PHNOM PENH, Feb. 13 (Xinhua) -- Experts have express their doubt and lack of confidence, as the Korea Exchange (KRX) plans to sign an official agreement with the Cambodian government next week to help launch the kingdom's proposed stock exchange market in December, national media said on Friday.
Some observers warned that the timing of the initiative could create problems as Cambodia faces reduced economic growth, increased unemployment and the threat of rising non-performing loans, said English-language daily newspaper the Phnom Penh Post.
"I think that currently, the environment is not good enough to proceed with the stock market in Cambodia," Kang Chandararot, economist and president of the Cambodia Institute for Development Study, told the newspaper.
Cambodia would risk losing investors' confidence, if it rushed prematurely into establishing an exchange, he said.
Nguon Meng Tech, director general of the Cambodia Chamber of Commerce, urged the government to postpone launching the exchange until 2012, saying that not enough Cambodian investors understood how a bourse worked.
"Most Cambodian business old hands have little knowledge about a stock exchange. So, how can they throw money at it?" he said.
Meanwhile, Minister of Finance and Economy Keat Chhon said on Thursday that "we will put our efforts into achieving a (December) target" although the government could not "set an official date for the establishment of the stock market."
"The global financial crisis, of course, impacts the stock market. But we won't abandon our plan to establish an exchange due to the crisis," he said.
KRX manager Inpyo Lee expected institutional investors and foreigners to be the main source of liquidity in the early stages of the Cambodian exchange.
Although there had been no formal agreements signed, investment and retail banks had expressed interests as institutional investors, he said.
About 30 companies would be listed by the time the exchange was operating "normally," he said.
The stock exchange market was mulled and prepared years ago amid common prosperity and development of the country, but finally came into shape as the national economy slowed down right after 3 years of double-digit growth from 2005 to 2007.
The Cambodian economy was estimated to grow by only 7 percent in 2008 and the government is trying to maintain a 6 percent growth in 2009.
However, the International Monetary Fund (IMF) said that Cambodia's economy will come under intense pressure in 2009 as tourism, garments and construction take a hit from the global economic meltdown.
"Cambodia's exceptional growth performance is coming under increasing strain from the global economic crisis and weakening external demand", said an IMF report, adding that foreign direct investment will decline and foreign reserves could fall to about 1.9 billion U.S. dollars.
The report predicted 4.8 percent economic growth for Cambodia in 2009.
The World Bank has forecast 4.9 percent Gross Domestic Products (GDP) growth for Cambodia this year.
| Editor: Bi Mingxin |
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