The Cambodian government and business sector has indicated its willingness to create a functioning stock market within the next three years in an attempt to raise capital investment in the domestic market, instead of relying solely on foreign aid, government officials and analysts said Wednesday.
Government officials agree that now is the time to begin the necessary training.
“If Cambodia is willing to start right now, I believe Cambodia will possibly be able to start up by 2005,” said Bit Seanglim, the economist who heads the a five-member working group created by Prime Minister Hun Sen in July 2000 that is tasked with assessing the country’s readiness to form a stock market.
“You can not run a country dependent only on foreign aid,” said Ruediger Vaon Rosen, an economist with the German university Deutches Aitkeninstitut. “Cambodia must also raise capital through a domestic stock market.”
Vaon Rosen pointed out that Vietnam experienced many problems when it first started preparing to establish its stock market in 1994. The market did not open for business until 2000 and when it did open, only two companies were traded. Today there are 14 member companies and by the end of this year that figure is expected to jump to 30 companies, he said.
Vaon Rosen said he believes the main task will be ensuring the shareholders have confidence in the brokerage companies that handle their stocks, and also in the stock market as a whole.
“If I were a shareholder, I would want to be sure that my money is safe and that I am able to make money from my money and that I can take it out of the market,” he said.
Laws covering corporations, contracts and bankruptcy need to be strengthened and the private sector must develop a proper accounting system and transparent auditing systems.
Bit Seanglim indicated one problem might involve reluctance by privately owned companies to make their financial records available, as they must when they are publicly traded.
As in other stock markets, companies will be required to meet a minimum capital investment. In Vietnam, that minimum investment is $1 million. In Cambodia, Vaon Rosen said that figure will be at the discretion of the government. “If we were to start today,” said Bit Seanglim, “the stock market would be under the supervision of the National Bank of Cambodia.”