The International Finance Corp. (IFC), a member of the World Bank Group, on Thursday signed a memorandum of understanding with the Securities and Exchange Commission (SEC) to strengthen the country’s regulatory framework and corporate governance practices.
In a statement, IFC said that the cooperation aims to raise market awareness of good governance to attract more foreign investment to the country.
Under the memorandum, IFC and SEC will work together to revise the country’s Corporate Governance Code and set best practices for Philippine companies to follow.
IFC will facilitate the exchange of information on regulatory reforms between Commission officials and international corporate governance experts.
“We will work together with IFC to improve our regulations and encourage Philippine corporates to adopt best corporate governance practices so that they can reap the benefits,” said SEC Chairperson Teresita Herbosa, stressing that these efforts are crucial to the development of a strong and sustainable capital market in the Philippines.
IFC noted that numerous studies report that investors have greater confidence in companies with good governance and in markets that are backed by sound legal and regulatory regimes.
In a 2002 McKinsey survey, institutional investors said they would pay premiums averaging 22 percent to own well-governed companies in Asia and Latin America. More foreign investment will create jobs, strengthen the business environment, and improve private sector efficacy, it added.
IFC said it would provide training to SEC officials to help them enhance the country’s corporate governance legal framework and advise them on draft laws and regulations.
It will also work with the commission to organize corporate governance seminars and workshops for Philippine companies.
“By adopting good corporate governance practices, Philippine companies can enhance their competitiveness and attract foreign investment to fund their growth,” said Jane Yuan Xu, IFC Philippines country manager.
“This will help build a vibrant private sector and lead to sustainable economic development in the Philippines,” she added.
IFC said the partnership is part of a country program it launched recently to support the Philippines’ efforts to enhance corporate governance.
In addition to working with the Philippine government to improve the country’s regulations and investment climate, IFC also supports the local institute of directors and provides corporate governance advice to Philippine companies.