The two parties agreed that better governance would raise Myanmar companies’ competitiveness and make the economy more attractive to investors.

Vivek Pathak, IFC East Asia Pacific director, said developing a strong private sector would play a pivotal role in helping Myanmar realise its economic potential and attract more foreign direct investment, which now stands at less than a third of Thailand’s.

“This is where corporate governance comes into play … Good governance can help Myanmar companies not only improve their competitiveness, but also provide assurance to investors, business partners, and other stakeholders alike, helping them attract capital and remain sustainable over the long term.”

Under the pact supported by Australia and the United Kingdom, training programmes are on offer to local companies. Seminars and conferences will be organised to raise awareness about why good governance is so crucial for Myanmar’s private sector.

Myanmar companies are notorious for underdeveloped boards of directors, ill-defined director duties, poor transparency, rudimentary control frameworks, and inadequate shareholder practices. Many of these issues stem partly from the absence of a robust legal and regulatory framework that includes basic governance provisions and investor protections.

Pathak said companies with better governance were less likely to suffer from mismanagement and usually generated better returns for shareholders. They are therefore more attractive to investors and will find it easier to draw in capital for their growth.

Myanmar’s economy has been undergoing tremendous positive changes since the World Bank Group set up an office there in 2012. Gross domestic product per capita now stands at about US$1,200 compared with neighbouring Thailand at nearly $5,800 and the overall average of about $3,800 among Asean countries.

These figures show that Myanmar has huge potential to become one of the most dynamic economies in the region, he said.

In front of nearly 400 representatives from both the public and private sectors, Professor Aung Tun Thet, a member of the Myanmar Investment Commission and economic adviser to the president, said the country needed good corporate governance to maintain its growth momentum.

Nearly 300 companies have joined the United Nations Global Compact, making Myanmar No 1 in terms of membership. To him, good management and risk management are the keys to corporate governance. He also stressed the importance of training for all directors and the adoption of corporate-governance codes based on guidelines of the Organisation for Economic Cooperation and Development and Asean.

The professor said good governance must focus on honesty, transparency, accountability, responsibility, independence, fairness, and social responsibility. A corporate-governance framework needs to reflect the culture, style, and issues of the organisation, and it should balance economic and social targets with individual and communal goals.

Interests of individuals, corporations, and society should be taken into serious consideration.

He asserted that the government needed to raise awareness of corporate governance. The Company Law, enacted before the World War I, should be amended and incorporate these values.