Report on the Observance of Standards and Codes : Corporate Governance Country Assessment, Republic of Indonesia
In reforming its corporate governance, and in establishing a rule-based business culture, Indonesia faces many challenges. The key challenges are as follows. Enforcement of laws and regulations needs to be strengthened. Administrative sanctions for...
| Main Author: | |
|---|---|
| Format: | Corporate Governance Assessment (ROSC) |
| Language: | English en_US |
| Published: |
Washington, DC
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/08/6569550/report-observance-standards-codes-rosc-corporate-governance-country-assessment-indonesia http://hdl.handle.net/10986/14463 |
| Summary: | In reforming its corporate governance,
and in establishing a rule-based business culture, Indonesia
faces many challenges. The key challenges are as follows.
Enforcement of laws and regulations needs to be
strengthened. Administrative sanctions for violation of
securities or disclosure rules may not be adequate. Efforts
should be expended to ensure that corporate officials in the
position of trust are held accountable when they violate the
law. Sanctions should go beyond fines, and the incentive
system should be changed so that violators are truly
discouraged, and good corporate behavior is promoted. This
requires strengthening enforcement capacity of Bapepam for
securities violations, and its independence as the
securities regulator. The Company Law should explicitly
refer to the fiduciary duties of directors and managers for
violation of securities laws. Current efforts to amend the
Company Law need to be expedited. Further efforts should
also be expended to develop alternative (non-judiciary)
mechanisms, such as shareholder activism, for encouraging compliance. |
|---|