Corporate governance

The degree to which corporations observe basic principles of sound corporate governance helps to determine investment decisions, influencing the confidence of investors, the cost of capital, the overall functioning of financial markets and ultimately the development of more sustainable sources of financing. Malaysia has taken significant steps to strengthen its corporate governance framework, especially after the Asian financial crisis. This chapter analyses some of the government’s far-reaching reforms ranging from strengthening minority shareholder rights to enhanced enforcement measures. The role of government-linked companies (GLCs) and the associated GLC Transformation Programme as part of the government’s overall drive to increase competition and opportunities for private investment is also addressed. Given the recent momentum of corporate governance reforms, Malaysia and its private sector could now benefit from consolidation of the various initiatives.