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Stock Exchange Ready for SMEs

Khmer Times Share:
Small and medium enterprises hope to raise more working capital by being listed on the Cambodia Securities Exchange (CSX). KT/Chor Sokunthea

The Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC) sees small and medium sized businesses (SMEs) as the engine to drive growth on the local stock market, while the companies already listed have been growing steadily.
 
Speaking yesterday on the sidelines of a conference called Securities Market: A Path Toward Growing Business, FASMEC president Te Taing Por said he believed there will be more small and medium sized businesses listing on the Cambodia Stock Exchange (CSX) when both stakeholders – FASMEC and CSX – sign a memorandum of understanding (MoU) in August.
 
He said the MoU between FASMEC and the CSX will enable 300 members and 15 associations under FASMEC to be able to list on the stock exchange to seek long-term working capital to expand their businesses after being listed.
 
Mr. Por added that there are a lot of small and medium sized businesses which would be able to list if there was support from the government.
 
“It is not only FASMEC which wants to push small and medium sized businesses to register on CSX, but also the Ministry of Economy and Finance because it is the only way for SMEs to get long-term working capital to ensure sustainable growth,” he said.
 
“Although there is FASMEC micro-finance to support and fund those businesses, there is still a lack of capital, so the best choice is to push SMEs to list on the CSX.”
 
Nearly one year ago the Growth Board was started, an alternative board for SMEs at the CSX. But so far no small or medium-sized companies have applied to list. The establishment of the Growth Board was initiated by the government to add another option of financing for the small and medium-sized businesses which wanted to be listed and which account for more than $10 billion in annual sales and 1.3 million jobs.
 
SMEs almost always face the problem of funding for investment and working capital. Companies usually have various sources of funding from different financial institutions, yet most are short-term funding that may be a barrier for them to develop their long-term business plan.
 
Senior Minister of Economy and Finance Aun Pornmoniroth said at the conference that to encourage more enterprises to list on the stock exchange, the government has offered a tax incentive for companies 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.
 
“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,” Mr. Pornmoniroth said.
“This factor will enforce the qualified companies to have a long-term competitiveness in the free and open market,” he added.
 
Mr. Taing Por said reluctant SMEs which are concerned about listing on the CSX lack information on the benefits they will receive from a listing. Therefore, the government should help them make their businesses work, he added.  
 
The Economy and Finance Minister said the ministry is working to promote and raise awareness about the CSX to all enterprises and open the way for SMEs to list on the CSX. The ministry hoped to see positive results in the near future.
 
Hong Sok Hour, the Chief Executive Office of the Cambodia Securities Exchange, told the conference the demand for working capital was still a challenge for almost every enterprise. He said enterprises will not grow fast by relying on only their own capital and each company will not grow without getting into debt with a bank.
 
However, the capital borrowing from a bank and the capital from issuing shares are complimentary since the capital from the stock market is long-term to sustain and make a business stronger.
 
“Cambodian enterprises should be ready and prepared to compete with foreign companies by strengthening their businesses,” Mr. Sok Hour said.  
 
According to the Ministry of Planning’s Cambodian 2014 Inter-Censal Economic Survey, the total number of businesses in Cambodia as of March 2014 was 513,759, of which about 97 percent were micro establishments – with less than 10 people involved – and one third of which have existed for less than three years.

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