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Wednesday, December 02, 2009

Cambodia set to build 1st stock market

PHNOM PENH, Cambodia (AP) — Cambodia will soon start construction on a building to house its first stock exchange which it hopes will help draw foreign investment to the impoverished country, the Finance Ministry said Wednesday.

A South Korean firm, World City Co. Ltd., was awarded the contract to build the $6 million building in Phnom Penh, which is scheduled for completion by the end of 2010, said Mey Vann, director of financial industry at the Finance Ministry.

"We expect that the official operation of our stock market will start once the building is complete," Mey Vann said.

In a statement, the ministry called the creation of a stock exchange "an important and historic event in Cambodia" that will create new jobs, revitalize the local economy and transform Phnom Penh "into a world-class city."

Prime Minister Hun Sen announced plans to launch a stock market in 2007, saying Cambodia needs to find new ways to draw international capital to move beyond relying only on international aid and banks loans.

Soon after, lawmakers approved a securities law on issuance and trading of nongovernment securities to pave the way for a stock market.

The Cambodian economy is small but one of the fastest growing in Asia. The economy is largely driven by just one industry, textiles, which accounts for nearly 80 percent of exports. The economy's development has been heavily reliant on hundreds of millions of dollars (euros) in international aid.

For investors, the country's junk-level credit ratings suggest it is a risky bet because of its weak oversight and rampant corruption.

Neighboring Vietnam started its stock market in July 2000, and it has been a big success, both for companies and investors.

The four-story, 71,900-sq. foot (6,682-sq. meter) Cambodian stock market building will be located in Phnom Penh's financial district on the outskirts of the capital.

The South Korean developer, World City, is providing the land and construction costs, hoping to recoup its investment by having the value of its nearby properties increase due to the stock exchange being sited there, Hang Choun Naron, director general of the Finance Ministry.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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