Speech by Mrs Lim Hwee Hua, Minister Of State, Ministry Of Finance & Ministry Of Transport, for The Malaysia Singapore Forum 2004 at Grand Hyatt, Singapore, Monday 13 December 2004(cont'd)15 Dec 2004
Greater Market Discipline
35. Another important element in fostering good corporate behaviour and performance is market discipline. This refers to the ongoing scrutiny and oversight by investors, rating agencies, the financial markets and the general public. While corporate governance protects against unscrupulous business practices, market discipline protects against unsound ones.
36. The two critical ingredients for effective market discipline are good accounting standards and timely, accurate, and adequate disclosure of information, so that investors can make informed decisions. To ensure clarity and comparability of data with companies internationally, Singapore has made it mandatory for all companies to comply with prescribed accounting standards.
37. Furthermore, listed companies are subject to a higher standard of transparency and disclosure than private companies as they source funds from the general public. Listed companies are required to make continuous disclosure regarding their businesses, financial performance and prospects and are also required to report quarterly results.
Role of Businesses in Promoting Corporate Social Responsibility
38. Finally, let me touch on the issue of corporate social responsibility or CSR. CSR is really about the values, culture and leadership of a business. Businesses do not operate in a vacuum. While the first priority of every business is building shareholder value, every business also has a social responsibility towards the community and environment which they operate in.
39. CSR is not just a public relations exercise to make businesses look good. It actually makes good business sense. It helps enhance the community the business operates in, develop the people through community and educational initiatives, and promote the business' brand. Businesses that show greater understanding of what social responsibility entails will be more competitive with today's consumers, be able to hire and retain better people, attract long-term shareholders and build a stronger brand in the marketplace.
40. Since 2002, a number of initiatives have been launched to increase awareness among business about the concept of CSR and to boost participation. Some of the noteworthy CSR initiatives include the AMCham Corporate Citizenship Initiative by the American Chamber of Commerce and SingTel's Touching Lives Fund. For example, the Touching Lives Fund supports children's charities such as the Rainbow Centre, the School for the Deaf and the Children Society. The Fund helps beneficiaries run programs, which include education, training and therapy for children with disabilities regardless of race or ethnicity. I would like to encourage more businesses to do their part as responsible corporate citizens and to give more back to the community.
41. Let me end by noting that in the face of globalisation and rapid change, governments and businesses have to work together even more in order for a country to thrive. Governments have the responsibility to listen to the concerns of businesses and to balance them with those of stakeholders, such as employees and shareholders, all with the aim of sustaining viability.
42. Businesses need to be entrepreneurial and innovative, and at the same time, act with honesty and integrity. They must recognize that they have responsibilities to their stakeholders and the society that they operate in. Working together, with Governments setting the right policies, and businesses working hard to seize opportunities, we create wealth, jobs and better lives for our people.
43. Thank you.