Corporate Governance in Asia — Challenges and Prospects

Executive Editor’s note: I am delighted to inform our readers that internationally known professor  Gunter Dufey has accepted our invitation to join us as  as the Director-Editor for the region of Singapore and Southeast Asia among his other activities. We are looking forward to his wise and experienced inputs. Below is a brief CV of his and the first article for our publication.

Professor Gunter Dufey, PhD or “GD” as he is known among friends and colleagues is Professor Emeritus of The University of Michigan Ross School of Business, in Ann Arbor, MI USA and Consultant on the faculty of Banking and Finance, Nanyang Business School, Singapore where he taught since 2000 to date. Parts of his academic career were spent at Stanford (USA), University of Texas, Wirtschaftsuniversität Wien (Austria), St. Gallen (Switzerland) and Universität des Saarlandes (Germany) where he was appointed Honorary Professor. His research interests focus on risk management, intl. financial markets and corporate governance. He has published widely. Parallel to his academic career, he worked for extended periods with a number of multinational companies and government agencies, such as  the US Department of the Treasury,, the Ministry of Finance ? FAIR in Tokyo and the Pacific Rim Bankers Program, Seattle, USA. He continues to serve on the Boards of Guinness/Atkinson, USA and until recently on several subsidiaries of Ally Financial (GMAC), Detroit and Toronto. He participates in managing the portfolios of several foundations. From 09/2001 to 02/2003 he was employed with McKinsey and Co. in Singapore, supporting the firm’s Corp. Governance practice in Asia. GD has been a member of the Singapore Institute of Directors, an active participant in the programs of the Asian Corporate Governance Association and currently serves part-time as Executive Director of EDUCATION EXCHANGE LTD, Singapore. Throughout his career he has been actively engaged in Executive Education.

Corporate Governance (CG) has been an enduring issue in the Region (Southeast Asia), especially after the Asian Crisis where poor CG made the crisis considerably worse as investors, local and foreign, harbored serious doubts about their fate when business firms confronted adverse conditions. In spite of progress made over the years, surveys conducted by organizations such as McKinsey & Co and well as the Asian Corporate Governance Association (ACGA) show that – while there are wide differences among countries in the Region – overall there is much room for improvement when compared to the developed markets in North America and Western Europe – although knowledgeable observers will hasten to add that there is considerable room for improving CG in these countries too.

Today, there are two factors that provide special urgency for CG ‘upgrading’: For one, a number of Asian countries, in particular Japan, South Korea, Taiwan, and the city states of Hong Kong and Singapore, have reached a stage of economic development where ‘technological catching-up’ can not be relied upon for further growth. With population increase severely limited and in some cases negative, can provide a further source of economic growth. The second factor, distinct yet related, is the looming pension problem in all these societies, driven by shrinking labor forces and rapidly rising life expectancies. With the traditional Asian family based retirement system disappearing, and ‘pay as you go’ social security systems ailing – to the extent they ever existed in the Region, the only alternatives are so called ‘defined contribution’ (DC) arrangements, illustrated by Singapore’s CPF. However, as this example shows, DC pension systems require the availability of assets with good returns over the long term. In practice only equities (incl. real estate related equities) can yield returns that make contributions affordable. And equity markets with good returns require high quality CG, where firms are managed for the benefit of investors.

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Instead of soaking the rich, create some new riches: an update

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Dr. John Psarouthakis, Executive Editor.www.BusinessThinker.com.
Founder and Managing Director, www.jpmcenter.com

We all know that if we confiscate the entire 2017 earnings of the highest earners and sent it to Washington, you would solve almost nothing in Washington. Most of us, I hope, understand furthermore that pulling the One Percent’s wealth away from the capitalist funnel that feeds our economy would be worse than solving nothing; it would be a serious problem. This plan would, on the other hand, goad the very top layer of American wealth to do everything in its power to grow the economic pie.

I first thought of the plan applying to any person or entity with taxable income of $1 million a year or more. That was partly because a million dollars is certainly a nice income—but also because it’s an easy figure with which to work in sorting out numerical concepts. A $1-million cutoff would apply to an army of CEOs and business owners, but also to several battalions of quarterbacks, pitchers, power forwards, rock guitar players, actors, and media performers or executives. Applying the plan to the entire One Percent would cover any household making roughly $506,000 and up. Maybe the plan could be modified and applied effectively to affluent but somewhat lower pay grades. I don’t know. Economists and tax experts and actuaries and mathematicians who are whizzes with algorithms—lots of people need to have a go at fine-tuning and improving what I will call here “Economic Growth Corporations.”

These Economic Growth Corporations (EGCs) would not be think tanks, or advisory panels, or bureaucracies whose public benefit can be measured only via the most imaginative statistics. EGCs would be chartered to grow the economy in fact, not in theory and not as mere demonstration projects. EGCs would jumpstart our economic engine in ways numerous schemes, from “enterprise zones” to your town’s tax-abated industrial park, have never done.

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A Manufacturing Renaissance; Is the Tech/Software Boom Over?

David ColeDr. David Cole is the Chairman of AutoHarvest (autoharvest.org), a web based tool to accelerate innovation in the auto industry. Dr. Cole is Chairman Emeritus of the Center for Automotive Research and a former Professor of Engineering at the University of Michigan where he taught courses related to the automotive field for over 25 years. He is a fellow of the Society of Automotive Engineers, Engineering Society of Detroit and Society of Manufacturing Engineers and was recently elected to the Automotive Hall of Fame.

We are in a period of amazing, almost transformational change like we have never witnessed before and all indications point to the pace quickening as we move forward from today. Clearly one dimension of this dynamic period is the incredible rate of change in technology that surrounds us from cars and housing to personal communication and healthcare.

For the past several decades the growth in technology is particularly evident in electronics with the control of just about everything shifting to electronic chips and their embedded software. These include cell phones and their multiple apps, the tools we use to design and manufacture goods of all forms, modern agricultural tools that enable farmers to optimize their business and the multitude of electronic items that pervade our lives.

It has been a great run and we have celebrated the enormous success of companies like Apple, Dell, Microsoft and Intel with very high evaluations and significant wealth creation for all involved. A new and really quite profound emerging question is what’s next? I’m not suggesting that these important companies will disappear nor will the technology they have developed but what they have produced and continue to produce may be becoming more of a commodity where the low cost provider wins. Many have seen significant declines in their value in the past several years. Have they peaked and, if so, what’s next?

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