Photo by: HENG CHIVOAN Workers outside the Camko site, where Cambodia’s stock exchange is to be housed.
The Phnom Penh Post
Written by Nguon Sovan
Monday, 12 January 2009
Officials say the September opening of the Kingdom’s first stock exchange is off as the global financial slowdown takes its toll on the economy.
CAMBODIA'S much-touted stock exchange has been delayed indefinitely due to the worsening global economic slowdown, officials told the Post Sunday.
Its launch was scheduled for September, with the Korea Exchange providing funds and technical support. But as Cambodia's economy - one of the region's most vibrant - slowed to single-digit growth last year, the exchange's future was put in doubt.
"Cambodia has been affected by the global financial crisis, especially in terms of real estate and garment exports. Therefore, the plan to open Cambodia's stock market has been postponed, and no specific schedule is set for it," said Mey Vann, director of the Finance Ministry's Department of Financial Industry.
"We cannot push to form the stock market, as our economy does not have a solid foundation yet due to the impact of the crisis," he said.
"Now, we will focus our efforts on stabilising our economy.
"Officials had reiterated that the launch was on schedule as recently as last month, but the government now says that times have changed.
"When we planned to establish the stock market ... there was no global financial crisis. Now, the crisis has hit, so the government has to reconsider the economic benefits and sustainability," he said.
"We will wait and see whether the global economy shows signs of recovery. If it recovers soon, we will soon establish Cambodia's stock market. But if it takes a long time to recover, the stock market will take longer to form," he said.
" LESS THAN FIVE PERCENT OF CAMBODIAN PEOPLE UNDERSTAND THE STOCK MARKET. "
December deadline
The Korean partners in the project expressed surprise at the government's postponement, saying they had not been informed of the change.
"There is a possibility that [the launch] will be delayed. September might be hard, but the end of December is more likely," Intyo Lee, project director for Korea Exchange, said on Sunday.
He said that the partners had already made progress on the exchange with the formation of a securities watchdog. He added that he expects at least three companies would list immediately and that five would list after the launch.
"I don't think that the economic crisis has seriously affected Cambodia. This is mainly a banking issue," he said.
But outside experts said that the slow economy and a lack of public enthusiasm mean the launch could be years away.
Nguon Meng Tech, director general of the Cambodia Chamber of Commerce, said Sunday the postponement is appropriate.
"The launch shouldn't take place before at least 2012 because recessions never recover in just one or two years - it takes at least four years to recover," said Nguon Meng Tech.
"Less than five percent of Cambodian people understand the stock market," he added.
In Channy, president and CEO of ACLEDA Bank, said that more outreach is needed before the market is viable.
We support the postponement because the public and companies still do not understand the stock market," In Channy said.
He agreed that a launch date of 2012 was more realistic.
"The stock market can proceed only if there are qualified companies to join. Otherwise, it will be impossible."
He said that local companies also lack international ratings, which he said are essential for firms wanting to list.
"For banking, as far as I know, only ACLEDA has the international rating," he said.
He added that other conditions such as auditing, good governance and financial reporting were needed.
ADDITIONAL REPORTING BY GEORGE MCLEOD
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