Stock market likely to miss 2009 deadline: govt official
Written by Kay Kimsong
Friday, 16 May 2008
Cambodia is likely to miss its deadline to establish a stock exchange
by 2009, a top finance ministry official said, adding that the
country=92s nascent business sector is still too chaotic and dominated
by secretive, family-run business groups to sup****t a transparent
bourse.
=93There are many who are urging us to have a [stock] market soon =85 but
there are many challenges in terms of laws that we are lacking, as
well as the performance and management of companies,=94 said Kao Thach,
head of the financial markets unit at the Ministry of Economy and
Finance.
One of the biggest obstacles, according to Thach, are the private
companies that might eventually list on an exchange.
Most operate in a shadowy world of back rooms and closed bids, and are
not likely to submit to the rigorous auditing required to go public,
he said.
=93The ministry wants [these companies] to prepare themselves=94 to list,
he said.
=93I urge business people to think about international financial
re****ting standards =96 this is the common language for publicly listed
companies,=94 he said.
=93Right now is the time for those who want to be publicly listed to
change the way they manage their companies =85 and put their businesses
in control of members of a board,=94 he said.
In September, the government began requiring some 400 businesses to
submit their financial statements to independent auditors in one of a
series of steps it says is necessary to open a stock market.
Cambodia last year also approved legislation on the issuance of bonds
and partnered with South Korea, which provided the country with $1.8
million in assistance with the hopes of opening a bourse next year.
The aim, according to government officials, is to attract foreign
capital =96 Cambodia attracted only $483 million in foreign direct
investment in 2006, compared to billions of dollars in neighboring
Thailand and Vietnam =96 and broaden Cambodia=92s prohibitively narrow
economic base.
Despite an average of 11 percent growth over the past three years, the
impoverished country=92s is small and heavily reliant on only the
garment sector, which accounts for nearly 80 percent of all ex****ts.
Private sector officials agree that Cambodia has many hurdles to
overcome before establi****ng a stock exchange, saying that financial
laws in particular need to be strengthened.
=93The stock market is not a place where businesses can cheat each other
=96 it is a place for public enterprises to make a fair profit,=94 said
Key Kak, chairman of the accounting firm Morison Kak & Associes.
=93The question is =85 can the authorities monitor and crack down on
people who intend to cheat others in business,=94 he added, also urging
companies to agree to open their books to scrutiny.
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=93Right now is the time for those who want to be publicly listed to
change the way they manage their companies.=94
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=93We are no longer an isolated market,=94 he said. =93We can no longer
operate using different business practices from other countries in the
region =96 we have to meet certain standards.=94
According to Kim Ju Kyung, chief operations officer with the Cambodian
Development Specialized Bank, Cambodia has significant potential for
capital market growth, but that depended on companies=92 participation
in the stock market =96 something that could be severely impacted by the
corruption that continues to plague the country=92s business sector.
=93Corruption creates a bottleneck for financial market development,=94 he
said.
=93Surely, corruption is one of the obstacles facing investment here =96
it will slow down business activity,=94 he added.
Cambodia consistently ranks near the bottom of the list in the German
organization Transparency International=92s annual corruption index of.
In 2007 it was listed 162 out of 179 countries, the group said.
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