An agreement has been reached between the government, the Asian Development Bank and the state-run insurance company Caminco to delay Caminco’s privatization, the government official who oversees the insurance industry said Thursday.
“Because of the conditions of the market, we have decided to pursue a restructuring of the company,” said Mey Vann, director of the Financial Industry Department of the Ministry of Finance.
In April the Ministry of Finance announced that it was putting 48 percent of Caminco’s shares up for sale. Caminco officials had explained that this was the first step towards privatization of the company. A Finance Ministry official had added that Caminco’s privatization was a requirement put forth by ADB.
In 2002, the National Assembly approved $13 million for the Caminco privatization effort.
Since then, ADB has helped reform the company to make it salable.
At present, the process is not advanced enough to attract a buyer for the company, Mey Vann said. “There needs to be more transparency in the way the company reports to the board.” He said.
The reform plan was signed in August, Vanndy Hem, the ADB consultant on the project, said on Wednesday.
Referring to a Finance Ministry proclamation of April 1, which some have interpreted as lowering the insurance-industry capital registration requirement from $7 million to $1.5 million, Vanndy Hem said this was not related to the Caminco share offering.
The April 1 proclamation was voided through another proclamation on Aug 2, said Mey Vann.
The capital registration requirement has always been $7 million, he said. This $7 million encompasses all a company’s assets including buildings and cash. Solvency refers only to a company’s amount of ready cash.
Before April, a company had to deposit in cash a total of $4.2 million in the bank over five years to meet the solvency requirement.
The first-year payment had been, and is once again, $1.05 million—the April 1 proclamation had sought to raise that amount to $1.5 million, Mey Vann said.