Distinguished guests,

           It is indeed an honour and privilege to be invited today to deliver the keynote address at this Business Roundtable for Indian and Thai businessmen at the International Conference on “Corporate Governance and Business Sustainability” organized by the Martin de Tours School of Management of Assumption University of Thailand and Sri Ram College of Commerce, University of Delhi.

           Although the topic of this conference is not directly related to my field of duty, I would attempt to put forth my views and assessment, as a bystander with an avid interest in the happenings in the corporate world.

           I wish to start from the time of the Asian crisis, which shook the global financial system in the late 1990s. At that time, the policymakers and regulators alike heard the rallying cry from around the world to establish and promote a system that would encourage better corporate governance for both businesses and governments. Since then, governments, policymakers and regulators around the globe have devoted significant time and resources to the development of legislation and policies related to corporate governance.

           In very simple terms, corporate governance entails the way in which a company’s board oversees the management of the company, and how the board members in turn are accountable to shareholders and the company. Corporate governance also provides the structure through which the objectives of the company are set and the means of attaining those objectives and monitoring performance are determined. The question before us is- what should good corporate governance provide for- it should provide proper incentives for the board and management to pursue objectives in the interests of the company and its stakeholders and should facilitate effective monitoring. This encourages the firms to use resources more efficiently. Good corporate governance is not simply about minimizing the risk of corporate failure and dealing with those guilty of fraud. It also is a fundamental prerequisite to improving economic performance, facilitating corporate access to capital, and improving the investment climate. Poor corporate governance, on the other hand, weakens a company’s potential and may lead to financial difficulties and even fraud.

           Undoubtedly a company’s supervisory board should play an important role in approving the objectives, strategy and business plans of the institution, monitoring the performance of its management and ensuring that the internal control and risk management systems of the institution are effective. The supervisory board also should ensure that the institution conducts its affairs with integrity and in accordance with high ethical standards. Thus the supervisory board is part of the system of checks and balances that ensure that neither large shareholders nor management abuse their power and that decisions are made with the institution’s best interests in mind. It has been proven that a competent supervisory board, free of conflicts of interest, can help protect shareholders, ensure compliance with laws and regulations, and provide useful guidance to management in areas of strategic concern.

           Talking of non-financial institutions as well as financial institutions which face some real challenges in this new economy, I would say that in the constantly evolving operating environment, they must be able to respond and adapt to the challenges they face. One of the many challenges is the ability to maintain adequate pricing amid fierce competition from their competitors and the high cost demanded by technological changes. The last decades witnessed remarkable advances in technological engineering and innovation, which make these times particularly interesting and challenging for directors. The pace of innovation is expected to increase further in the years to come as businesses increasingly integrate the use of new technologies into their operations. Hence, it can be said with certainty that the implementation of sound governance is not only important for the proper management and supervision of businesses, but also is imperative for businesses to obtain and maintain a competitive position in the market.

           As a response to the Asian crisis, the Organization of Economic and Cooperative Developments (OECD) had issued a set of corporate governance principles to help governments evaluate and improve the legal, institutional, and regulatory framework for corporate governance in their countries. These guidelines have been widely adopted as a benchmark for good practice in corporate governance. They have been endorsed by the Financial Stability Forum as one of its key standards for ensuring international financial stability and by the World Bank in its effort to improve corporate governance in emerging markets. International organizations such as the Basel Committee, the International Organization of Securities Commission (IOSCO), and the International Association of Insurance Supervisors (IAIS) also have been active in drawing from the collective supervisory experience of their members and other supervisory authorities in issuing supervisory guidance to foster safe and sound policies related corporate governance.

           The recent corporate scandals have focused the mind of governments, regulators, companies, investors, and the general public on weaknesses in corporate governance systems and the continued need to address these issues. These scandals highlighted the fact that the world’s seemingly most successful companies in the world’s most advanced economies can suffer from severe corporate governance failures that destroy substantial wealth for investors and employees. I am sure that you would agree that the integrity of businesses is central to the vitality and stability of our economy. It would be ideal if businesses, at all times, foster a corporate governance framework that promotes market integrity, the independence of the board from management, transparency, an effective risk management system, and a system of accountability.

           We are at a critical juncture – economically, socially and environmentally. More than one billion people lack access to food, electricity or safe drinking water and most of the world’s ecosystems are in decline. Gaps between rich and poor are widening. Unfortunately, we are nearing the point of no return on climate change. The threat to prosperity, productivity and stability is looming large on the horizon. Citizens by the millions have voiced their discontent around similar themes: sustainability, inequality, corruption, repression and the absence of decent work. On the other hand trust in Government and the private sector is declining dramatically. A series of disasters, scandals and business-as-usual have made people increasingly skeptical of the corporate world whereas the future of markets is uncertain. But one thing is clear: we need markets that can deliver a sustainable and equitable future for all. Many would now doubt whether capitalism is in crisis. Others may call this a crisis of globalization. What we actually see is a crisis of leadership -- a lack of imagination in looking at old problems with fresh eyes -- and a lack of urgency as the clock keeps ticking. In these uncertain and tumultuous times, there is a need to work together to deliver solutions for sustainability.

           Ladies and Gentlemen, the business case for sustainability is strong and getting stronger. Market disturbances, social unrest, ecological devastation, natural and man-made disasters – whether near or far away – are having direct impacts on supply chains, capital flows, public opinion and employee productivity. But risk exposes only a partial picture. The positive case is far more compelling; building markets for the future; meeting growing consumer desire and demand for greener products and services; laying the foundations for dignity, stability and opportunity for all. This is what sustainability is all about, and it is why more and more companies and investors have put corporate sustainability on their agendas. The United Nations is helping them to focus on delivering value in four key areas: financial, social, environmental and ethical – what they call the quadruple bottom-line.

           In the past only a few companies were exploring the notion of sustainable business. Now thousands or even more are doing so. And yet, corporate sustainability as currently practiced has yet to rise fully to the challenge. Regrettably the principles of sustainability have not entered business strategy. Nor have we seen the depth of action that is needed. And those that are engaged represent only a small percentage of the world’s estimated 80,000 multinationals and millions of smaller enterprises. We need business sustainability to be in the DNA of business culture and operations. This is a priority but there are several factors holding us back. Corporate sustainability is not properly valued.

           Countless proven innovations and solutions -- from energy efficiency to emissions reductions -- are not supported with the right incentives. In fact, incentive structures still tend to encourage unsustainable behaviour. Corporate sustainability has gone mainstream and now we must achieve critical mass. I am hopeful that with the strong support and leadership of the business houses which you lead, we can change and shape the world we want and make this world better for all.

           As trade and investment flows between India and Thailand gain momentum, I would like to share with you some thoughts on the growing engagement which has thrown up business opportunities in new and diversified areas such as food processing, infrastructure, automobiles, hospitality, tourism and manufacturing sectors. The growing ties between the two countries have come at a time when significant developments are taking place in the ASEAN region. Asian Economic Community (AEC) 2015 promises to bring greater integration among member countries be it in the form of physical connectivity, economic links, cultural and educational ties. As India marks its 20th year as a dialogue partner with ASEAN, it is placing much greater emphasis on its policies to expand trade and investment cooperation and connectivity with the 10-country ASEAN group. In this context Thailand’s initiative to join hands with India for developing the Dawei deep sea port in peninsular Myanmar and build a mainline corridor connecting Chennai with Dawei in Myanmar is vital.

           For Thai investors, fast growing India would remain attractive given the vast opportunities available in infrastructure sector, tourism and retail industries. Indian government reiterated its focus to promote cooperation between the Indian and ASEAN private sectors in key areas such as pharmaceuticals, innovation and skill training, IT, manufacturing and infrastructure. India continues to remain an interesting market for export of goods from Thailand. Thailand is the 28th largest exporting source into India. Currently, Thai goods have benefited for tax reduction under ASEAN-India FTA in Goods, which came into effect from 01 January, 2010 and resulted in the flow of more goods into Indian market. An Early Harvest Scheme, covering 84 products, under the proposed India-Thailand FTA, in place since September 2004, has already resulted in phenomenal growth in our bilateral trade. Comprehensive FTA on goods, services and investments, currently under negotiations is envisaged to bring about greater benefits and economic and commercial links between the two countries in the years to come.

           Thailand views India as the gateway to South Asia and beyond. As the result of reduced tariff rates and new initiatives adopted by both the countries, trade between two countries increased manifold in recent years. Total trade between India and Thailand during January-August, 2013 is US $ 6.04 billion. Bilateral trade is expected to touch US $ 14 billion by 2014.

           Investment by Indian and Thai companies into each other’s countries is also growing rapidly. Indian FDI in Thailand is estimated to be around US $ 2 billion since 1970s. FDI from Thailand to India from April 2000 to July, 2013 reached US $ 128.62 million.

           I would also like to dwell briefly on India-ASEAN trade and investment relations. ASEAN-India dialogue relations have grown rapidly from a sectoral dialogue partnership in 1992 to a full dialogue partnership in December 1995. At the ASEAN-India Commemorative Summit held in December 2012 in New Delhi, India, the Leaders adopted the ASEAN-India Vision Statement and declared that the ASEAN-India Partnership stands elevated to a Strategic Partnership. The total trade between ASEAN and India grew significantly in 2011-2012, reaching USD 79.3 billion, surpassing the trade target of USD 70 billion by 2012. At the 10th ASEAN-India Summit in November 2012, the Leaders set the target of US$100 billion by 2015 for ASEAN-India trade. Acknowledging this trend and recognising the economic potential of closer linkages, both sides recognised the opportunities for deepening trade and investments, and agreed to negotiate a framework agreement to pave the way for the establishment of an ASEAN-India Free Trade Area.

           At the 2nd ASEAN-India Summit in 2003, the Leaders signed the ASEAN-India Framework Agreement on Comprehensive Economic Cooperation. The Framework Agreement laid a sound basis for the establishment of an ASEAN-India Free Trade Area (FTA), which includes FTA in goods, services and investment. ASEAN and India also signed the ASEAN-India Trade in Goods (TIG) Agreement in Bangkok in August 2009 which came into force in Jan 2010. The signing of this Agreement has paved the way for the creation of one of the world’s largest free trade areas (FTA) - market of almost 1.8 billion people with a combined GDP of US$ 2.8 trillion. During the 10th ASEAN-India Summit in November 2012, the ASEAN-India Leaders tasked their economic ministers to step up their efforts and flexibility to conclude the ASEAN-India Trade in Services and Investment Agreement at the earliest. Subsequently, an announcement on the conclusion of the negotiations on both Agreements on ASEAN-India Trade in Services and Investment was made and the draft Agreement is expected to be signed soon.

           With these words, I wish to conclude my remarks. I wish that your experience at this conference will be fruitful and that by sharing your experiences you will shed further light on the subject of sound corporate governance and the role of supervisory and managing directors in promoting sound corporate governance practices.

           I wish to thank the Martin de Tours School of Management, Assumption University and its Director Mr. Glen Chatelier for inviting me to this conference.

Thank you.