The Western model of corporate governance (notably the model used in Britain and the United States), which multilateral agencies and institutional investors have used as benchmarks, has had the backing of professional shareholders, stakeholders and regulators, all of whom are experienced in both standard-setting and, more importantly, enforcement.

The governments in these countries are democratically elected and are replaced by the same system if they do not perform. This transformation from feudalism to open and accountable government has taken close to 100 years to achieve.

In Asia, the four growing dragon economies have had less than 30 years of economic expansion and the four little tiger economies have had less than 15 years. The tigers' pace of economic growth (or bubble growth) has been such that political and regulatory governance have simply not been able to keep up.

Given that these economies are often dominated by a few, often less than 10, business families, sound corporate governance practices, including a level playing field for minority investors, tend not to be on the agenda. To make matters worse, the cabinet line-up in these countries is often a who's who of representatives from the business community and landowners. Elections normally involve vote buying and vote rigging, with campaign contributions funded by businessmen.

In substance, therefore, unless great efforts are made to redress the imbalance of cabinet ministers, central bankers, regulators and judges being the agents for business and banking empires, there is little hope of sound corporate governance being practised or enforced.

In regional terms, Hong Kong is a darling when it comes to transparency, proper disclosure and accountability.

This is largely because we learnt our lessons earlier than the tiger economies, notably during the October 1987 crash, which triggered fundamental reform.

We have also learnt from the experiences of others.

Also, the existence of a large community of legal, accounting, investment banking and fund-management professionals has enabled Hong Kong to assume a leading position in practising sound corporate governance in Asia.

Another factor is that our government servants and regulators are clean and are willing to be accountable.

On the enforcement side, establishment of criminal enforcement agencies such as the ICAC and the Commercial Crimes Bureau, and strict regulation of banking and financial intermediaries has been effective, whereas the regulation of listed companies has been sloppy.

This has been due to the following reasons: the Stock Exchange of Hong Kong Listing Rules are not legally backed and the Code of Best Practice is only issued for guidance; the Securities and Futures Commission's legal powers of enforcement do not extend to listed companies; and the Government's Financial Services Bureau, which is vested with powers of investigation under the Companies Ordinance, is staffed by administrative officers who do not have the necessary professional experience to enforce or investigate.

The experiences suffered in the region during the past two years have raised many alarm bells regarding company failure, particularly as the rebuilding of collapsed economies requires a huge amount of funds. Also, institutional investors and stakeholders are more cautious about investing and lending.

Corporate fund seekers must therefore practise high standards of corporate governance, in the form of timely disclosure and reporting systems, and enhanced levels of corporate stewardship, using audit committees and risk-management techniques.

Building up a stronger board with more visible involvement of respected independent non-executive directors will also improve investor confidence.

The Government and regulators must also take necessary measures to ensure they do a more effective job. While power-broking negotiations are going on for the exchanges to merge and a composite Securities Bill is being promoted, perhaps someone could review whether our regulatory agencies have professionals with the right experience in the right places at the right time to carry out necessary enforcement work.

Without proper enforcement, Hong Kong cannot go very far in further building up its status as a leading financial market.

Edward K. F. Chow is a Council member of The Hong Kong Society of Accountants and chairman of its corporate governance committee. He is also a Council Member of The Hong Kong Institute of Directors. This article reflects his personal views.