CAMBODIA: Government's stock market plans under fire

The Cambodian government says it wants an exchange set up within two years and has enlisted the help of South Korea to achieve its end. But the opposition says the country isn't ready, and fears ordinary investors will end up losing out.

Presenter - Tom Fayle Speaker - Sam Rainsy, Cambodian opposition leader; Bret Sciaroni, lawyer and chair, American Cambodian Business Council; Bret Sciaroni, lawyer and chair, American Cambodian Business Council.

FAYLE: Cambodia's economy may be booming, but development is still largely reliant on the millions of dollars pumped into the country each year in the form of international aid. And this is despite a recent surge in bank deposits. The trouble is, much of the cash flowing into the banking system is being held short term. Those who need to, simply find it too difficult to mobilise enough long-term funding for investment. Brett Sciaroni is a Phnom-Penh based lawyer, and chair of the American-Cambodian Business Council. He's among those in the business community that supports the government's ambitious plans, at least in principle.

SCIARONI: It's not a problem for Cambodia to have a stock market, so long as it's done the right way. This is a challenge for Cambodia, that it's trying to catch up in terms of human resources, to have the people in place. But for me, I think it's a good idea, it's a good objective to strive for, and the faster we can have it, I think the better is for the Cambodian economy.

FAYLE: Cambodia's opposition leader, Sam Rainsy, himself a former finance minister, sees it somewhat differently.

RAINSY: My concern is the lack of transparency, and the rampant corruption that is prevailing in Cambodia. As long as we don't ensure the rule of law, as long as we don't fight corruption, any stock exchange in Cambodia will not function properly.

FAYLE: But is it not important for an economy, a developing economy, like Cambodia, to have a stock-market, to be able to funnel capital into development?

RAINSY: We realise that. We support the idea of creating a stock market in Cambodia. But we want to ensure that the right conditions are met. The long awaited law against corruption has not been passed by the National Assembly yet, and there is no indication that the government is willing to curb corruption.

FAYLE: But Brett Sciaroni, of the American Cambodian Business Council, says while he personally supports anti-corruption legislation, the passage of such of a law should not hold up the development of a local securities market. And he argues that if done correctly, the introduction of a stock exchange will inevitably lead to greater transparency, even if the 2009 target date is a tad ambitious.

SCIARONI: If the stock market here has the kind of disclosure rules that other stock markets have, it means that for local companies, they will have to fully disclose critical information about their companies. As local companies understand that this is a source of revenue, there'll be a trade off. They'll have to disclose what they are doing, and a lot of local companies don't disclose much about their activities publicly. But in order to get listed, they'll have to - so they'll see the trade off between the need for capital and the disclosure of information which has heretofore been held pretty closely.

FAYLE: Sam Rainsy, though, says the level of government control of the new oversight body, the Securities Commission, means potential investors need to be on their guard.

RAINSY: I am afraid that when they say control, they can manipulate the market, so that their cronies make money at the expense of the poor innocent investors - meaning that the Cambodian who could be attracted by by quick gains. We have to warn potential investors, small and big, to be careful, at least at the early stage of the Cambodian stock market.

FAYE: In short then, is the country ready for such a stock market?

RAINSY: No, in short, in one word, "No".