Ong Ye Kung, a board member of the Monetary Authority of Singapore, warned against observing rules and regulation as a matter of process or ticking boxes as such tendencies can lead businesspeople astray from intended outcomes.

According to Ong Ye Kung, who is also Singapore’s minister for education, firms are increasingly preoccupied with rules, regulations and compliance – rather than their purpose and intended outcome – which can cause material damage to corporate governance and overall quality of any industry. 

«When [compliance] becomes the preoccupation, a process-driven, tick-box approach rather than outcome-based approach takes over,» Ong said at a recent investor conference in Singapore.

«Companies observe rules in form, rather [than] in spirit or in substance.» 

Key Outcomes

Ong highlighted five key outcomes that sound regulation should produce. First, it is the protection and fair treatment of minority shareholder interests «for we trust a system to the extent to which it protects the smallest or the weakest stakeholder» – a major point of emphasis in the MAS and Singapore Exchange’s recent revision to listing rules. In line with this is the second key outcome, which is to define success beyond merely maximizing profitability or any single metric.

Third, good governance should not be excessively rigid or restrictive as to stifle innovation and dynamism. Naturally, such flexibility may increase the risk of failure and whilst businesses should minimize such issues, they must accept that absolute prevention is not only unachievable – the fourth outcome – but can also impede the third outcome. 

The fifth and final outcome is to adopt a long-term perspective to good governance as «a company that merely fulfills short-term goals and fighting fires all the time will not sustain long-term competitiveness».

Trends in Regulating

And from the regulator’s perspective, Ong underlined three key trends that cannot be overlooked: regulation that caters to technological advancement without discriminating between traditional and high tech players; regulation that is risk-focused; and the granularity of rules and regulations. 

«[G]ood corporate governance does not just benefit a company and its stakeholders,» Ong concluded.

«If it is widely practiced, it leads to an atmosphere of collective trust in Singapore companies. This is important because it will strengthen the Singapore brand and this will open up more opportunities for everyone.»