The Mirror, Vol. 13, No. 596 Wednesday, 21.1.2009
“Phnom Penh: The meltdown of the global economy, the lack of trust from investors, the lack of skills, the weakness of laws and of the judicial system, and corruption are considered by experts to be obstacles against the expected success of a stock market in Cambodia. This assessment is made as Cambodia plans to start the process of its first stock market in December 2009.
“It should be noted that a stock market is a gathering forum which allows investors and the general people to invest in companies that they trust, in order bring back profits for them. Those companies participating in a stock market can sell their shares to anybody and take the money like a loan for extending their activities, expecting profit; citizens can buy shares in order to become shareholders and co-owners of a shares selling company. Such clients can receive benefits, as long as the company makes profit.
“At present, the global economy is facing a crisis, and the stock markets of all countries are low, because many owners of shares sold their shares in order to recoup [as much as is left of their] original capital, and many other potential customers give up their intentions to invest in the stock market.
“The Chief Researcher of the Cambodian Institute for Cooperation and Peace, Mr. Chab Sothearith, said that the general loss of trust from investors will make it difficult for a stock market in Cambodia to take off.
“In should be noted that the Cambodian government announced a stock market project in September 2007 with Korea Exchange of South Korea, which put up 45% of the share capital as a partner immediately. After the announcement, the Cambodia Securities and Stock Exchange Law was adopted, and a Securities Commission of Cambodia was created, to encourage the creation of a stock exchange, which will issue shares and take action against companies that violate the law.
“However, stock exchange experts said that Cambodia still has a lot of shortcomings which are an obstacle for the progress of starting a stock exchange at the end of this year.
“An advisor of the National Accounting Council and finance professor of the Royal University of Economy and Law, Mr. Soum Chanthy, said that so far, Cambodia has very few stock market experts and does not have a proper and sufficiently complex technical basis to meet the operations of a stock market.
“In addition, Cambodia needs a firm legal system and courts with high capabilities to quickly and justly solve issues related to doing business in a stock market.
“Mr. Soum Chanthy added that although there is still one year left to create a stock market, Cambodia is not yet capable to meet all shortcomings mentioned above, making the stock market plan progress slowly.
“The director of the Cambodia Institute of Development Studies, Mr. Kang Chandararoth, said that while Cambodia has not yet an anti-corruption law, the creation of a stock market will provide high hazards, and losses will have to be faced by investors.
“The Cambodian government has not yet adopted an anti-corruption law for many years.
“Mr. Kang Chandararath went on to say that corruption can happen at state and private companies, like hiding facts in financial reports about capital, losses, and profits.
“It should be noted that part of success of a successful investment of capital depends on good governance and financial transparency of companies; their situation needs to be disclosed publicly; however, among more than 2,000 enterprises operating in Cambodia, less than 20% publish annual reports. This information comes from the National Accounting Council at the Ministry of Economy and Finance.
“A secretary of state of the Ministry of Economy and Finance, Mr. Ngy Tayi, agreed with the definition of the problems mentioned above, and he said that at present, the Ministry continues to encourage different companies to organize their reports properly before they are allowed to participate in the stock market. In the meantime, the director of the general commercial development project of Korea Exchange, Mr. In Myo Lee [phonetic], said that a stock market can help to reduce corruption in Cambodia.
“Cambodia wants to attract national and international investors from more than 400 companies to this stock market, but so far, according to Korean investors who are partners, there are only three state-controlled companies which plan to register something at the stock market of Cambodia.” Khmer Sthapana, Vol.2, #188, 21.1.2009