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Law being drafted to allow government bonds to be issued

Sorn Sarath / Khmer Times Share:
It will be the first time government bonds will be listed on the Cambodian Securities Exchange and will join six corporate bonds. KT/Pann Rachana

The Ministry of Economy and Finance (MEF) has been discussing a new draft law on government securities that will pave the way for the government to issue its sovereign bond soon to promote the Kingdom’s capital market announcement.

The discussion was presided over by Minister Aun Pornmoniroth with participation from relevant ministries’ technical officials.

According to the MEF, the new draft law is being prepared to respond to the increasing demand for resources and financing, which can meet the real needs of economic and social development.

“Responding to special financing needs for infrastructure development, strengthening cash management, developing the securities and finance sector and supporting other priority and necessary projects, the new law is aimed to expand the scope of funding sources, especially by focusing on domestic funding sources,” the ministry said.

The law will also determine the size and form of issuance of state securities, determining the participants and methods of trading securities, as well as penalties.

“The new draft law is comprehensive and responsive to the current context and changing trends of Cambodia’s development through the establishment of a common framework for the management, issuance, trading and management of securities,” the announcement read.

Pornmoniroth spoke of the importance of the new law on government securities and urged relevant ministries to speed up the draft in order to get approval from the government.

Sou Socheat, director-general of the Securities and Exchange Commission of Cambodia (SECC) said that it’s good for the capital market because government securities could be listed on the Cambodia Securities Exchange CSX). He said this will make the Cambodia market more attractive.

The Asian Development Bank (ADB) has urged Cambodia to develop the local market for both corporate and government bonds while promoting local currency issues.

In its twice-yearly Asian Development Outlook, the ADB recognised that Cambodian authorities were committed to developing financial services to support growth and ensure macroeconomic stability.

The bank said local government bond issues could help diversify the nonbank financial sector and deepen local capital markets which would help reduce reliance on bank credit and offer new channels for long-term financial intermediation.

The Kingdom’s capital market is growing notably with more companies selling securities and an increase in initial public offerings. There are currently six companies that have issued corporate bonds on the CSX and another six listed on the equity side. PESTECH (Cambodia) Plc is also due to list on the Cambodia equity market next month.

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