Bank Central Asia is one of the corporate disclosure champions in Southeast Asia, according to FTI Consulting's Asean Disclosure Index 2018 report released on Sept. 28. (Reuters Photo/Darren Whiteside)

Indonesian Companies Must Improve Corporate Disclosure Practices: Report

BY :SARAH YUNIARNI

OCTOBER 01, 2018

Jakarta. Indonesia must improve its corporate disclosure practices, particularly on board quality, global business advisory FTI Consulting said in a report released late last week.

The Asean Disclosure Index 2018 report gives Indonesia a score of 7.9 out of 10, below neighbors Malaysia (8.7), Thailand (8.6) and Singapore (8.3), but higher than the Philippines (7.8) and Vietnam (5.4).

The company reviewed the annual reports and corporate websites of 30 companies in each of the six countries based on 12 disclosure parameters, divided into the three categories: performance disclosure (two parameters), board quality (five parameters) and risk disclosure quality (five parameters).

FTI Consulting said companies in Malaysia and Thailand have the highest board-related quality and disclosure standards among the six Southeast Asian countries.

"The Asean Disclosure Index report shows that progress is being made in the region to raise corporate transparency and nonfinancial disclosure, but there is still room for improvement," said Paul Downie, chairman for Asia Pacific in FTI Consulting's strategic communications division.

FTI Consulting listed 24 companies as "disclosure champions," with only three of them – Bank Central Asia, Bank Mandiri and Perusahaan Gas Negara (PGN) – from Indonesia. The remainder are from Malaysia, Thailand and Singapore.

Malaysian companies also ranked the highest on average on board quality, scoring 3.5 out of 4, followed by Singapore and Thailand at 3.2 each, Indonesia (3), the Philippines (2.9) and Vietnam (2.5).

The board-quality assessment measures companies' boards of directors on remuneration, third-party evaluation, dividend policies and gender diversity.

Indonesia rated the lowest in terms of gender diversity at director level, with only 19 of the 30 companies that were assessed employing at least one female director, compared with Malaysia with 29.

Despite this weakness, Indonesia rated the highest on board evaluations by external experts, with three companies allowing for that, while there are eight doing so in the Philippines.

Similarly, 20 companies in Indonesia and 19 in the Philippines also have whistleblowing systems in place on their websites, while no companies in the other four countries made such provision.

Six companies – from Indonesia, the Philippines and Vietnam – also provide metrics on whistleblowing cases every year and include this transparently in their annual reports, with some of them also providing details on the outcomes.

These companies are Ayala Corp and PLDT in the Philippines, Sampoerna and Telkom in Indonesia and VietJet Aviation in Vietnam.

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