Securities Exchange Attracts SMEs

KHMER TIMES
MAY KUNMAKARA

The Cambodian Securities Exchange received requests from several SMEs to be listed on the bourse. Reuters

The Cambodia Securities Exchange’s (CSX) Growth Board, a new trading platform for small and medium-sized enterprises (SMEs) formed last September, has received expressions of interests from several SMEs to be listed on the fledgling bourse.

Lamun Soleil, the CSX’s market operations department director, told Khmer Times yesterday that the SMEs from various sectors wanted to be listed on the Growth Board to raise more funds through the stock market for their business expansion.

“The CSX received expressions of interest from several SMEs to raise capital from the public through the stock exchange and these SMEs come from various sectors, including real estate and education,” said Mr. Soleil.

“There is one strong candidate from the real estate sector that could be listed on the Growth Board by the end of 2017,” he added. Mr. Soleil, however, declined to identify the real estate firm.

The CSX’s Growth Board requires SMEs to have a minimum capital of $500,000 to be listed on the stock exchange, compared to $10 million for public companies.

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.

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.

Minister of Economy and Finance Aun Pornmoniroth told Khmer Times earlier that to encourage more SMEs to list on the stock exchange, the government has offered a tax incentive for firms 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, he said.

“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,” added Mr. Pornmoniroth.

“This factor will enforce the qualified companies to have a long-term competitiveness in the free and open market,” he added.

Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), told Khmer Times that more SMEs will be encouraged to list on the CSX’s Growth Board after FASMEC and the stock exchange formalize an agreement.

Mr. Taing Por said many SMEs are still hesitant to raise capital on the CSX due to the lack of information on how to go about it, and urged the government to develop a communication strategy targeting these enterprises.

Though the CSX’s Growth Board only requires SMEs to publish a year’s audited financial results to be listed, compared to three years’ results for public companies, many enterprises still find that bourse requirement difficult to fulfill.

“Many SMEs still need capacity building, especially in financial management and preparing audited financial statements for the public,” said the CSX’s Mr. Soleil.

“Transparency and tax compliance are still problems for the enterprises and it will take time for them to be up to standard for listing on the CSX.”