South Korean President Roh Moo-hyun on Monday asked the Cambodian government to intercede with North Korea and help secure a permanent peace on the Korean peninsula, according to Korean and Cambodian officials.
“The president asked Samdech [Prime Minister Hun Sen] to be a mediator for the two countries, north and south, and to tell [North Korea] that South Korea never wished to threaten the lives of any Korean people,” government spokesman Khieu Kanharith told reporters.
In their hour-and-a-half meeting at the Council of Ministers, Roh Moo-hyun and Hun Sen also discussed business, most notably a new $31-million loan from South Korea for information technology development. The two nations also announced an agreement to undertake a three-year feasibility study for the development of a Cambodian stock exchange.
How Cambodia might contribute to peace on the Korean peninsula remains unclear. Khieu Kanharith declined to provide any specifics on who from the Cambodian government might visit Pyongyang and when. But he added that the Cambodian government will do its best to act as a messenger of peace.
Cambodia, along with most of the international community, condemned the nuclear test North Korea conducted last month, but the country has long enjoyed a special relationship with North Korea, due largely to the role of retired King Norodom Sihanouk, who has a palace in Pyongyang.
“Cambodia, a member of Asean, is important to Korea as it maintains diplomatic missions in both Seoul and Pyongyang,” the South Korean government said in a statement.
North Korea has had diplomatic relations with Cambodia since 1964, while South Korea withdrew diplomatic relations in 1975 after Cambodia fell to the Khmer Rouge and only restored them in 1997, according to the Korean Overseas Information Service.
So far, Cambodia has benefited richly from the growing friendship with South Korea. In 2005, South Korea invested $219 million in Cambodia and two-way trade volume was $150 million, with the vast majority of it flowing from South Korea into Cambodia, according to the Korean Overseas Information Service.
On Monday, Cambodia’s Ministry of Finance and Korea Exchange Inc, a private company which operates the South Korean stock exchange, signed a memorandum of understanding to complete a three-year study of the feasibility of developing a joint-venture stock exchange in Cambodia, officials said.
The cost of the study, which is not yet known, will be covered by the Korea International Cooperation Agency, the Korea Exchange and the Cambodian government, said Hang Chuon Naron, secretary-general of the Finance Ministry.
A functioning, well-regulated securities market in Cambodia would radically change the way large infrastructure projects, which currently depend on foreign aid and commercial bank loans, are financed, Hang Chuon Naron said. A stock exchange would also allow Cambodian businesses to access more money from more places, he added.
Many hurdles remain to the implementation of a stock exchange, but if all goes well it could be launched around 2010, Hang Chuon Naron predicted.
“The main challenges are to raise the standard of the corporate sector and make it open and transparent,” he said. In addition to strengthening accounting and improving Cambodia’s legal infrastructure, he said the advent of publicly traded companies would require greater accountability.
“This is investment by the public and the companies have to be accountable to the public,” he said.
In addition, two key laws for the development of a domestic securities market have yet to be signed. A draft of the Cambodian Government Security Law, which would facilitate the creation of a government bond market, is currently before the National Assembly. The Law on the Issuance and Trade of Non-Governmental Securities, which would establish a stock exchange and a regulatory body for the exchange, is being discussed at the Council of Ministers, Hang Chuon Naron said.
He said a number of investment banks interested in underwriting Cambodian government securities had already approached him. Cambodia, he added, is currently in the process of getting a credit rating from rating agency Standard & Poor’s, which is crucial for determining how much interest the Cambodian government would have to pay on future government bonds.
Also on Monday, Finance Minister Keat Chhon signed an agreement with Cheon Sik Yang, the chairman of the Import Export Bank of Korea, under which Cambodia will receive a $31 million loan at 0.5 percent interest to extend the government’s information technology system into the provinces.
Roh Moo-hyun and Hun Sen also discussed South Korea’s ongoing rehabilitation of National Route Three and the $26.7-million loan South Korea gave Cambodia earlier this year for water resource development, officials said.
Asked what South Korea hoped to achieve in Cambodia, Jung-Young Ryoo, a spokesman for the country, replied: “Friendship. Only friendship.”