The Corporate Governance (CG) Watch 2023 report released recently saw Malaysia maintain fifth place in a field of 12 markets in the Asia-Pacific region, with a score of 61.5%, up 2% from 2020.

Jointly produced by the Asian Corporate Governance Association (ACGA) and brokerage and investment group CLSA, the report evaluated the corporate governance and ESG performances of 12 markets across the Asia-Pacific region in seven categories.

The report ranked the 12 markets as follows:

1. Australia; 2. Japan; 3. Singapore; 4. Taiwan; 5. Malaysia; 6. Hong Kong, 7.India; 8. Korea; 9. Thailand; 10. China; 11. Philippines; and 12. Indonesia.

Of the seven categories, Malaysia performed well in two – ranking first in the auditors and audit regulators category, and second in the CG rules segment.

In the auditors and audit regulators category, which relates to accounting and audit standards, Malaysia scored an impressive 92% (up from 86% in 2020).

The report noted that this is a high-scoring category and said that “almost all markets are gradually rising in score”. Australia, however, bucked the trend this year, dropping five rungs from being joint top with Malaysia in 2020 to equal fifth with Hong Kong.

In the CG rules category, Malaysia came in second behind Australia, scoring 83%.

In this category, the 12 markets were ranked according to the existence of rules and codes of best practices for listed companies and stewardship codes for investors, the independence of audit and nomination committees, the ease with which independent directors can be nominated, and the fairness and transparency of shareholders’ meetings.

“Given the huge volume of CG regulation in Asia since the Asian financial crisis, it is not surprising that scores here tend to be high,” the report said.

However, unlike in surveys conducted prior to 2018, the report did not score markets according to whether those rules were properly implemented.

“In earlier versions of CG Watch, we assessed both rules and practices, marking scores down if a rule was on the books but poorly implemented by listed companies,” the report pointed out.

However, Malaysia fared poorly in the government and public governance category, scoring 37% (up from 32%), to be ranked a lowly eighth.

Problem areas identified among regulators in most of the markets, including Malaysia, were the inconsistent level of support from the government for policy and enforcement work of regulators, a lack of independence from the government, issues surrounding the access of minority shareholders to the legal system, and the lack of genuinely independent commissions against corruption.

“Judicial independence is under attack and/or suffers from a perception of bias in several markets, including Malaysia, Thailand and Hong Kong,” the report said.

Malaysia’s scores in the remaining categories were as follows:

•  listed companies, 66%, unchanged from 2020
• regulators, 58% (up from 53%)
• civil society & media, 53% (up from 44%)
• investors, 42% (down from 43%)