Released : Monday, July 11, 2011 1:32 AM
PHNOM PENH, Jul 11, 2011 (Xinhua via COMTEX) -- by Nguon Sovan
Cambodia on Monday inaugurated the long-awaited stock market in optimistic hopes to mobilize long- term financial resources to boost the country's economic development.
Speaking during the launching of Cambodia Securities Exchange ( CSX) at its head-office located in the kingdom's tallest building, Canadia Tower, the Minister of Finance Keat Chhon, chairman of the Securities and Exchange Commission of Cambodia (SECC), which is the regulator for the CSX, said that the launching is a milestone for Cambodia financial sector and also a new national pride of Cambodia.
"Finally, the CSX is created," he said. "The inauguration is the evidence of the readiness of CSX to start the first securities trading by the end of this year."
The CSX is a securities market operator, a securities clearing and settlement facility operator, and a depository operator.
"The stock market would be a long term source of capital for companies' development and be a boost to the country's economy," he said.
Keat Chhon added that three state-owned enterprises -- Sihanoukville Autonomous Port, Telecom Cambodia and Phnom Penh Water Supply Authority -- have been preparing Initial Public Offering (IPO) to list and trade on the CSX from the end of this year.
Kim Bongsoo, chairman and CEO of the Korean Exchange, said the CSX will be very important to attract capital from local and foreign investors to develop businesses.
"With good preparedness by the government of Cambodia and Cambodian officials under the support from the Korean Exchange, I believe that the CSX will operate smoothly and successfully," he said. "However, to run it in a full-swing operation, it needs a long term period -- the Korean Exchange is committed to helping the CSX to be as high standard as other stock markets in the world. "
However, the director general of Cambodia Chamber of Commerce Nguon Meng Tech said the government should not rush to open the stock market and added that to launch an internationally recognized stock market in Cambodia, it should take "another five years" to prepare.
"In my point of view, it's still not the right time for this country to open the market because of low public confidence and limited human resources," he told Xinhua.
He explained that most businesses in Cambodia are in family business forms and they have no knowledge at all with the stock market, so it should take more time to build confidence among them first.
Moreover, the knowledge and expertise abilities of the SECC officials are limited, so it's easy to expose to risks, he added.
The plan to open CSX was initiated by Korean Exchange in 2007. The CSX is a joint venture between the Korean Exchange, holding a 45 percent stake and the government of Cambodia, owing the remaining 55 percent.
The schedule to launch the market had been postponed twice -- in 2009 and 2010.
The following are some useful information about the bourse.
CURRENCY USE
The CSX uses Cambodian riel. The issuing securities shall be inscribed as riel currency and the quotation on securities in the trading system of CSX shall be conducted in riel currency.
The clearing and settlement facility in the primary market and the secondary market shall be used in rile currency, but during the first three years since the date of the establishment of the CSX, the clearing and settlement facility in U.S. dollar currency will be allowed in order to encourage investors to enter the market.
TAX INCENTIVES FOR COMPANY LISTING ON THE STOCK EXCHANGE
For firms listing on the CSX, the Tax on Net Profit would drop from 20 percent to 18 percent, while the withholding taxes on interest and dividends would both drop from 14 percent to 7 percent, for the first three years, according to the regulation issued by the Ministry of Economy and Finance dated on April 22, 2011.
CRITERIA FOR COMPANIES WANTING TO LIST IN THE CSX
For a company who wants to list in the stock market and issue the Initial Public Offering (IPO), it's required to have the minimum capital of 10 billion riels, or 2.4 million U.S. dollars and the last annual minimum net profit of 1.5 billion riels, or 361,445 U.S. dollars as well as the minimum net profits for the last three years worth 3 billion riels, or 722,891 U.S. dollars, according to the regulation of the SECC.
Also, the company must issue at least 300,000 units of bond, of which a unit worth 4,000 riels, or 1 U.S. dollar par value.
(c) 2011 XINHUA NEWS AGENCY
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