SINGAPORE, 25 October 2025 — At the ASEAN Business & Investment Summit 2025 in Kuala Lumpur, Dilhan Pillay Sandrasegara, Chief Executive Officer of Temasek Holdings Pte Ltd, delivered a pointed message to companies across Southeast Asia: improving corporate governance and investor rights enforcement is critical if the region wants to lure and retain global investment.
Pillay highlighted that the region’s private-credit markets and long-term domestic capital mobilisation are hampered by weaker governance frameworks, compared with Western jurisdictions. He stated, “If you want to get the capital into the market … governance is the most important thing. That means there must also be enforcement where there’s a lack of governance.”
Temasek, Singapore’s state-owned investment firm with a net asset value of S$434 billion (~US$334 billion) as of March, used the platform to emphasise that investor confidence is fundamentally tied to how well corporates protect shareholder rights, implement transparency and enforce responsibilities.
Key Governance Issues in Southeast Asia
- Investor rights & enforcement: Pillay underscored that disclosure rules, minority-shareholder protections and legal recourse remain weak in parts of Southeast Asia, limiting both foreign inflows and domestic institutional capital.
- Private credit and longer-term capital: He noted that the region’s private capital markets lag those in the U.S. and Europe partly due to governance gaps, meaning companies cannot stay private longer or access growth capital as easily.
- Global integration & competitiveness: As Asia vies for global capital, governance will become a differentiator. Companies with stronger frameworks may gain lower cost of capital, better access to global investors and improved valuations.
Why It Matters for Asia
- Capital inflows & growth engines: Southeast Asia’s growth story, young population, digital economy, rising consumption, is attractive. But if governance remains a weak link, it could curtail large-scale investment or raise the risk premiums attached to assets.
- Regional ambition meets investor reality: Countries like Malaysia, Indonesia, Vietnam and the Philippines are pushing to become investment hubs. Pillay’s remarks suggest that policy and corporate reforms must keep pace with aspirations.
- Domestic capital retention: Good governance isn’t just about attracting foreign investors; it also helps to prevent domestic capital flight, lower risk perceptions and support local institutional investors — critical for sustained growth.
What Needs to Change
- Stronger regulatory enforcement: It’s not enough to have regulations on paper, enforcement mechanisms, independence of oversight bodies and consistent application matter.
- Improved disclosure & transparency: Firms should adopt international reporting standards, proactive stakeholder communication and robust board governance practices.
- Protection of minority shareholders: Ensuring that smaller investors are treated equitably, conflicts of interest are managed and exit mechanisms are clear.
- Governance in private markets: As more companies stay private longer or raise private-market capital, governance frameworks must adapt, covering valuation, exit rights and investor protections.
Outlook
Pillay’s warning may act as a catalyst for regional corporate and regulatory reform. As global investors shift toward higher-governance jurisdictions, ASEAN firms could face increased pressure, but also opportunity, to upgrade practices. If Southeast Asia responds, it could unlock deeper capital markets, more resilient growth and stronger global positioning.
