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SMEs Eye Bourse for Funds

Khmer Times Share:
SMEs could be listed in a special segment on the Cambodia Securities Exchange (CSX). KT/Chor Sokunthea

Small and medium enterprises (SMEs) in Cambodia could start raising capital from the public, through the stock exchange, if government efforts to amend financial regulations to allow SMEs to be publicly listed get off the ground.
 
Nguon Sokha, secretary of state of the Ministry of Economy and Finance, said in a seminar last Friday that the government considered SMEs as one of the main drivers of the country’s economic growth.
 
Because of this, he said, the ministry and other government agencies are looking to amend relevant financial regulations to allow SMEs to be publicly listed on the stock exchange to seek additional capital, other than just relying on banks and microfinance institutions (MFIs).
 
“Considering the role of SMEs in nation building and their potential in terms of generating employment and income as well as fostering enterprise, it is necessary that an enabling environment is provided for these enterprises to flourish,” said Mr. Sokha.
 
Keo Mom, president of the Cambodia Women Entrepreneurs Association, said being listed on the stock exchange was an additional option for SMEs to seek funds.
 
“Banks and MFIs charge high interest rates for loans and coupled with that they often demand collateral in the form of assets like property, which SMEs often do not possess,” she said.
 
“The banks or MFIs provide loans equal to about 50 percent of the deposited collateral value. This becomes an impediment to SMEs if they do not have enough collateral.”
 
Ms. Mom said running SMEs in Cambodia was different from other countries.
 
“The risk of failure can be high compared to companies which have already grown larger. So we need to find other avenues to raise additional funds, other than banks and MFIs,” she said.
 
Kauy Vath, CEO of Vtrust Group, said Cambodia could follow countries like India and the United States where SMEs are publicly listed in a special segment on the bourses.
 
 

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He said these SMEs come under the category of “emerging blue chips” and attract a breed of investors that recognize the potential of young enterprises.
 
“When these SMEs need financial resources, they raise them on the bourses,” said Mr. Vath.
 
But SMEs can be high-risk bets on bourses due to their small capital structure, hinted Sou Socheat, director general of the Securities and Exchange Commission (SEC) of Cambodia.
 
“Since most of the SMEs are new, there is no performance track record to judge them,” said Mr. Socheat.
 
Mr. Socheat pointed out that an eligibility criteria was needed for entry of SMEs into the SEC so that it develops into a successful market “where SMEs can list and where informed investors can find suitable enterprises to invest their funds”.
 
“We won’t set specific capital requirements like for big public companies. But for SMEs the main requirements will be a minimum period, like three years or more, for their business operations,” he said.
 
Also, added Mr. Socheat, the SEC will examine the criteria of SMEs like going through their financial records to ensure their financial health is maintained, if they are listed on the bourse.

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