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Regulatory authorities across Asia are taking risks by failing to keep pace with international corporate governance reforms, according to a new regional survey published this week.
‘Corporate Governance Watch 2010’ by the Asian Corporate Governance Association and regional broker CLSA, warns that “complacent” Asian regulators have taken their feet off the gas since the 2008 financial crisis.
Amar Gill, author and CLSA head of thematic research, cautions that Asian markets may suffer as a result. He says: “The 2008 global financial crisis was a wasted opportunity. Rather than using it to push reform forward, most governments have taken a complacent view, happy that the crisis this time did not start in Asia.
“Not enough has been invested to make best practices work and the negative trends we see may lead to a build-up of governance risk for the coming years.”
Examining regulatory environments, enforcement, auditing, and corporate governance rules, practice and culture across 11 countries, the report claims that in many markets either “reform fatigue” has set in or regulators are taking longer than expected to get reforms passed. In many markets, regulators are making it too easy for companies to get away with “box-ticking”, it claims.
The survey is the eighth of its kind on corporate governance in Asia since 2000. In its ranking of countries, not one meets the authors’ benchmark for “world class”. Singapore has dethroned Hong Kong to take first place, while worst the performers were India, Korea and the Philippines. China performed better across the board and Thailand, Japan and Indonesia also improved on previous years.
Despite coming top, the report is particularly scathing about the performance of “secondrate” Hong Kong and Singapore. “Both should be performing at a much higher level for financial centres that aspire to follow international standards,” it says.
It adds: “Hopes that the crisis would prove a catalyst for a new round of serious reform proved unfounded, thanks primarily to the global fiscal stimulus in 2009 that saw stock markets bounce back (especially in Asia) and governments, investors and just about everybody breathing a collective sigh of relief. Asia may well pay for this complacency in future.”
In spite of the slow pace of regulatory reform, the survey notes that across the board Asian countries were taking “more seriously” the enforcement of fines, bans, orders and warnings.
ACGA Secretary General Jamie Allen adds: “The reality is that most Asian markets are starting to lag behind global standards. The private sector has to undertake governance reforms proactively and see this as in their own self-interest. Markets that do this well will likely sustain their regulatory reforms more effectively and efficiently.”
– By Will Henley. Originally published in Global Financial Strategy
The Commonwealth Secretariat was chosen this week as a major partner for delivering up to US$600,000 in youth enterprise development and mentoring schemes across Africa, helping young and aspiring entrepreneurs to set up businesses and escape from poverty.
Peter Munga, chairman and founder of Equity Banking Group, one of the largest banking and micro-financing institutions in East Africa, formally invited the Secretariat to assist in delivering the programme, funded by his PK Munga Foundation, during a speech at Marlborough House, London, UK, on 26 October 2009.
‘Monumental’ problem of unemployment
“Looking at the youth today, I see a solid pillar on which hopes and aspirations of our member states and the Commonwealth will be built,” Mr Munga said. “We need to encourage them to venture in new areas, through enterprise, IT and other ventures that will help them chart a new course.”
Warning that the current economic slowdown was harming the prospects of young people across African economies, Mr Munga insisted that the “monumental” problem of unemployment was being felt “earlier and harder” by young people, and affecting their self-esteem.
“The long-term effects of this disillusionment with self and society become all too costly for us to cope with. Young people have to know they will have to navigate through this wilderness with our guidance and mentoring,” he stressed.
US$200,000 already raised
The PK Munga Foundation aims to raise a total of US$1.2 million for “mentoring, inspiring and enabling small scale farmers, small enterprise operators and the youth to achieve their dreams” – half of which (an estimated US$600,000) will be committed to youth enterprise.
Julius Kaberere, Technical Co-operation and Strategic Response Adviser at the Secretariat, said the organisation, which represents 18 African countries, will help in “implementing the youth component” of the PK Munga Foundation’s work, adding that the Secretariat would be able to “contribute ideas” on how the other half of the foundation’s funds are used.
“We will need to send a team to agree on the logistics of how the programme is going to be rolled out,” Mr Kaberere explained. “Helping young people to improve their livelihoods, lifting income through small and medium enterprises, and mentoring youth to make the right choices in life will help them become better citizens of the Commonwealth.”
Of the target US$1.2 million, $200,000 has already been raised. The $100,000 awarded to Mr Munga earlier this year by the YARA Foundation in Norway for his work to reduce hunger and poverty in Africa has already been donated to the fund, while Mr Munga has separately contributed a similar amount from his own personal fortune.
African Business of the Year
Equity Bank, which Mr Munga launched in 1984, has grown from a building society and micro-finance institution to become one of the biggest banks in East Africa. In addition to providing simple banking services for people across this region, Equity Bank has sponsored pre-university training for more than 600 students in Kenya over the past 11 years.
Today, some 4.1 million bank accounts in Kenya are held by Equity Bank, which also has branches in neighbouring Commonwealth member countries. It was named African Business of the Year at the Commonwealth Business Council and Africa Business awards earlier in July 2009.
Copyright: Commonwealth Secretariat
Design quality must be placed at the heart of the new planning bill, peers in the House of Lords demanded this week.
On Wednesday, former architecture minister Alan Howarth joined forces with fellow Labour peer Janet Whitaker to call for the proposed Infrastructure Planning Commission (IPC) – which will determine the country’s largest infrastructure projects – to include at least one design expert and to give planning authorities a duty to consider design quality.
Although none of the amendments were accepted by Labour peer Kay Andrews, parliamentary under secretary of state in the department of Communities and Local Government, who is overseeing the passage of the bill, Howarth told BD that Andrews would be forced to take on board the call for design quality, which came from all three parties.
He said because the government did not have a majority in the Lords, it would be defeated if it rejected the call for design quality when the bill – currently at committee stage – reaches report stage next month.
Howarth said: “With the seriousness of the debate and the range of support I had, I think they realise they’ve got no choice politically. I’m going to ask Baroness Andrews for a meeting so we can work through the nitty-gritty. I hope we can get down to some serious discussions about what the government will offer at report stage. I’m optimistic.”
Just a week after BD revealed architects’ despair over the government’s record on design, Whitaker said it was “extraordinary” that good design was not already part of the bill.
“It wasn’t raised at all [in the Commons’ debate],” she said. “Good design is not a frill or a luxury, it’s a fundamental. Infrastructure will not function properly without good design.”
Howarth – who this summer successfully lobbied government to ensure the new Homes & Communities Agency was given a statutory duty to contribute to design quality – told fellow peers that the proposed amendments would ensure good design was intrinsic to the planning process.
“Good design must be explicitly articulated in the bill,” he told the House of Lords on Wednesday. “If it is, all concerned in the planning process will know they’ve got to go beyond lip service and take design seriously.”
But Andrews claimed planning policy statements were sufficient to ensure good design, saying: “Our planning policy guidance is there for a purpose, and PPS1, which is the overarching planning policy statement, makes specific reference to design and sustainability as paramount requirements that should be followed… The priority for action in this area is not further statutory provision. Rather, it is to make our existing system work better.”
During the debate, Labour peer Richard Rogers backed the proposed amendments, saying: “I am delighted to hear the support that design has had today. Infrastructure is the central part of the built environment, and Britain has a great tradition of good design. Good design does not have to cost more, but it certainly adds long-term value.”
Association of Consultant Architects’ chairman Brian Waters welcomed the Lords’ input, and claimed giving local authorities the power to reject schemes on design grounds was crucial.
“The absence of that power is a major weakness in planning. The objection will be that it’s subjective, difficult to handle, but that doesn’t mean it’s not a good idea.”
RIBA public affairs manager Jamie Hodge said: “The debate showed there is cross-party consensus, a rare thing indeed, on entrenching good design within the planning system. It’s disappointing but not unexpected that the amendments supported by the RIBA didn’t pass at this stage.
“However, given that the government accepted our arguments on design in the recent housing bill, we hope that we will see similar movement when the planning bill returns for its third reading, and we’ll be pushing strongly on this over the next few weeks.”
By Will Henley / ML
This was first published by Building Design here.
The Government has placed housing at the top of its agenda for the next Parliamentary year. Last month saw the launch of a Green Paper, Homes for the Future, by housing minister Yvette Cooper, which outlined the Government’s plan to create sustainable, affordable homes for the future.
Among the headline figures were a £3bn rise in funding to deliver three million more homes by 2020 and a new shared-ownership scheme.
Speaking at the launch, Cooper said: “The housing shortage means first-time buyers and young families are finding it increasingly hard to get their first step onto the housing ladder. Unless we act now, by 2026, first-time buyers will find average house prices are 10 times their salary. That could lead to real social inequality and injustice.”
Despite these words, analysts are unsure if the proposals will provide effective and immediate relief for first-time buyers. Continued economic growth, inward migration, interest rates and employment growth are all continuing to drive demand, says Hometrack director of research Richard Donnell. The result is that demand is continually outstripping supply.
“New housing continues to add just about 1 per cent of supply a year. The real challenge of joined-up government is to increase supply at the right time,” Donnell says. He is complimentary about the Green Paper but he warns that it will not provide a panacea for the ailments of first-time buyers. “If I had a kid who was 18, I would not hold out a huge amount of hope for them.”
Chartered Institute of Housing deputy chief executive Sarah Webb says the past 10 years has seen a consistent shortfall in the supply of new housing. The pressures facing first-time buyers are no no longer confined to property hotspots but are now felt countrywide.
“Even people with two satisfactory incomes are now struggling. We now face a bit of a crisis,” Webb says.
The Green Paper says 25,000 shared ownership and shared equity homes a year will be funded through the Housing Corporation and English Partnerships. But many of the paper’s measures are aimed at key workers and social housing rather than first-time buyers.
This will provide some assistance for first-time buyers. As Webb says: “If you take people who can’t access rented housing now out of the equation, then they won’t be competing with first-time buyers.”
Although this may cool demand a little, it will do very little to help the big numbers of people for whom buying their own home is already out of their reach.
The Government is trying to address this issue by revamping the Open Market HomeBuy shared equity scheme. In addition to the current scheme, the Government is proposing a further option, where buyers with a combined income of less than £60,000 will be able to borrow up to 82.5 per cent of a property’s value and the Government will retain the remaining 17.5 per cent equity. Under this scheme, borrowers would be able to use any mortgage lender.
John Charcol senior technical director Ray Boulger says: “They will have the benefit of being able to choose a cheaper mortgage from a wider range of products. It will be a big plus for those who get on the scheme.” However, the Green Paper commits no new funding to this scheme and it will only be available to the small number of key workers and those on council waiting lists who qualify for the existing scheme.
“It will only be able to help a very small proportion of first-time buyers. You would not really expect anything different from this Government. Announcing the good news but not the caveat has been something we have got used to from Gordon Brown,” Boulger says.
Donnell agrees with the sentiment of the paper but says the key test will be in the delivery and the economics of land. “The Government has to ensure that there is housing in the right places. It is no use building in places where no one wants to live. New housing developments need to be located in the south of England, where the pressures are the most intense.”
But despite Green Paper commitments to offer public sector land for development, Donnell cautions against optimism about the enthusiasm of the public sector to provide it at impressive discounts. “To encourage development, you need to charge below market price for land. But at the moment, best value rules mean that government bodies must sell land at full market value.
“Given that it takes two years to get planning permission and two years to build anything, that land could be up to four years away from delivering any units.”
One significant pressure on first-time buyers is the buy-to-let market. In the short term, changes here are more likely to be felt by first-time buyers than other positive long-term measures, believes Univ-ersity of York Centre for Housing Policy professor Steve Wilcox.
“About an eighth of transactions last year were buy to let. If these investors stop buying, that would take an eighth of the market out and have a major impact on first-time buyers,” he says.
But Webb says the Green Paper fails to tackle this issue. “There needs to be an end to the tax incentives that effectively subsidise the buy-to-let market. These investors are competing with first-time buyers for scarce property.” The paper also fails to deal with the issue of stamp duty, says Helen Adams, managing director of first-time buyer advice service FirstRungNow.
While she welcomes prior announcements to change the threshold so that a bigger number of first-time buyers are exempt, many first-time buyers will still have to pay the tax. “It is a big money earner for the Government and there is no intervention on that front to help first-time buyers at all. They have to pay as much stamp duty as a buy-to-let investor.”
According to Adams, the overall effect of the Green Paper “is not going to be that dramatic”.”There are just too many people chasing too few properties and that will continue to be so for a long time,” she says.
Wilcox says simply setting targets to increase the rate of housebuilding will not in itself change the picture in the short run. “It will be 2016 before we catch up with the rate of household growth. If it works, the Green Paper will be good news for first-time buyers in 10 to 20 years’ time. But at the moment, we are lagging behind.”
This article was first published in Money Marketing here. Photo by Aaron Bihari.