Cambodian bourse planned for 2009

By Amy Kazmin in Bangkok and Song Jung-a in Seoul

South Korea's stock exchange and the Cambodian government have agreed to set up a stock exchange in Phnom Penh in 2009, the latest signal of the optimism sweeping the fast growing but deeply impoverished country.
Even a few years ago the idea of a stock market would have seemed far-fetched in a country where three decades ago the radical Maoists of the Khmer Rouge abolished money and forced the entire urban population into the countryside in a drive to create an agrarian utopia.
But Cambodia’s economy is booming, having grown an average of 9 per cent a year for the past decade, propelled by surging foreign tourist arrivals, garment exports, construction and improvements in agriculture, and Phnom Penh is today keen for all the trappings of a modern economy.
Most of the capital financing Cambodia’s rapid growth has come from external sources, including foreign aid and growing foreign direct investment. A senior World Bank official in Phnom Penh said Cambodia would increasingly need to rely on domestic savings. Local bank lending is surging. Credit to the private sector rose 60 per cent in 2007.
“If Cambodia is to sustain high rates of growth, it is important that it manages to mobilise well its people’s savings,” the official said. “It is clear that the savings available for the stock market will initially be limited.”
In a statement on Tuesday, the KRX said that it planned to train Cambodians to set up the new bourse and to establish the market infrastructure this year. It said it would be ready to open the exchange next year.
The statement said the exchange would be 51 per cent owned by the Cambodian government, with up to 49 per cent held by KRX, although the detailed investment plans are still in progress. The two sides have signed a memorandum of understanding but not a final contract.
In spite of the rapid expansion, it is far from clear that Cambodia’s private sector, dominated by closely held family businesses, is ready to take the leap to go public. “The key issue will be to raise corporate governance standards,” the World Bank official said.