Entrepreneurs Still Fearful Of Investment In Cambodian Bourse
For many young Cambodians, the lack of knowledge about the basics of the capital market and how it works are the main reasons for them to avoid the country’s fledgling stock exchange – even if it offers them an opportunity to make money.
For 25-year-old Huot Sochea, an owner of three mobile cafes in Battambang, the Cambodia Securities Exchange (CSX) is nothing more than just a building in Phnom Penh for a few privileged companies. “There hasn’t been much publicity by the government on the CSX and many of my friends are still in the dark of what actually happens there. What we know is that there are only four companies listed,” said Sochea.
Despite being a business management graduate from Build Bright University in Phnom Penh, he remains skeptical of the CSX. “CSX officials should make a conscientious effort to be more open to the public. Lack of financial knowledge and the wrong perspective is what provides the foundation for this fear among young entrepreneurs to invest in the stock market,” said Sochea.
The Phnom Penh Special Economic Zone Plc. (PPSEZ) was the latest company to be listed on the CSX in May last year. PPSEZ’s listing on the CSX follows the listing of three other public companies – Phnom Penh Water Supply Authority, garment manufacturer Grand Twin International, and the Phnom Penh Autonomous Port. The Phnom Penh Water Supply Authority was listed in 2012, followed by Grand Twin International in 2014 and Phnom Penh Autonomous Port in 2015.
“If you want to learn something, you need to allocate some time to it and then put that knowledge into practice,” Sun Bunly, a 22-year-old banking and finance student from the National University of Management, told the Khmer Times. Bunly said that though he had attended lectures on capital markets and investing in the stock exchange, he had doubts whether those theories actually worked in the real world – in the midst of global uncertainties. “Don’t get me wrong. I am impressed with our CSX. But I want practical skills on how to play the market and make profits,” he said. “I am eager to learn and I think the CSX officials can do things better by explaining the mechanisms of the market to university students.”
But Lamun Soleil, director of the market operations department at the CSX, told the Khmer Times that the Securities and Exchange Commission of Cambodia (SECC) and the CSX have had seminars in several universities in Phnom Penh, including Norton University, Zaman University, Cam Ed, and the Economic and Finance Institute. “The SECC and CSX have also had workshops and seminars among students and young entrepreneurs in Kampong Cham, Prey Veng, Battambang, and Banteay Meanchey provinces,” added Soleil.
“Regarding stock markets, awareness just doesn’t come overnight. From our experience in Thailand, it took decades to create public awareness. How fast or slow it goes depends on the development of the market.” Soleil agreed that knowledge is power when it came to playing the stock market. “Spending a little time on history and market psychology could prove to be priceless,” he said.
For the moment, however, he pointed out that the CSX might not seem attractive due to the low profitability of the listed companies. “If this market could provide high returns as the real estate and other business sectors, the public will naturally flock to the CSX.”
In mid-2015, in a move to attract more investors to list on the bourse, the government launched a new listing platform called the Growth Board. This was another option of financing for small-and medium-sized enterprises (SMEs) who want to be listed on the CSX and which accounted for more than $10 billion in annual sales and 1.3 million jobs. But so far no small or medium-sized companies have applied to be listed. Nonetheless, incentives have been offered to the SMEs. Minister of Economy and Finance Aun Pornmoniroth told Khmer Times earlier that to encourage more SMEs to list on the stock exchange, the government has offered a tax incentive for firms that list their enterprises on the CSX before 2018. They will receive a 50 percent tax reduction on revenue for five years and a suspension of income tax each month, he said. “Listing companies on the CSX will enable enterprises to have more working capital in the long term, as well as strengthen the companies’ branding to build trust from involved stakeholders such as clients, suppliers and bankers,” added Pornmoniroth.
When mobile cafe owner Sochea was told of the opportunities for SMEs to be listed on the CSX, his interest in the capital market suddenly picked up. “If there are any seminars or workshops for SMEs in relation to the Growth Board, please do let me know. I hope my business will grow large enough soon, to be listed on the CSX.”