via CAAI News Media
Sunday, 28 February 2010 18:13 By Ek Madra
PHNOM PENH – “Once fully operational, the stock market will become the fifth key source of investment financing for Cambodia,” said the report about the Cambodian macroeconomic framework which was release by the ministry of finance and economy.
The report did not say how much contribution would be made from when the stock market’s fully operated, which is expected in September or by the end of 2010 the latest.
It said the kingdom’s bourse will play a vital role in injecting its economy on the top of the current four sectors are—from donors, foreign direct investment (FDI), the government’s investment in public sectors, and bank loans to private sectors.
Cambodia received an estimated $600 million and foreign investment injected worth about $800 million per year, said the report was seen by DAP.
The government, which has been invested $1.2 billion a year for both current expenditure and capital investment to improve the public service delivery, is also credited for supporting its economy in recent years.
The fourth sector, which is the bank loans worth $2.5 billion to finance private sector projects, has also contributed to support the country’s economy.
Ming Bankosal, Director General of the Securities and Exchange Commission of Cambodia (SECC), said the country’s stock market will be operating in September or by the end of 2010 the latest.
“When we have stock exchange we can share the economic growth to the Cambodian people and the government can collect more taxes as well as to create more jobs,” he said.
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The Director General of the Securities and Exchange Commission of Cambodia (SECC) said on Wednesday the country’s stock exchange will be operating in September or by the end of this year the latest.
His Excellency Ming Bankosal said the opening of the stock exchange is not fully depends on the SECC side, it also depends on the issuing companies.
“We expect that by the third quarter of this year or by late this year we expect to have the stock trading in Cambodia,” he said on Thursday.
The bourse, which is the country’s new experience, will list good corporate companies of the local and joint venture investing companies which have foreign partners.
THEY CAN SHOW THEIR INTEREST, BUT NOT ALL LISTED
The country’s Securities and Exchange Commission of Cambodia (SECC) has began received applications since January 15 from the companies—who wanted to operate as dealers, investment advisors, brokers or underwriters—till March 1, 2010.
As many as 400 companies are thought to be possible candidates for flotation in the nation of nearly 14 million, said another official.
Much of Cambodia's economy is dependent on agriculture, although it has some proven off-shore oil and gas reserves, a vibrant garment industry and booming domestic construction and telecommunications sectors.
Applicants must meet with capital requirement along with human resource, he explained.
“This is a very technical field... we need experienced people in the field”
Mr. Bankosal wished not to reveal a number of companies, who already have applied to be listed on the stock, but said that there is a number of both local and foreign companies have applied for the listing.
“Other foreign companies who operating their businesses here have shown their interests to go public,” he said.
“We will then review and shortlist them in order to assess the company before we can issue them the licenses to operate,” said Bankosal.
“We do not want to have too many companies to go public, but we want to see the quality’s issuers. We need a good profile companies with good profits and they must be very experienced in good business sector along with good management to go public.”
“They must be very corporate governance and transparency,” said he said.
He also said to build confidence of the public in the stock is a difficult work and that means poor corporate should not be allowed to list.
“If there will be problems the stock and security, the confidence will go down and we need a long time to restore the confidence.”
“So we have to be careful about that,” he said.
He also explained when Cambodia has the financial markets, the corporate company, whose good transparency, can seek direct financing from the public with a lower interest.
“That also let Cambodian people to invest their money in the stock of the company.”
He also said that in Cambodia today those are lower and middle class people do not have the opportunity to be listed.
“So, when we have stock exchange we can share the economic growth and the government can collect more taxes as well as to create more jobs,” he said.
“And then transparency comes to Cambodia and international investors will see Cambodia is changing to international standard.”
“Now we are ready and waiting for the companies to prepare themselves with all our regulations.”
“When they are ready with our requirements, they can issue the shares to the public. Then we will open the trading officially,” he said.
“So the game is not only depends on the government side, it also depends on the private sector who wants to list,” said Bankosal.
FOUR STATES COMPANIES RECEIVED GREEN LIGHT
Prime Minister Hun Sen on Wednesday said there will be at least three companies would be listed on the stock namely the Electricite du Cambodge (EDC), Phnom Penh Water Supply Authority, and Sihanoukville Autonomous Port.
EDC, which was established since 1906, became a wholly state-owned limited liability company in 1996 to generate, transmit and distribute electric power though-out Cambodia. EDC is a juridical organization with administrative, financial and managerial authority. EDC is responsible for its profit and losses and liable for its debts to the extent of the value of its assets.
The Phnom Penh Water Supply Authority (PPWSA) in Cambodia was awarded the Asian Development Bank's (ADB) 2004 Water Prize for its transformation of Phnom Penh's water supply over the last 12 years. PPWSA has, since 1993, increased its distribution network reached to more than 80 percent in Phnom Penh from serving 40 percent, according to the Asian Development Bank (ADB).
Starting in 1960, the Sihanoukville Port has grown to be the largest port in Cambodia, and the only deep water port. Servicing container ships, naval ships, and cruise ship from around the world. Now, at 125 hectares, the port is continually undergoing expansion and improvement (almost finished now). The Sihanoukville Autonomous Port (PAS) is becoming a main entry point for tourists to Sihanoukville, coming on cruise ships from Vietnam, Thailand, Indonesia and Singapore. Many foreign warships also docked here.
KOREANS HELP CAMBODIA TO ESTABLISH BOURSE
Cambodia and the South Korean developer World City Co Ltd singed early this month to build a $6 million construction for the country’s first stock market.
Another Mey Vann, director of the financial industry department at Cambodia's Ministry of Economy and Finance, told DAP last December that the four-story on the 6,000 square meter of the four-story building, which located on the former muddy land at the north of Phnom Penh’s outskirt, will be completed in the next eight months.
It took months before reaching a final approval of the building design model, which shows the culture of Cambodia and Korea.
The project, which has been slow as the result of financial down turn began last year.
His Excellency Bankosal also said the government has already decided to list the three companies and they will be listed on the stock exchange.
South Korea has been helping Cambodia to establish the stock and securities and the financial development Center is located in Camko City, where the location of the Stock Exchange and Securities and Exchange Commission of Cambodia (SECC) will be, he said.
Cambodia’s idea of establishing the bourse since the 1990s but has struggled for traction in a country known for chronic poverty and a history of upheaval, including the Khmer Rouge "Killing Fields" blamed for the death of nearly 2 million in period 1975- 79.
South Korean company’s officials said they decided to invest in Cambodia following its “serious research on the country’s politics and economic.”
“When we were in South Korea every one was thinking about the past violence of Khmer Rouge,” he said referring to this impoverished Southeast Asian nation which went through 30 years of war till 1998 the same year that Pol Pot, architecture of the Khmer Rouge, died.
“We were then really afraid to open business in Cambodia, but actually when we came here we realized that it is really safe,” said Yunyoung Lee, director of the marketing division, told reporters.
“So we want to start our project of stock market before others start.”
A number of seminars about the bourse have been conducted since last November, which aimed at raising awareness about the coming stock exchange.
The exchange expects to start small with just four or five companies issuing about $10 million worth of shares each, Intyo Lee, project director for Korea Exchange, has said.
Korea Exchange <.KS11>, Asia's fourth-largest bourse operator, will own 49 percent of the exchange and is recruiting and training workers for it. Cambodian will own the rest. Cambodia passed the stock market law in September 2007.
Korea has pledged $1.8 million in aid and technical assistance from the Seoul stock exchange to get the Phnom Penh bourse off the ground. Overall, the launch would cost $15 million, said the government officials.
CAMBODIAN GROWTH
The kingdom’s s growth has been remarkably high in recent years—was 10.4 percent last year. It was an estimated contracted 2.2 percent and is projected to increase 4.2 percent for 2010.
FOREIGN DIRECT INVESTMENT (FDI)
Cambodia’s Foreign Direct Investment (FDI) hit record $4 billion last year in 2006, according to the Council for the Development of Cambodia (CDC).
According to the National Bank of Cambodia (NBC) the FDI value for 2007 was US$866 million. It was US$795 million for 2008. It further dropped to US$515 million last year.
Cambodia received more than 2 million visitors in recent years and that figure is expected to increase 15 percent a year. The country produced more than 7 million tonnes of rice for 2009/2010.
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