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PERU
President
Toledo Says Public-Private Sectors Partnership Is Vital
President
Alejandro Toledo of Peru began his keynote address on Building
the Institutions for Good Governance stating that good strategic
partnership between government and business will lead to a
win-win situation for all. He went on to say the government can
provide a stable political and economic base for companies to
grow more than they will provide more capital for the government
through taxation which the government can then reinvest into
society, especially in health and education, to fight and bring
an end to poverty.
As
businesses increase their earnings and expand, this will create
new jobs and thus reduce unemployment. At the same time, workers
will gain increased buying power, which will further contribute
to the nation's economic growth.
Mr.
Toledo said that for macro economic stability to be achieved,
government must initiate a strong fiscal discipline. It must
also be proactive while not interfering in business decisions or
complicating different processes such as customs. Taxation must
also be equitable and neutral for fair competition. Furthermore,
labor should be easy to contract. Mr. Toledo's third point of
government responsibility is legal stability, which means clear
transparent rules. The judicial system must guarantee equal
rights and enforce laws that fight corruption. Mr. Toledo then
turned to the responsibilities of business in this partnership.
He said while it is their job to maximize shareholders' value,
it must be remembered that businesses are the motor that drives
sustainable growth. Profiting is not enough. In today's very
competitive environment, President Toledo believes it is the
role of businesses to diversify into both new sectors and
markets. As globalization gets stronger, it is too risky for a
business to remain in one area.
Mr.
Toledo stressed his opinion that companies should see poverty as
an enormous window of opportunity. Through sustainable growth,
all can profit. He explained that 40% of the Latin American
population is below the poverty level, but if these people can
become educated and become employed, as many as 480 million
people will become active consumers, creating a strong base for
further sustainable growth.
He
then stressed that for this to continue over the long-term,
companies must follow the rules. Today as much as 20-25% of
production costs can be attributed to corruption so if this can
be alleviated, companies could then operate more efficiently and
fairly.
Finally,
President Toledo turned to corporate environmental
responsibility. Our world must be protected for future
generations, and if businesses do not incorporate good
environmental practices, protect their workers and surrounding
communities, again over the long-term, companies will suffer. In
closing, President Toledo said, "It is time for the demands
of Wall Street to intersect with the demands of main street."
Good business must assume social responsibilities and, at the
end, they will also be able to create the highest long-term
values for their shareholders, a win-win situation for all. In
the panel discussion that followed, Professor On Kit Tam of
Monash University said that public and corporate governance are
very similar. Both must act ethically and take the initiative
for self regulation.
John
Prasetio, chairman of Ernst and Young / Prasetio, Sawoko &
Sandjaja (TBC) took an opposing viewpoint. He said it is the
responsibility of companies to make the greatest profit for
their shareholders.
Their
focus should be on maximum growth, which he felt was more of an
American attitude. President
Toledo then ended the discussion stating that a company's vision
must also focus on the social climate. If it does not, local
communities will ultimately turn against it. Thus, he closed by
reiterating that for all to prosper, government and business
must be committed to partnership and good practices.
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