Government and private sector representatives expressed near-unanimous support at a May 30 presentation at the Sunway Hotel on initiatives to create a Cambodian stock exchange (CSE) by as early as the end of 2003.

The presentation's approximately 200 participants heard a progress report by Dr. Bit Seanglim, Chairman of the Securities and Exchange Regulation Working Group, and urged the government to hasten the implementation of the legal framework necessary for the successful launch of a Cambodian stock market.

"I'm totally pro-stock market [because] I think its the future of Cambodia... no one can stop it [being created], not even the Minister of Finance," said panel member Chris Ho, General Manager of Phnom Penh's Monorom Holiday Villa. "It's the future of Cambodia, especially within Asean and the fact that the Vietnam Stock Exchange started a few months ago means that Cambodia must establish a securities exchange as well."

First mooted by the government in 1995, the creation of a stock market was hailed as a key element in poverty reduction, economic development and the introduction of international business and accounting practices in the Kingdom.

"Cambodia in the medium term needs [a stock exchange] and by creating one there will be more pressure to solve the country's problems such as the need for a minimum of accounting standards, transparency and auditing," said panel member Peter Koppinger of the Konrad Adenauer Foundation. "A stock exchange is a good mechanism to create a new mechanism of clean business."

Dr. Bit Seanglim also emphasized the role a stock exchange could have in creating and nurturing a still-nascent Cambodian middle class.

"Cambodia has a young population but it will grow old fast and the government needs to provide another avenue for people to invest their savings," he said.

Seanglim told the meeting that the first companies chosen to be listed on the exchange would come from a short list of the top 200 companies in Cambodia.

Although Cambodia's draft securities law has passed its first simple review by the Council of Jurists in May, Seanglim distanced himself from initial predictions that the new CSE could be operational by 2003, stressing that "serious" public and private sector education was necessary prior to the start of trading.

"A stock exchange is not a casino, it's a place where all information has been disclosed by all companies and it's not a game of chance, it depends on research and analysis," Seanglim said.

"I think we might need at least three years after the [securities] law is finished for education and training."

The need for training and education was also emphasized by Kottinger, who said that "crucial problems" in Cambodian business culture needed to be addressed in order for the CSE to succeed.

"There's a need for a change in the culture of companies who want to be listed [including] a complete upgrade of accounting methods and orientation," Kottinger said. "At the moment, to be fair, the advantages of being non-transparent are so huge it will be difficult to attract companies [to join the CSE]."

Participants at the seminar also questioned whether Cambodia's shaky legal framework and institutionalized official corruption made the current timing in preparing for a stock exchange inappropriate.

However Isabelle Allen, a spokesperson for the International Securities Consultancy, a private company which specializes in assisting countries to develop stock exchanges, said such concerns could delay indefinitely the creation of the CSE.

"Every country [when preparing the creation of a stock exchange] is different, but all think their problems are insurmountable, that the laws aren't right and there is corruption, etc," Allen said.

"Îf we wait for the legal structure to be in place we'll lose a lot of time...it's better to start early and start small and learn the business when you're small."

According to Allen, a speedy creation of stock exchange depended on political will to expedite the passage of a securities law and a review and upgrade of banking, contract and company law to international standards,

"It's possible to put a stock exchange in place before the legal structure, but ultimately the legal structure is necessary for investor confidence," she said.

"There's no reason a Cambodian stock exchange couldn't be operational by 2003 provided we get started now."

While much more conservative in his estimates on how quickly a stock exchange might become operational ("We have a long way to go"), Koppinger also cautioned against pessimism about the feasibility of a CSE.

"Vietnam is a good example [for Cambodia to follow]," Koppinger said. "They have the same mess of corruption, bad legislation and wrong culture in state enterprises, but they established their stock exchange last year."

Seanglim also noted the necessity of overhauling Cambodian laws to pave the way for the creation of a stock exchange, but added that once in operation the stock exchange itself would promote transparency and "clean" business practices.

"A stock exchange helps good governance by requiring full disclosure. If not, people will get sued," Seanglim said. "A stock exchange can assist companies to learn how to do business by international standards."

Chris Ho echoed Seanglim's sentiments on the economically therapeutic value of a stock exchange.

"It'll be a prestige to be listed and a chance to get back the money [that companies] have invested here," Ho said, urging that the private sector take the initiative in the CSE's formation and self-regulation of its operations.

"We want to get all companies interested to create a [private sector stock exchange] working group to discuss problems such as how to meet listing requirements," Ho said.

"I want [the stock exchange] yesterday, but there are currently not enough companies that meet listing criteria, such as having three years of continuous profit, so I think it will take a minimum of 2 1/2 to three years to establish."