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The Kingdom’s securities market poised for even stronger growth

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Deputy prime minister and Minister of Economy and Finance Aun Pornmoniroth (second right). SUPPLIED

The Kingdom’s securities market poised for even stronger growth

Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth’s speech to mark the 10th anniversary of the CSX.

I would like to congratulate HE Dr Hean Sahip, secretary of state at the Ministry of Economy and Finance, and chairman of the board of the Cambodia Securities Exchange (CSX), HE Sou Socheat, the director-general of the Securities and Exchange Regulator of Cambodia (SERC), and HE Hong Sok Hour, the CEO of CSX.

I would also like to applaud the management, staff and all stakeholders who have worked so hard to develop the securities market in Cambodia, which is expected to only grow even stronger in the future.

According to economic theory, the securities sector can contribute to the development of the national economy by increasing the efficiency of mobilising and allocating capital from economically capable financial agents to economic agents that need financing.

A flourishing securities sector will provide an alternative source of capital for business owners in general and create a source of income for individuals and economic entities, who can better diversify their investments.

In this regard, the securities market development project in Cambodia started under the high initiative of Samdech Akka Moha Sena Padei Techo Hun Sen, Prime Minister of the Kingdom of Cambodia.

The Prime Minister appointed a working group at the Ministry of Economy and Finance to study the possibility of establishing this securities market in 2006 under the direct leadership of HE Dr Keat Chhon, former Permanent Deputy Prime Minister and Minister of Economy and Finance.

The securities sector in Cambodia officially started with the introduction of the Law on the Issuance and Trading of Public Securities in 2007 and the launch of the Securities and Exchange Commission of Cambodia in 2008 and various players in the securities sector.

Protecting public interest

CSX was established as a joint venture between Cambodia, represented by the Ministry of Economy and Finance, and the Korea Securities Exchange in 2010, with the first securities trading – Phnom Penh Water Supply Authority – launched on April 18, 2012.

To develop the securities sector, the government, with the Ministry of Economy and Finance, is committed to supporting this sector through tax incentives for issuers and investors, aiming to protect the public interest and prepare regulations that are favourable to securities activities.

The government will continue to pay attention to this as well as consider additional mechanisms so that this market can fulfil its role in attracting capital and promoting investment activities in the national economy more broadly and more effectively.

The government has provided incentives – such as income tax reductions for listed enterprises on sales, both equity and bonds, tax deductions, and withholding tax on interest on dividends and bonds – since CSX was launched in 2012
until now.

It will continue to uphold this encouragement until it reaches an acceptable level of development.

The government also plans to issue sovereign bonds in 2022 to create a new source of financing for the state, as well as to create new financial instruments for investors in the securities market, especially institutional investors, such as banks and insurance companies, as well as pension and social security funds.

These new financial instruments are expected to be popular for trading on the CSX and provide a benchmark for corporate securities trading and financial analysis as implemented in developed markets.

Driving force

The glow of peace over the past two decades is an invaluable achievement brought to our people and our nation by Prime Minister Hun Sen.

In addition to building countless physical achievements, the government has also been striving to develop and implement a series of policies and measures to address all challenges, both economic and social in aim, to ensure a favourable business and macroeconomic environment.

It has also been working to ensure financial stability for attracting investment and promoting trade, especially to accelerate diversification and strengthen the competitiveness of the Cambodian economy.

The government has always considered the private sector as an indispensable partner and a driving force in driving economic growth.

In this regard, in addition to the securities exchange mechanism that is the subject of this conference, a number of other initiatives have been launched to support the private sector.

These include the establishment of the Entrepreneurship Development Fund, the new Techo Startup Center to support start-ups, and the Small and Medium Enterprise Bank of Cambodia, as well as the launch of the “Small and Medium Enterprise Support Financing Project”.

The establishment of the digital CamDX facilitates business registration, while the establishment, in particular, of the Government-Private Sector Forum and related mechanisms, under this forum, improve the ease of doing business
in Cambodia.

We have navigated the Covid-19 pandemic with a number of measures, particularly the government’s effective Covid-19 vaccination campaign, and with the involvement of all stakeholders, both nationally and sub-nationally.

Under the right leadership, with the careful long-term vision of Prime Minster Hun Sen, Cambodia has been able to fully reopen its society and economy in all areas.

However, there remain risks and geopolitical tensions, particularly the war between Russia and Ukraine, which is bringing serious negative consequences and continues to put pressure on the recovery path of the global economy.

The disruption of key inter-connected processes of global production chains and rising energy prices, as well as the decline of some major economies, has led to an increase in the prices of goods.

In this context, the government continues to commit to accelerate the progress of implementation and deepen reform work aimed at building stronger economic resilience.

The government has set out the “Strategic Framework and Programmes for Economic Recovery in the Context of Living with the Covid-19 in a New Normal 2021-2023” to revive the Cambodian economy now and in the medium term.

It also aims to strengthen resilience for sustainable and long-term socioeconomic development, and inclusion.

The importance of the digital revolution – Digital Transformation – in the public and private sectors has also been highlighted to accelerate the recovery of the national economy.

Remarkable growth

With the remarkable growth of the CSX and significant developments over the past 10 years, as reported by HE Hong Sok Hour and HE Sou Socheat, I would like to make some recommendations in order to accelerate and strengthen the development of the securities market:

Continue to increase the dissemination of the benefits that the Royal Government of Cambodia has been providing to listed companies, especially tax incentives for the securities sector and tax relief for listed companies through new mechanisms and the latest technology.

Observe and seize new opportunities in the financial technology system to accelerate market development through the digitisation of CSX’s and SERC’s mechanisms.

These aim to provide convenience and speed, while being manageable for investors and listed companies, as well as seize opportunities for the rapid development of financial technology systems to diversify financial products for the market and expand the services of CSX to unlisted companies, such as securities depository mechanisms.

Organise, with all the relevant stakeholders of the securities market, detailed activities in the context of the current global economic situation as well as the rapid development of financial technologies for the development of the securities market for the next 10 years through the preparation and launch of the 10-year strategic plan for securities sector development. I have already asked the SERC to lead this task.

The development of the securities sector requires time and participation from all players, both public and private.

Therefore, I sincerely hope that all actors will cooperate with CSX and SERC to further promote the development of this market in accordance with government’s policies, strategic marketing development plans and the market, as well as the laws and regulations in force.

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