Lawmakers began debating legislation Tuesday that could pave the way for the proposed 2009 launch of the Cambodian Securities Market.
If passed, the 58-article draft Law on the Issuance and Trading of Non-Government Securities will set the rules and regulations by which private and state enterprises can issue stocks and bonds.
It also establishes the Securities and Exchange Commission of Cambodia, the body charged with regulating the planned securities market and the issuing of government bonds.
The government, in partnership with the South Korean exchange, announced last week the launch of the securities market project, which is expected to culminate in the launching of the Cambodian exchange in 2009.
According to the draft law, the government will establish the nine-member Securities and Exchange Commission of Cambodia, which will be presided over by the minister of finance. The eight other members will be officials from the ministries of Finance, Commerce and Justice; the National Bank of Cambodia; and the Council of Ministers. There will also be a general-director of the commission and two securities experts that will be selected by the finance minister and approved by the prime minister. SECC members will serve five-year terms and are eligible for re-appointment.
CPP lawmaker Cheam Yeap, who chairs the Assembly commission on finance and banking, said that the law was needed to spur development and fulfill requirements concerning Cambodia’s membership of the World Trade Organization. “The law is a tool for Cambodia to fulfill its duty to the WTO and help economic development by utilizing all the resources of the public,” he said.
Sam Rainsy addressed the floor to take issue with the heavy government involvement in the SECC, saying that his 20 years of experience as a securities analyst in France had taught him that such regulating bodies must be wholly independent.
“The committee’s members must be independent and show goodwill and competence,” Sam Rainsy said. “I am concerned that the members of the government involved with the committee will engage in corruption.”
Sam Rainsy said he was particularly concerned about the prospect of insider trading among government officials if the SECC lacked independence. “The government officials will know first, so they will buy first,” he said. Sam Rainsy added that a securities market could be used as a means to launder money, making it all the more necessary for the regulating body to be independent and upright.
“A securities market can be a place for cheating when the law is not enforced,” he said. “I would like to remind the people: You can lose money.”
Responding to Sam Rainsy, Keat Chhon said that the government will control the SECC until at least 2015 because the government might spend around $15 million on building infrastructure and IT systems for the securities market and needed to have oversight on that spending.
“If the National Assembly thinks that it is not right, the government can fire the minister,” he said. “The government has its accountability-the commission must be controlled by the government.”
Keat Chhon said that the government does intend to have a fully independent committee in the future, adding that the government has started to train human resources for just such a purpose. He added that it is expected that only about 20 companies will be listed when the exchange opens in 2009.
Lawmakers approved the first three of the draft law’s ten chapters Tuesday. The debate is scheduled to continue today.