Good CorporateGovernance∙

Presented with loving care by :Discussion Group 18

“1997

BadCorporate Governance

is one reason the Political-ecomonical crisisbegan in

And also ”

Background

the needs of good corporate governance pertaining to principle-agency theory

Market crash

1929

IndonesiaEast Asia

HOW GCGSTARTED IN

INDONESIA?

1998

1998

2000

2001

2004

2006

2004

2004

Corporate Governance (CG)

Indonesia government signed letter of intent IMF

KNKCG established

General guidelines CG

Guidelines of GCGin banking

Guidelines for Independent Commissioners and Audit Committee for the Effective Establishment

KNKG established

KNKG completed guidelines of CG 2001

LAW BASISOF GOOD

CORPORATEGOVERNANCE∙GCG

YEAR LAW

1998 the country is free from corruption, collusion, and nepotism

1999 eradication of corruption

2000 GCG development in the company

Implementation of the policy of good corporate governance in all BUMN

Implementation GCG and instruction of formation guidelines for the Establishment of Applied Corporate Governance Team

Letter of Commissioner PT Pos Indonesia (Persero) Number 520/S-KU/2000 Establishment of audit Koimplementimite subject.

2001 eradication of corruption (Undang-Undang No. 20 Tahun 2001)

Moral Movement BTP Pos Indonesia (Clean, Transparent and Professional).(Decision of the Board of Directors of PT Pos Indonesia (Persero) No.81/Dirut/1201

2002 Corporate Governance Practices in SOEs (State Owned Enterprises Minister No.KEP-117/M-MBU/2002)

regarding intensification and Acceleration of KKN (Circular Letter of Minister ofAdministrative Reform Republic of Indonesia. 37a/M-PAN/2002)

Definition ?

OECD KNKG

UNDP UNESCAPBPKB

IICGFCGI+

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Definition by OECD organization for economic co-operation and development

Corporate governance is the system by which business cooperation are directed and controlled. The corporate governance structure specifies the distribution of the rights and responsibilities among different participants in the cooperation such as the board, managers, shareholders and other stakeholders and spell out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which company objectives are set and the means of attaining those objectives and monitoring performance”(OECD,April 1999, h.2)

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Definition by FCGICorporate governance can therefore be defined as: a set of rules that define the relationship between shareholders, managers, creditors, the government, employees and other internal and external stakeholders in respect to their rights and responsibilities, or the system by which companies are directed and controlled. (taken from Cadbury Committee of United Kingdom) The objective of corporate governance is to create added value to the stakeholders. 

Definition by fgciForum for corporate governance in indonesia

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Definition by iicgindonesia institute for corporate governance

Corporate governance is defined by IICG (Indonesian Institute of Corporate Governance) as the processes and structures that are applied in running the company, with the main purpose of increasing shareholder value over the long term and with due regard to the interests of other stakeholders. Corporate governance also requires the device structure to achieve the above objectives and monitoring performance. (Www.iicg.org)

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Definition by KNKGkomite nasional kebijakan governance

Good corporate governance (GCG) according to KNKG is one of the market economic system pilar. Corporate governance is closely related to trust both to the companies that implement it and to the business climate in the country. The implementation of GCG encourage the creation of fair competition and a conducive business climate. Therefore, the implementation of good corporate governance by companies in Indonesia is very important to support the continuous of economic growth and stability.

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Definition by UNDPunited nations development programme

According to United Nations Development Program (UNDP) document, governance is the use of political economic and administrative authority to manage the affairs of the country at all levels. Governance includes all the mechanism, process and institutions where the citizens and community groups to express their interests using legal rights, obligations and bridge those differences between them.

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Definition by BPKPbadan pengawasan keuangan dan pembangunan

Good corporate governance is a system of control and regulation of companies that can be seen from the mechanism of the relationship between the various parties who take care of the company, as well as in terms of "values " of the management mechanisms contained itself. GCG BPKP team defined GCG from the soft definition which is easier to understand, even the layman, which is Commitment, terms of play, and implementation of healthy and ethical business practices

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Definition by unescapunited nations economic and social commision for Asia and Pacific

Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. governance describes the process of decision-making and the process by which decisions are implemented or not implemented. The term governance can apply to corporate, international, national, local governance or to the interactions between other sectors of society

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7PrinciplesofGCG

OECDFairness ∙ transparancy ∙ accountability ∙

Responsibility

FCGI…the rights of shareholders…equitable treatment of shareholders …the role of stakeholders should be recognized as established by law and active co-operation between corporations and stakeholders in creating wealth, jobs and financially sound enterprises…timely and accurate disclosure and transparency …the responsibilities of the board in the management, the supervision of the management and the accountability to the company and shareholders. 

IICGCommitment ∙ transparancy ∙ accountability ∙

responsibility ∙ independency ∙ justicecompetency ∙ mission ∙ leadership ∙

collaboration

The country and tools to create laws that support a healthy business climate, efficient and transparent, implement legislation and law enforcement consistently (consistent law enforcement)

Business world as a market participant to implement good corporate governances a basic guideline implementation efforts

The public as the users of products and services of the business world and affected parties of the existence of the company,  showing concern and social control in an objective and responsible manner

KNKG

UNDPLegitimacy and Voice

Direction

Performance

Accountability

Fairness

ParticipationConsensus orientation

Strategic vision

Responsiveness Effectiveness and efficiency

Accountability.Transparency

Equity .Rule of Law

transparancy accountability

responsibilityindependency

fairness

bpkp

WINTERTemplate

UNESCAP

• Participation• Rule of law• Transparency• Responsiveness• Consensus oriented• Equity and inclusiveness• Effectiveness and efficiency• Accountability

The Implementation

POS INDONESIA adopted from BPKP

http://www.posindonesia.co.id/home/index.php/extensions/gcg

“One of the efforts to improve the performance of a company / organization is to implement Good Corporate Governance

(GCG). Implementation of Good Corporate Governance (GCG) is a guideline for the commissioners and directors in

making decisions and execute actions based on high moral, compliance with laws and regulations applicable as well

as awareness of corporate social responsibility of interested parties (stakeholders) consistently”

5 PRINCIPLESOF GOOD CORPORATEGOVERNANCE

• Transparancy• Responsibility• Fairness

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