The National Bank of Cambodia is aiming to open a stock exchange here by 2007, officials said Thursday, though many business specialists think the country is not ready.
Government economists had previously said a stock market could be up and running by 2005, but that has been revised.
“A stock market will help improve the economy,” said Tal Nai Im, director general for the National Bank of Cambodia. “It will help with raising capital for investment.”
The bank is working with the Ministry of Finance to strengthen accounting standards in the country’s banks, private companies and state-owned enterprises. National Bank officials said a draft law to form a stock market is floating around the Ministry of Finance, though they were not clear when the law might make its way to the National Assembly.
“I believe that when a stock market is ready, local companies won’t hide their financial reports,” Tal Nai Im said.
But private sector representatives fear that investors won’t have the confidence in the accounting and auditing procedures of firms that may be listed on the proposed exchange.
“If the public believes that the banking system is unreliable…the stock market won’t happen,” said In Channy, general manager of Acleda Bank. “A stock market needs honest people and transparent companies.”
Tim Smyth, managing director of Indochina Research, agreed.
“Common accounting rules and proper auditing procedures are a prerequisite for a stock market,” he said Thursday. “Accounting rules and auditing bodies need to be trusted or it may as well be a card game.”
The recent rejection of Nagacorp Ltd from listing on the Singapore stock exchange’ may not bode well for a Cambodian stock exchange.
The Monetary Authority of Singapore rejected Nagacorp, which had hoped to be the first casino operator in Cambodia listed on the exchange, because it failed to address concerns about money laundering, the Associated Press reported at the time.
Sok Kong, president of Sokimex, the country’s largest petroleum company, said Sokimex would be listed on the Cambodian stock market if it is in place by 2007, but he feared the stock market will not be successful.
“I think we need to have good policy and good laws,” he said.
Right now, he said, the country lacks many laws, human resources and standardized prices necessary for a stock exchange to function properly. Nevertheless, government officials were optimistic that the National Assembly would adopt the stock market law within two years.
All companies will be required to practice the same accounting standards in 2005, paving the way for a stock market to become a reality, Mey Vann, deputy director of the Finance Ministry’s financial industry department, said on Thursday.
“The money that people used to hide under the mattress will be invested into the stock market,” he said.