FCGI Position Papers

As NCCG partner in formulizing and developing principles and rules of Good Corporate Governance (GCG), the FCGI has already submitted its thoughts in developing the Code of Corporate Governance Best Practices (the Code) to the NCCG. In addition the FCGI has also submitted  an Action Plan implementing the Code as well as GCG principles. The FCGI thoughts were drafted to be the Position Papers consisting of Position Papers number 1, 2, and 3.

Those three Positions Papers summarized are as follows:

1. First Position Paper of the Forum on Corporate Governance in Indonesia (Draft Matrix of Corporate Governance and Framework Code of Good Corporate Governance)
   
   This position paper was made and submitted to the NCCG in April 2000 prior to the May 1st revision Code of Good Corporate Governance draft. The aforesaid position paper was addressed to formulize the revision of the code of conduct based on the inputs come from association joined the FCGI. It contains several items consisting of: Objective and Definition of Corporate Governance, Key Features of Corporate Governance in Indonesia, Recent Reforms in Corporate Governance, and Policy Recommendations.
   
   With respect to the Policy Recommendation, it focuses on the Ownership Structure, Internal Control and Shareholders Protection, Creditor Monitoring Discipline and Protection, Market Competition and the Market for Corporate Control, and Capital Market Development and Financing.
   
2. Second Position Paper for Recommendations concerning Good Corporate Governance (Detailed Comments)
   
   As a partner of the National Committee on Corporate Governance (NCCG), FCGI has followed up its previous position paper on Draft of Matrix of Corporate Governance and Framework Code of Good Corporate Governance by submitting the Second Position Paper. This recent position paper contains a detailed comment on the Code of Good Corporate Governance drafted by the National Committee on Corporate Governance (NCCG).
   
   The position paper consists of:
   1. Recommendations for improvement of the current legal framework, based on possible inconsistencies of the Code with the current other laws that the companies have to abide with, e.g.: Company Law (UUPT), Laws on Capital Market, Banking Law, etc.
   2. Practical problems that may arise in the implementation of each provision of the Code and recommendations to companies.
   3. Suggestions for changes in the Code.
   
   The FCGI finished its Second Position Paper on 29 August 2000 and submitted the position paper to the NCCG on 30 August 2000 at the time the NCCG held its general meeting to discuss the revisions of the Code.
   
   Currently the FCGI has had several joint meetings either with the NCCG, the BAPEPAM, or the Jakarta Stock Exchange (the JSX/BEJ) to discuss the code of conduct and steps to implement the code. The joint meetings were followed up by the FCGI through drafting its position paper on Action Plan in Implementation Good Corporate Governance.
    
3. FCGI Position Paper on Action Plan in Implementation Good Corporate Governance
   
   There are several main issues addressed by the FCGI respectively: The Self-Assessment Scorecards System on Good Corporate Governance Practices, the Independent Certification on Good Corporate Governance, and Training on Good Corporate Governance. These issues are proposed by the FCGI in order to make the principles of good corporate governance more actual and readily be applied for the companies and the stakeholders.
   
   With regard to the Self-Assessment Scorecards System, the FCGI considers that a self-assessment scorecard checklist should be made on how so far one company has implemented good corporate governance to allow self-assessment. This checklist will show the company where its good corporate governance meets the standard and where it requires improvement. Following up this idea, FCGI would research existing models, such as the German model on the scorecards of corporate governance, as the basis standards for the checklist. Regarding the idea of Certification on Good Corporate Governance (the so-called 'quasi' ISO certification), the FCGI thinks that the idea of so-called ISO certification on Corporate Governance is (still) unfeasible for Indonesia. The corporate governance requirements as set out in the self-assessment scorecard should be best independently assessed by the auditor as part of the audit of the company's financial statements. The ideas of a self-assessment model and the certification on good corporate governance could be carried out through the idea of a Public Award. (See the summary of the table below).
   
   Whereas regarding the idea on Training on Good Corporate Governance and the relation with the Institute of Directors and Commissioners, the FCGI proposes necessary to provide good corporate governance as a curriculum in universities and the business schools. The FCGI could contribute the corporate governance curriculum in a study cases form. Especially for the professionals corporate governance should be contained in the training conducted. As an example, in order to obtain the certificate of QIA (Internal Auditor) one of the requirements should be knowledge on corporate governance.