The Asian Corporate Governance Association (ACGA), in conjunction with CLSA, periodically publishes a survey and ranking of corporate governance practices in major Asian countries. This analysis identifies the issues impeding corporate governance and is fundamental to the long-term development of Asian markets.

Shortly after we published our last newsletter they released their latest report. It indicates that market rankings have undergone the biggest change in 20 years. Seven of 12 markets changed places, more than the 5 in 2018 or 2020.

Australia maintains its lead since joining ACGA’s survey in 2016 (see our review HERE).

This year’s survey shows that Australia scored a 75.2% out of a potential maximum governance score of 100%, marking a 0.5% increase from the previous survey taken in 2020. Australia has remained around the 75% mark. There are suggestions in the report that this inertia may be symptomatic of the country’s failure to evolve and improve its regulators. The contrast with the rate of improvement among near neighbours is stark .

Australia is followed by Japan with 64.6%, Singapore with 62.9%, Taiwan with 62.8% and Malaysia with 61.5%. Japan has a significant increase in ranking to 2nd place from 5th, while the previous 2nd rank, Hong Kong, experienced a significant fall to equal 6th. Singapore and Thailand experienced a marginal decline, and all other markets improved steadily in the last year.

Australia stands out in Government & Public Governance, Corporate Governance Rules, Listed Companies and Civil Society & Media, ranking first relative to other markets and keeping the lead. The high corporate governance score lies in Australia’s transparent and accountable systems of government, and proactiveness in improving standards.

What is notable in Australia’s market scores by category is its low Regulators score, despite its Enforcement score being equal 1st. A particular concern is the Auditors and Audit Regulators score. Almost all markets are gradually rising in score while Australia fell from equal 1st in 2020 to equal 5^th this year. The reduction in score reflects the weaker role ASIC plays in audit regulation, having reduced the scope of its inspection of audit files and disciplinary powers against firms. ASIC has also dropped the publication of audit industry measures that was gaining ground in 2019.

In a time of great change for other Asian markets, there is marginal improvement overall for Australia. Markets with rapid reform agendas and more agents of change are catching up to Australia’s position, while category scores have barely shifted. Whether this persists remains to be seen. A change in political environment or priorities could quickly skew the results and shift corporate governance developments.

See the CLSA’s summary HERE and access their report from HERE.

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