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BOOK REVIEW |
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BOOK REVIEW |
Liberalization Lessons A team of experts
highlights various aspects of corporate governance By A CORRESSPONDENT At a time when Nepal is going through a period of rapid reform in the corporate and financial sectors, the country needs appropriate modalities that would support the principles of effective governance. Corporate governance entails a complex web of relationships within a firm or company and its connections to outside agents. It includes the management-labor function, technology, ownership-management relationship, government policies regarding the corporate sector, financial institutions, work culture, social attitudes and other aspects of corporate life. All have a bearing on a firm's operations and production. "The development of a strong framework for cooperate governance is fundamental in the process of change. There are several important dimensions of corporate governance. These include a clear cut and potent legal matrix, grounded in such legislation as Nepal as Nepal Company Act, Bankruptcy Act, and a financial institution act," says Dr. Bimal Prasad Koirala, secretary to the Ministry of Finance, in his foreword. "[His Majesty's Government] is moving swiftly to advance the various elements of the process of reform of corporate governance, working closely with the private sector and with targeted assistance from development partners." The book is a compilation of articles written by Professor Bishwa Keshar Maskey, Professor John Adams, Dr. Yuba Raj Khatiwada, Dambar P. Dhungel and Pradeep Man Vaidya. Economic liberalization is a process that requires great patience and involves many complexities. Unless there is a holistic approach to managing corporate affairs through appropriate policies, an economy cannot be expected to meet the goals set by policymakers. In the absence of standard practices in the activities of companies, economic policies do not mean much to a nation. "It is companies that meet the projected national production goals and it is they that pay, in the form of taxes, for a large share of the government's operations. Since they are the conduits of policy implementation for the desired national objectives, their functioning needs to be smooth and predictable," says Professor Maskey. The recent history of the Nepalese corporate sector shows that the country is not an exception to the general rule. Nepalese policy makers have looked at the modern corporate sector with a bias of one kind or the other, but never with a holistic approach. In his article "Traditional and Modern Styles of Doing Business in Nepal, Implications for Corporate Governance", John Adams, Center for South Asian Studies, University of Virginia, said reforms in corporate governance and in the financial sector can play a major role in raising Nepal's growth rate by as much as two full percentage points, while promoting employment and reducing poverty. "In recent days, parliament has been acting on key pieces of legislation that will establish the Institute of Chartered Accountants of Nepal as an independent professional body as an independent, professional body of accounts and auditors and that will strength capital markets," says Professor Adams. In his article "Banking Sector Reforms in Nepal, Implications for Corporate Governance", Dr. Yuba Raj Khatiwada stresses the need for change. "The goal of the financial development system is to foster efficiency in goods and assets, to ensure the stability of the system and to allow for an equitable and socially acceptable distribution of income and wealth," says Dr. Khatiwada. Chairman of the Security Board of Nepal Dambar P. Dhungel discusses various developments in the capital market and the role of corporate governance in the liberalization process. The thoughts and analyses contained in the book should serve as a review of Nepal's experience in corporate governance and a roadmap for the future. Corporate Governance
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