The private sector applauded the establishment of the Non-Bank Financial Services Authority (NBFSA) following Senate approval of a draft law on its organisation and function.
Greenlit at a Council of Ministers meeting presided over by Prime Minister Hun Sen on September 4, the draft law on the organisation and functioning of the NBFSA aims to unify all non-banking regulators and manage the rapid growth that the sector has enjoyed in recent years.
The 57 senators unanimously approved the bill at the 6th Senate Session on December 21 after getting the National Assembly’s nod on November 25. It comprises five chapters and 25 articles.
Ministry of Economy and Finance spokesman Meas Soksensan told The Post that the non-banking financial sector is currently under the jurisdiction of two regulators, his ministry and the Securities and Exchange Commission of Cambodia (SECC).
With the Cambodian financial sector constantly developing new services and products powered by globalisation, it has become more difficult to ascertain the individual regulators’ jurisdiction under which they fall, he said.
“In this sense, in response to actual need and in acknowledgment of the importance of this merger of non-bank financial regulators, the government drafted a law on the organisation and functioning of the NBFSA to integrate the mechanisms of management and control of the sector.
“This is to strengthen and ensure the effective management, control and development of the non-banking financial industry, as well as promote the development and use of financial technology in the sector,” Soksensan said.
He noted that the sector encompasses insurance, private pensions, securities, social security, project-bidding management, accounting and auditing, real estate and mortgages.
In Channy, president and group managing director of ACLEDA Bank Plc, expressed his appreciation for the central authority, which he said will make it easier for operators to communicate.
“I welcome the establishment because the sector is growing faster now and requires a clear regulator to manage or enact policy, akin to the one we have in the banking and financial sector – the National Bank of Cambodia,” he said.
Shin Chang-moo, president and CEO of South Korean-owned Phnom Penh Commercial Bank Plc (PPCBank), said the ultimate function of a financial regulator is to secure prudent management in business operation, finance and risk, ensuring that financial consumers are well protected and the industry and economy as a whole will grow soundly and in harmony.
Efficiency-wise, an integrated form of a regulatory body can be found among “advanced regimes”, he said, noting that even they had gone through histories of separation and integration.
“I personally believe that the government established the right path to develop the Kingdom’s financial sectors for the long-term perspective.
“I hope there will be more projects and opportunities for various public sectors including the newly approved NBFSA to collaborate and share knowledge, experience and expertise,” Shin said.
As of September, Cambodia Insurance Association had 31 members – 15 in the general insurance category, 11 life insurance players, four micro-insurance companies and one reinsurer.
While general insurance increased by 18.2 per cent and the life insurance segment grew 2.8 per cent, micro insurance fell 21.7 per cent in the third quarter of last year, the association said.
At the same time, the total assets of all insurers as of the first half of 2020 amounted to some $678 million, of which 63 per cent was injected into the banking system in Cambodia in the form of deposits.
Meanwhile, capital investment in the construction sector in the first nine months of 2020 fell 9.6 per cent to $5.868 billion from $6.494 billion in the corresponding period of 2019, the Ministry of Land Management, Urban Planning and Construction reported.
It said it approved 3,739 construction projects (covering 12.91 million sqm) during the period, up 306 or 8.9 per cent from the 3,433 (on 13 million sqm) given the green light during the same time last year.