Thailand has moved up four spots to rank fourth in Asia on this year's list compiled by the Asian Corporate Governance Association and CLSA Asia-Pacific Markets.
The CG Watch report, which assesses the quality of corporate governance in 11 Asian countries, put Thailand in an eighth place in its last 2007 survey.
Thailand scored 5.5, up from 4.7 in 2007, tying with Taiwan, which also ranked fourth in the previous survey. Thailand was recognised as the most improved country due to highest score improvement.
Singapore was the best performer this year with a score of 6.7, followed by Hong Kong at 6.5 and Japan at 5.7. The Philippines was last on the list, scoring 3.7. Others include Malaysia (6th), India and China (7th), South Korea (9th) and Indonesia (10th).
Scores are based on five categories - CG rules and practices, enforcement, political/regulatory environment, adoption of International Generally Accepted Accounting Principles and CG culture.
Chalee Chantanayingyong, a deputy secretary-general of the Securities Exchange Commission (SEC), said the perception of Thailand had improved because of continuous collaboration from all parties in the capital market.
Among supporting factors are having a capital market development plan on the national agenda, adjustments in laws and regulations to lift CG standards, such as setting clear roles and responsibilities of directors and executives, and the establishment of a mechanism to protect whistle-blowers.
The survey also looked at how CG practices are being implemented by listed companies. Average CG scores of Thai listed companies were the highest in Asia.
Mr Chalee said development of corporate governance will help increase investors' interest in the Thai capital market. However, Thailand still needs to improve law enforcement, which is perceived as one of the country's weaknesses. "Our law enforcement process is quite long compared with other countries," he said.
The SEC is now pushing forward an amendment dealing with enforcement under the Securities and Exchange Act. It would promote implementation of civil penalties, allowing for faster enforcement. A draft is before the Finance Ministry. The move is part of the capital development plan.
Pakorn Malakul na Ayudhya, head of the subcommittee of the Corporate Governance Centre, said Thailand's CG improvement was expected to lift the country's competitiveness in the long term with more investments from foreign funds.
"Foreign investors are looking at the level of corporate governance as a criterion for managing fund risk," he said.