At the first Capital Markets Summit Forum in Cambodia, Cambodia Securities Plc. and international experts discussed ‘What role does the Cambodian capital market in the overall economic and industrial development?’. The discussion was very insightful.
Mr. Jack Lee, Founder and CEO of Smile Shop the Leading E-Commerce Platform in Cambodia saying: “I think the role of the capital market in the overall economic development is like the yeast that causes the dough to ferment, with this yeast, the dough can be fermented quickly, and the same with the capital market, which plays the role of a catalyst to accelerate the overall economic and industrial development.”
So, what role does the capital market play in overall economic development?
Diversification of Financing Channels to Facilitate Enterprise Development
The capital market is an important place for asset allocation and plays an increasingly important role in the financing structure of enterprises. As an important platform for direct financing of enterprises, the capital market can help enterprises get rid of the traditional single credit financing method, provide diversified financing channels for enterprises, greatly enhance the financing ability of enterprises, and become a powerful booster for enterprise development.
International experts Mr. Jack Lee pointed out that financing through equity and bond issuance are important channels for the capital market to provide financing for enterprises, which are listed on the Cambodian Securities Exchange to attract funds from domestic and foreign investors to achieve rapid expansion, improve and enhances the company's visibility and brand image, and strengthens its market competitiveness.
“As an entrepreneur, I am fortunate to have received some investment through the financing channels of the Cambodian capital market. In my opinion, at this stage, it is easier for Cambodian enterprises to secure financing through bond issuance. The importance of the capital market for corporate financing is unquestionable.”
In addition, he also pointed out that the capital market can gather a large amount of idle funds in Cambodian society, providing more financial support for the investment and development of small and medium-sized enterprises.
With the strong support of the Securities and Exchange Regulator of Cambodia and the Cambodia Securities Exchange, Cambodia Securities Plc., have launched the Small and Medium-sized Enterprises (SME) program to help SMEs secure financing and support the development of small and medium-sized enterprises in Cambodia.
In addition, the Cambodian Royal government has cooperated with Cambodia Securities Plc. and other financial institutions to launch a joint financing mechanism for small and medium-sized enterprises (SMEs). Since February 2020, the Cambodian Royal government has provided low-interest loans to SMEs through partnerships with SMEs banks, commercial banks, and microfinance institutions to solved the funding problem in the development of SMEs. So far, nearly 2,500 SMEs have received convenient financing support, with a total amount more than USD 200 million.
Allocation of different financing distribution networks can help promote enterprise development
The capital market, as an important hub for the high-level circulation of technology, capital, and industry, serves as a channel for optimizing industrial structure allocation. It plays a crucial role in the development of industrial scale and the upgrading of industrial structure in Cambodia.
“I believe the role of the capital market in overall economic development is similar to that of yeast in making dough rise. With yeast, the dough can rise quickly; likewise, the capital market acts as a catalyst in the overall economy and industrial development, accelerating both economic and industrial growth,” Mr. Jack Lee said so.
The capital market, as an important platform for resource integration, plays a crucial role in accelerating capital and industrial concentration in Cambodia.
As of the first half of 2024, Cambodia has a total of 46 economic zones, with 745 investment projects attracting a total investment of 8.9 billion USD. These zones have attracted numerous companies from countries such as China, Japan, and South Korea. The concentration of these companies has led to the rapid development of supporting industries within the zones, forming a complete industrial chain.
At the same time, the substantial influx of capital has provided the necessary funding and technological support for the industrial upgrading of Cambodia's economic zones. This has effectively accelerated the country's transition from labor-intensive industries such as textiles and garments, luggage and leather goods, and wood manufacturing, to high value-added, innovative, and competitive technology-intensive industries such as automotive parts and tires, photovoltaic materials, hardware machinery, building materials and home furnishings, and biopharmaceuticals.
Regulate business operations and promote the healthy development of the overall economy
The capital market not only provides funding and financing channels for enterprises, but also plays an important regulatory role in corporate governance.
Mr. Jack Lee emphasized: "To be listed companies are required to be under the supervision of the Securities and Exchange Regulator of Cambodia. They must establish sound corporate governance structures and disclose corporate information, which will help improve transparency and promote the long-term development of the company."
Firstly, the capital market requires enterprises to establish sound corporate governance structures and internal control systems, strengthening financial management and risk control.
Secondly, the capital market effectively promotes the standardization and transparency of corporate information disclosure. The Cambodia Securities Exchange clearly mandates that listed companies must disclose information truthfully, accurately, and comprehensively, with severe penalties imposed on companies that engage in false disclosure.
Moreover, the capital market will encourage companies to strengthen their awareness of social responsibility. Some listed companies in Cambodia actively participate in social welfare activities, contributing to local causes such as education, healthcare, and environmental protection.
By going public, companies can not only build a strong market image and brand reputation, reduce operational risks, and improve management efficiency, but also promote sustainable development, gain favor from the capital market, significantly enhance competitiveness, and increase opportunities for international cooperation.
Looking at the history of the development of international capital markets, the economic rise of many countries has been closely linked to the strength of their capital markets. Wall Street in the United States is regarded as the global financial center, and its developed capital markets have laid a solid foundation for the long-term prosperity of the U.S. economy. In the late 19th and early 20th centuries, the U.S. capital markets provided substantial funding for industries such as railroads and steel, driving the industrialization process in the country. Similarly, China's capital markets have played a significant role since the reform and opening-up, making an important contribution to the development of Chinese enterprises and the rapid growth of the economy.
In recent years, the Cambodian Royal Government has attached great importance to the development of the capital market and has taken a series of proactive measures. On one hand, it has strengthened the infrastructure of the capital market, improved the legal and regulatory framework, and enhanced the transparency and standardization of the market. On the other hand, it has introduced a series of preferential policies to attract both domestic and international investors to participate in Cambodia's capital market.
Currently, Cambodia's capital market is showing a positive development trend. The establishment of the Cambodia Securities Exchange has provided enterprise with an open and transparent financing platform. More and more companies are paying attention to and preparing to enter the capital market. So far, 23 companies have publicly issued stocks and bonds, raising a total of approximately 400 million USD. Since 2018, the market trading volume has increased by 14 times.
At the same time, foreign investors have shown strong interest in Cambodia's capital market, actively seeking investment opportunities. According to a report from the Cambodia Securities Exchange in July 2024, the exchange is opening an average of 800 to 900 new accounts per day, with an average daily trading volume of approximately 260,000 USD in stocks.
In summary, the development of the capital market plays a crucial role in the overall economy and industrial development of a country. Looking at the development history of major global economies, the capital market has played a key role in all of them. Currently, Cambodia places great emphasis on the development of its capital market, actively introducing relevant policies and carrying out tax reforms to promote its growth.
According to Mr. Darren Teng, Managing Director of Cambodia Securities Plc., based on his extensive experience in international capital markets, he predicts that a wave of company listings will occur in Cambodia within the next 2-3 years. As one of the key drivers of Cambodia's securities and capital markets, Cambodia Securities will continue to make every effort to promote the development of the capital market, thereby driving the overall economic growth of Cambodia.
About Cambodia Securities Plc.
Cambodia Securities Plc., is the first fully licensed securities underwriting firm in the Kingdom of Cambodia to focused on investment banking as its main business since the reform and opening of the securities exchange. The company has obtained significant business licenses in the securities sector issued by Securities and Exchange Regulator of Cambodia (SERC), including underwriting, dealing, brokerage and investment advisory services in the securities sector and other similar financial businesses. which makes this company the first securities company in Cambodia capable of providing services to investors both buyers and sellers.
Cambodia Securities Plc., offers clients a range of services, including pre-listing guidance, mergers and acquisitions, financial advices, corporate consulting, corporate governance systems, and underwriting services to assist issuers in raising funds through public offering of equity securities or bonds. The company also provides a research team to facilitate the application for investors identification and trading account as well.
In addition, the company provides useful services such as brokerage services for stock market trading, investment advisory services and including underwriting guidance. It also facilitates collective investment plans, offering funding, Pre-IPO investments and real estate, while establishing connections with local and overseas partners with extensive business experience.
As one of the main promoters of Cambodia's capital market, Cambodia Securities Plc., will effort to promote the development of the capital market with the support of the government, our company also organized the Cambodia First Capital Market Summit Forum. This professional forum will draw the attention of international investors to Cambodia while also assisting local businesses in raising funds effectively.
What role does the capital market play in the overall economic and industrial development?