in the top 10 of previous reports, all of them have made added efforts this year to enhance disclosure, and City Mart has risen from the eighth in 2016 to second in 2018. Other firms scoring highly are Aya Bank, Max Myanmar, Shwe Taung, Grand Guardian Insurance, Dagon Group, Myanmar Thilawa SEZ Holding (MTSH) and KBZ Group.

Nicolas Delange, of business sustainability consultancy Yever, MCRB’s partner for the report, remarked that the enthusiasm with which some companies took up their offer of feedback, and the dramatic improvement in their scores that resulted, clearly demonstrates that some companies are keen to receive guidance on what good corporate governance and disclosure means.

“The Securities and Exchange Commission of Myanmar is well-placed to do this, and to set corporate governance in Myanmar off on the right track. But it needs to have sufficient resources and support from development partners to do so,” he explained.

“What is also good to see is that there is innovation and global best practice on the part of some of the leading companies when it comes to sustainability management and reporting. This takes us away from the donations culture towards a future in which sustainability and inclusion are embedded in the business’ core activity,” Mr Delange added.

However, there is still a lot to be done.

Many companies among those assessed still do not have corporate websites (67 out of 182, or 37pc of those surveyed). Even where companies do, many of these websites publish little to no data relating to the criteria covered in this survey. Of those companies with websites, 80 out of 116 (69pc) scored less than 7pc, which was the overall average score for all companies assessed.

Previously, there were only 10 companies with high scores but the number has now increased to 20-30 businesses. However, there were still companies with low scores remaining, especially public companies; when 54 of them were assessed it was discovered that they did not adhere to public company regulations and their scores were extremely low, according to Ms Bowman.

A majority of public companies should provide transparency as they have the right to sell shares, but many of them were found not to have corporate websites; those that do have websites did not upload the companies’ biannual, annual, and financial reports, which should be released in accordance to the Companies Act, she commented.

More transparency

Moreover, while transparency assessments on the five companies, which are included in the Yangon Stock Exchange (YSX) list, yielded better results than other companies, FMI Company – which scored the highest – and the remaining companies need to go an extra mile to further improve their transparency, the director added.

The companies currently listed on the YSX are FMI, MTSH, Myanmar Citizens Bank Ltd, First Private Bank Ltd and TMH Telecom Public Co. All these companies have high scores in the Pwint Thit Sa report and are within the top 21 ranking.

The assessment also revealed that the four companies, excluding FMI, do not have scores for the criteria of sustainability management and reporting. Most of the public companies also have similar weaknesses as them.

Another striking finding was the very poor disclosure record and absence of corporate governance by companies who are registered at DICA as “public” companies, but have not met the reporting and disclosure requirements for such companies which were introduced in the 2015 Securities Exchange Rules. The average score for such companies was 4pc.

“If there’s a stock exchange, then there should more transparency. But, the law and bylaw of SECM are not strictly followed,” the MCRB director noted.

Furthermore, many of the jade companies, similar to previous years, are found to not have any websites. For energy companies, Parami, Smart and MPRL companies scored high transparency points. As these companies are partnering and working with foreign entities, they have committed to a high level of transparency, she continued.

Recommendations are included in the report which are intended to enhance corporate governance and transparency. These are directed at Myanmar companies, government, the Anti-Corruption Commission, the legislature, institutional investors and civil society and the media.

Myanmar remains behind most of the ASEAN countries in transparency level. MCRB is an initiative funded by the UK, Norway, Switzerland, the Netherlands and Ireland.

Source: Myanmar Times

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