Lack of trust hinders S-E Asia economic integration: report

Angela Tan
Published Wed, Dec 16, 2015 · 07:01 AM
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A LACK of trust is one of the factors holding back the establishment of an integrated South-east Asia economy which can punch its weight on the world stage, suggested the latest report from Chartered Accountants Worldwide.

In the report entitled, "Critical Success Factors for Tomorrow's Business Leaders: Perspectives from South-east Asia", the international body noted that the region faces several challenges like widespread corruption, large disparities in income distribution and political challenges from a more assertive China to the north. It argues that transparency, corporate governance and recognising the importance of ethics are critical to economic integration and tackling corruption.

The report comes in the wake of this year's establishment of the Asean Economic Community (AEC), an economic bloc with 622 million people and a market worth US$2.6 trillion per annum, making it theoretically the world's seventh largest economy.

Pat Costello, chairman of Chartered Accountants Worldwide, stressed that while the region is geographically distinct, it is also culturally diverse and comes with different approaches to doing business, different laws and regulations, which hinder integration.

"Some staff do not understand the importance of ethics in corporate governance and tend to brush it aside. Unsurprisingly, corruption remains one of the main challenges to achieving the goal of economic integration,'' he said.

The report suggested that chartered accountants could become custodians of the "corporate conscience" and help the region overcome some of the potential challenges to an integrated region.

"Chartered accountants possess the necessary skills to guide transparent and flourishing businesses, contributing to international economic development ... They are also viewed as key to good corporate governance,'' Gerard Ee, president of the Institute of Singapore Chartered Accountants (ISCA), said.

This morality cannot be merely reactive, and must be proactive.

"Accountants have traditionally focused on preventing things from going wrong instead of building a culture when it becomes natural to do what is right. Changing this approach is critical to building trust across the region and tackling corruption,'' said the report.

The report follows an international summit held in Singapore where senior CEOs, CFOs and executives, together with the heads of global chartered accountancy bodies, discussed the challenging new business agenda facing future finance professionals.

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