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The company is on a rapid growth trajectory, but with growth comes complexity, especially when family concerns mix with business operations.
“It’s not money I want to leave to my children,” says U Aung Zaw Naing. “My real legacy should be a strong business and a family that stands together.”
Balancing family values and business strategy
To help U Aung Zaw Naing and others like him, IFC’s East Asia Corporate Governance Team recently hosted a first-ever workshop in Myanmar to advise these executives on how to ensure that their family businesses—and family bonds—remain intact for the long term.
“It’s an issue of critical importance as Myanmar continues to transform,” says Vivek Pathak, IFC Director for East Asia and the Pacific. “The vast majority of Myanmar’s companies – both small and large alike – are family owned. Therefore, the long-term sustainability of these companies will be a key factor in the development of Myanmar’s private sector and its primal engine for job creation.”
The workshop was part of a launch event for the Myanmar language version of IFC’s Family Business Governance handbook. Participants worked through real-life case studies and focused on addressing key challenges such as writing and implementing a family constitution, identifying an approach to family member employment, succession planning, shareholding, and managing disputes.
“Generational transition is unique to family businesses,” says IFC’s Sanaa Abouzaid, the event’s main facilitator and the author of the handbook. “While the odds of survival are weak, there are governance mechanisms to manage the challenges.”
IFC’s work to strengthen the governance of Myanmar’s family-owned businesses is part of a larger strategy to encourage private sector growth in the country. With cumulative investments totaling $386 million, IFC is the largest investor in the nation’s private sector.
Focusing on family business sustainability
IFC’s East Asia Corporate Governance Team is also active in Indonesia, which boasts a larger and more advanced economy. Yet, family businesses play an outsized role in the economic structure of both nations.
At a day-long session co-organized by IFC and Indonesia’s Family Business Nusantara (FBN) Foundation, nearly 70 family business executives heard about the benefits of a more formalized approach to family governance.
Representatives from some of Indonesia’s most successful family businesses shared their challenges in championing a family governance agenda. Common issues included the importance of institutionalizing roles, rights, and responsibilities for family and non-family members, treating family members and other employees equally and fairly, and clarifying the role of the owner in business discussions and decisions.
“We can learn from and emulate these businesses,” says FBN’s Shanti L. Poesposoetjipto. “Hearing these first-hand experiences gives us confidence that while instituting proper governance structures in a family business is difficult and often messy, it is nevertheless worthwhile and critical to ensure future sustainability.”
IFC’s Myanmar Corporate Governance project is funded by UK Aid and Australian Aid.
IFC’s Indonesia Corporate Governance project is funded by the State Secretariat for Economic Affairs (SECO), Switzerland.
IFC is the implementing partner for both projects.
Seminar Brochure and Agenda: Ensuring Success and Continuity (PDF)
Op-Ed: Indonesia: Family businesses need good governance, too, Chris Razook, The Jakarta Post, November 15, 2016
Publication: IFC Family Business Governance Handbook (in English)
Photo Album: Family Business Governance Seminar - Ensuring Success and Continuity, The Dharmawangsa, Jakarta, November 8, 2016
Seminar Brochure and Agenda: Ensuring Success and Continuity (.pdf)
Op-Ed: Family Governance Critical for Myanmar’s Economic Development, Chris Razook, The Frontier Myanmar, November 9, 2016 (.pdf)
Publication: IFC Family Business Governance Handbook (.pdf in Burmese)
Photo Album: Family Business Governance Seminar - Ensuring Success and Continuity, Yangon, Myanmar, November 10-11, 2016