Good Corporate Governance∙ Presented with loving care by : Discussion Group 18
Nov 13, 2014
Good CorporateGovernance∙
Presented with loving care by :Discussion Group 18
“1997
BadCorporate Governance
is one reason the Political-ecomonical crisisbegan in
And also ”
Background
the needs of good corporate governance pertaining to principle-agency theory
Market crash
1929
IndonesiaEast Asia
HOW GCGSTARTED IN
INDONESIA?
1998
1998
2000
2001
2004
2006
2004
2004
Corporate Governance (CG)
Indonesia government signed letter of intent IMF
KNKCG established
General guidelines CG
Guidelines of GCGin banking
Guidelines for Independent Commissioners and Audit Committee for the Effective Establishment
KNKG established
KNKG completed guidelines of CG 2001
LAW BASISOF GOOD
CORPORATEGOVERNANCE∙GCG
YEAR LAW
1998 the country is free from corruption, collusion, and nepotism
1999 eradication of corruption
2000 GCG development in the company
Implementation of the policy of good corporate governance in all BUMN
Implementation GCG and instruction of formation guidelines for the Establishment of Applied Corporate Governance Team
Letter of Commissioner PT Pos Indonesia (Persero) Number 520/S-KU/2000 Establishment of audit Koimplementimite subject.
2001 eradication of corruption (Undang-Undang No. 20 Tahun 2001)
Moral Movement BTP Pos Indonesia (Clean, Transparent and Professional).(Decision of the Board of Directors of PT Pos Indonesia (Persero) No.81/Dirut/1201
2002 Corporate Governance Practices in SOEs (State Owned Enterprises Minister No.KEP-117/M-MBU/2002)
regarding intensification and Acceleration of KKN (Circular Letter of Minister ofAdministrative Reform Republic of Indonesia. 37a/M-PAN/2002)
Definition ?
OECD KNKG
UNDP UNESCAPBPKB
IICGFCGI+
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Definition by OECD organization for economic co-operation and development
Corporate governance is the system by which business cooperation are directed and controlled. The corporate governance structure specifies the distribution of the rights and responsibilities among different participants in the cooperation such as the board, managers, shareholders and other stakeholders and spell out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which company objectives are set and the means of attaining those objectives and monitoring performance”(OECD,April 1999, h.2)
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Definition by FCGICorporate governance can therefore be defined as: a set of rules that define the relationship between shareholders, managers, creditors, the government, employees and other internal and external stakeholders in respect to their rights and responsibilities, or the system by which companies are directed and controlled. (taken from Cadbury Committee of United Kingdom) The objective of corporate governance is to create added value to the stakeholders.
Definition by fgciForum for corporate governance in indonesia
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Definition by iicgindonesia institute for corporate governance
Corporate governance is defined by IICG (Indonesian Institute of Corporate Governance) as the processes and structures that are applied in running the company, with the main purpose of increasing shareholder value over the long term and with due regard to the interests of other stakeholders. Corporate governance also requires the device structure to achieve the above objectives and monitoring performance. (Www.iicg.org)
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Definition by KNKGkomite nasional kebijakan governance
Good corporate governance (GCG) according to KNKG is one of the market economic system pilar. Corporate governance is closely related to trust both to the companies that implement it and to the business climate in the country. The implementation of GCG encourage the creation of fair competition and a conducive business climate. Therefore, the implementation of good corporate governance by companies in Indonesia is very important to support the continuous of economic growth and stability.
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Definition by UNDPunited nations development programme
According to United Nations Development Program (UNDP) document, governance is the use of political economic and administrative authority to manage the affairs of the country at all levels. Governance includes all the mechanism, process and institutions where the citizens and community groups to express their interests using legal rights, obligations and bridge those differences between them.
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Definition by BPKPbadan pengawasan keuangan dan pembangunan
Good corporate governance is a system of control and regulation of companies that can be seen from the mechanism of the relationship between the various parties who take care of the company, as well as in terms of "values " of the management mechanisms contained itself. GCG BPKP team defined GCG from the soft definition which is easier to understand, even the layman, which is Commitment, terms of play, and implementation of healthy and ethical business practices
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Definition by unescapunited nations economic and social commision for Asia and Pacific
Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. governance describes the process of decision-making and the process by which decisions are implemented or not implemented. The term governance can apply to corporate, international, national, local governance or to the interactions between other sectors of society
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7PrinciplesofGCG
OECDFairness ∙ transparancy ∙ accountability ∙
Responsibility
FCGI…the rights of shareholders…equitable treatment of shareholders …the role of stakeholders should be recognized as established by law and active co-operation between corporations and stakeholders in creating wealth, jobs and financially sound enterprises…timely and accurate disclosure and transparency …the responsibilities of the board in the management, the supervision of the management and the accountability to the company and shareholders.
IICGCommitment ∙ transparancy ∙ accountability ∙
responsibility ∙ independency ∙ justicecompetency ∙ mission ∙ leadership ∙
collaboration
The country and tools to create laws that support a healthy business climate, efficient and transparent, implement legislation and law enforcement consistently (consistent law enforcement)
Business world as a market participant to implement good corporate governances a basic guideline implementation efforts
The public as the users of products and services of the business world and affected parties of the existence of the company, showing concern and social control in an objective and responsible manner
KNKG
UNDPLegitimacy and Voice
Direction
Performance
Accountability
Fairness
ParticipationConsensus orientation
Strategic vision
Responsiveness Effectiveness and efficiency
Accountability.Transparency
Equity .Rule of Law
transparancy accountability
responsibilityindependency
fairness
bpkp
WINTERTemplate
UNESCAP
• Participation• Rule of law• Transparency• Responsiveness• Consensus oriented• Equity and inclusiveness• Effectiveness and efficiency• Accountability
The Implementation
POS INDONESIA adopted from BPKP
http://www.posindonesia.co.id/home/index.php/extensions/gcg
“One of the efforts to improve the performance of a company / organization is to implement Good Corporate Governance
(GCG). Implementation of Good Corporate Governance (GCG) is a guideline for the commissioners and directors in
making decisions and execute actions based on high moral, compliance with laws and regulations applicable as well
as awareness of corporate social responsibility of interested parties (stakeholders) consistently”
5 PRINCIPLESOF GOOD CORPORATEGOVERNANCE
• Transparancy• Responsibility• Fairness
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