Stock Market to Boost SMEs

KHMER TIMES
SOK CHAN

The listing of small and medium enterprises on the Cambodia Securities Exchange (CSX) will boost their access to capital. KT/Chor Sokunthea

Small and Medium Enterprises (SMEs) may soon be listed on the Cambodian stock exchange, following the signing of a memorandum of understanding (MoU) between the Federation of Associations for Small and Medium Enterprises (FASMEC) and the Securities and Exchange Commission of Cambodia (SECC) on Thursday.

SMEs have an important role in Cambodia’s economy, and account for a large percentage of employment, explained FASMEC president Te Taing Por, noting however that a lack of access to capital was currently a constraining factor in their growth.

“Loan issues are a big concern for SMEs, which has been discussed so many times, but there are some mechanisms that have been done to solve this issue. However, the access to loans is still low, thus this new opportunity to get more capital by listing the company or enterprise on the stock exchange will [open up] additional capital.”

Mr. Taing Por said that the agreement had been long in the works, and was based around five key factors: secure mechanisms to help SMEs increase capital access, standardization of financial records and correct payment of taxes, a three-year tax exemption on revenue, training from SECC officials, and a boost in brand recognition and credibility.

Economy and Finance Minister Aun Pornmoniroth, said that the MoU will be a great benefit to SMEs, boosting not only their access to capital, but also their professionalism and capabilities. While the agreement did not signal any immediate plans to list SMEs on the stock exchange, he said that this was now a possibility.

“I encourage SMEs to be ready in order to follow the law, to prepare their financial statements to a recognized standard, and start implementing a corporate governance approach. It will not only provide SMEs additional funds through the security market, but it will increase the competitiveness of the enterprises in Asean, as well as competition globally.”

Keo Mom, CEO of LYLY Food Industry and president of Cambodia Women Entrepreneurs Association, told Khmer Times that the large financial boost for SMEs that this announcement represents will be very beneficial, with the current financing available from banks being too low, restrictive and requiring too much collateral. Provided that SMEs have suitable vision and growth desires, she said that the partnership will help them grow and eventually be able to list on the stock exchange.

The Cambodian Securities Exchange (CSX) started the Growth Board a year ago, designed to list SMEs, but so far no companies have applied to be listed. The government is still aiming for companies to list, however, and Mr. Pornmonirth said that tax incentives had been offered. Companies who list will receive a 50 percent tax exemption on revenue for the first five years, and income tax suspended for the same time period.

“Listing companies on the CSX will enable enterprises to have more working capital in the long-term,” said Mr. Pornmoniroth. “This factor will enable the qualified companies to have long term competitiveness in the free and open market,” he added.