PHNOM PENH (ThomsonFinancial) – Cambodia’s parliament on Wednesday approved a law that takes the country a step closer to opening its first stock exchange, planned for 2009. The National Assembly approved the law setting out the rules and regulations by which private and state enterprises can issue stocks and bonds.
‘This law will help develop the national economy and society by collecting capital from the public or securities investors… for investment,’ a copy of the draft said. The law also aims ‘to promote investment from abroad and the participation in the securities market in Cambodia,’ it said. The government now must establish a nine-member Securities and Exchange Commission of Cambodia to regulate the planned market and the issuing of government bonds, it said.The government last week launched a project to establish the country’s first securities market, partnering with South Korea in a programme that hopes to see a stock exchange established by 2009.
Despite concerns from oppostion lawmakers over the independence of the new commission, Finance Minister Keat Chhon said the law meets international standards. But he acknowledged that many challenges remain — particularly creating the infrastructure for the market and a computer system to manage trading. He said the government will control the new securities commission until at least 2015 and will spend some 15 million dollars to develop the market. Opposition leader Sam Rainsy urged the government not to interfere in the securities market. ‘When there is a lot of interference, it could lead to conflicts of interest,’ he said. ‘There will be a lot of money coming across the securities market, so then there will be the risk of cheating,’ Rainsy said.
While still one of the world’s poorest countries, Cambodia has emerged from decades of conflict as one of the region’s rising economies. The country has posted annual economic growth averaging 11 percent over the past three years on the back of strong garment and tourism sectors. Cambodia remains a largely cash-only economy and a high degree of mistrust keeps many people hoarding their money at home instead of using the banks. In April, Cambodia was assigned its first-ever sovereign debt rating by the credit rating agency Standard and Poor’s, which said the impoverished country’s outlook was ‘stable’.
The B+ rating is below investment grade status, restricting many institutional investors, but it is a significant step in Cambodia’s bid for economic respectability.