The Australian Government will partner with the Securities and Exchange Commission of Cambodia (SECC) to launch the landmark Domestic Capital Mobilisation for Infrastructure Investment through the Security Market Project.
The SECC is the regulator of the Cambodia Securities Exchange (CSX) launched in 2011 and operated by the Cambodian Government and the Korea Exchange.
Funded through Australia’s AU$50 million ($35 million) flagship infrastructure programme the partnership will provide technical assistance to develop a regulatory framework for specific infrastructure bonds with long-term debt.
The bonds will assist in building the capacity of market participants and developing measures to give the private sector in Cambodia more tools to invest in government infrastructure.
The technical assistance will also identify one pilot infrastructure project.
Speaking to Khmer Times the Australian Embassy said, 3i and the SECC will assess the suitability of existing regulations to support infrastructure bonds.
They added that these bonds will be fundamentally different from the currently issued listed bonds in terms of tenor, project risk profile and issuer profile.
“Based on this review, the technical assistance component will recommend any updates to the current regulatory framework to best support the issuance of new infrastructure bonds,” the embassy said.
“The aim is to initiate a pilot project before the end of 2021. The type of project which will be piloted will depend on both issuer interest and investor appetite,” the embassy added.
Sok Dara, Deputy Director-General of the SECC said, investments in infrastructure is not very broad in Cambodia and businesses which are seeking funds for those investments are still not active in terms of the security market.
“For example projects for the bus ride from the airport and connecting the roads to highways need a large budget. Meanwhile, only some of these projects are profitable. For example, people pay for the bus fee which means a return for the investor. The investor uses this revenue to draw investment. This is how one investment leads to another,” he said.
“We will inspect the actual demand in the market the securities market is a permanent and long term source of capital. We will also study the rules and regulations for the real practise to evaluate which project can be completed this way,” he added.
While the CSX is partially operated by the Korea Exchange, the Australian Embassy said that the Australian Government, through 3i is providing technical assistance to the SECC, and not the CSX.
“The SECC is an independent regulatory body from the CSX. Australia has a decade-long history of support to the SECC to develop its securities markets rules and regulations to regional and global best practices to support the operations of the Cambodian capital markets,” the embassy said.