By Kay Kimsong
THE CAMBODIA DAILY
The National Assembly passed a law on bonds Thursday that will pave the way for Cambodia to eventually establish a domestic bond-trading market. The 19-articte law was submitted to the Assembly in June.
Government officials did not specify when bonds will be issued in Cambodia, but SRP politicians warned that public confidence might not be ready for Cambodian bonds.
Finance Ministry Secretary of State Ouk Rabun said no prior Cambodian government has ever issued a marketable bond, but to develop the country it would soon need to.
"We lack capital, so we can borrow from the public through bonds," he said. A later subdecree will detail the interest rates and face value of the bonds, he said, adding that another law will be required to regulate the resale market of the bonds.
The law passed Thursday simply defines bonds, lays out government commitment to pay interest on the notes and use the capital raised for the national budget, and prescribes punishment for issuing fake bonds.
Issuing bonds and shouldering public debt is how countries that are not dependent on foreign aid, as Cambodia now is, finance growth.
Once a bond market is functioning, corporations could also begin selling bonds.
SRP lawmaker Keo Remy said the government should reform the court system and pass the long delayed anti-corruption law before issuing bonds.
"I think bonds are necessary to develop the financial market … but since 1979,1 see people don't trust the financial market," he said. "I think the government needs time to build public trust."
In February, the Finance Ministry received a Japanese-funded report from the independent Nomura Research Institute on the development of a bond market in Cambodia. The report said that in order for the government to build up public trust and gain investors in its bonds, it must get its financial house in order.
Government funds were as of February distributed in 1,580 bank accounts making accounting a nightmare, the report noted. And debt owed to a number of private companies is not reflected in the yearly government budget the institute stated.
National Assembly Banking and Finance Commission Chairman Cheam Yeap said the Finance Ministry will have to undertake a public campaign asking people to buy Cambodian bonds.
"If people keep money at home, they could lose it very quickly if there is a fire," he said.
Economist Kang Chandararot said that bonds could be a boon for the economy, allowing the government to reduce taxes and rely less on foreign donors.
Government officials did not specify when bonds will be issued in Cambodia, but SRP politicians warned that public confidence might not be ready for Cambodian bonds.
Finance Ministry Secretary of State Ouk Rabun said no prior Cambodian government has ever issued a marketable bond, but to develop the country it would soon need to.
"We lack capital, so we can borrow from the public through bonds," he said. A later subdecree will detail the interest rates and face value of the bonds, he said, adding that another law will be required to regulate the resale market of the bonds.
The law passed Thursday simply defines bonds, lays out government commitment to pay interest on the notes and use the capital raised for the national budget, and prescribes punishment for issuing fake bonds.
Issuing bonds and shouldering public debt is how countries that are not dependent on foreign aid, as Cambodia now is, finance growth.
Once a bond market is functioning, corporations could also begin selling bonds.
SRP lawmaker Keo Remy said the government should reform the court system and pass the long delayed anti-corruption law before issuing bonds.
"I think bonds are necessary to develop the financial market … but since 1979,1 see people don't trust the financial market," he said. "I think the government needs time to build public trust."
In February, the Finance Ministry received a Japanese-funded report from the independent Nomura Research Institute on the development of a bond market in Cambodia. The report said that in order for the government to build up public trust and gain investors in its bonds, it must get its financial house in order.
Government funds were as of February distributed in 1,580 bank accounts making accounting a nightmare, the report noted. And debt owed to a number of private companies is not reflected in the yearly government budget the institute stated.
National Assembly Banking and Finance Commission Chairman Cheam Yeap said the Finance Ministry will have to undertake a public campaign asking people to buy Cambodian bonds.
"If people keep money at home, they could lose it very quickly if there is a fire," he said.
Economist Kang Chandararot said that bonds could be a boon for the economy, allowing the government to reduce taxes and rely less on foreign donors.
2 comments:
Surprise! the National Assembly passed the law on Bond. What are you all going? All of you in the National Assembly had never known about businesses law and stock, trade law. You don't know about those law, and Cambodia don't have the law in the system. You should restructure Cambodia Financial, and bank system and how to handle the money. And pass the long waited Anti-corruption law before you do anything else. You want to issue Government's Bond to acquire financial support for the governmaent. I don't think the Cambodia Kingdom don't have Money to run government offices or the country. The Kingdom of Cambodia were funded in Billion and Billion of dollars. The people republic of China, the World Bank, the Japanese government.....ete. had fund this government with lots of money. And you still need more money? Please don't tell me you are trying to rob money from the poor Khmers by issue government bond. You are all have more than enough Money to run the country. If all of you stop stealing the money you will have plentifully money and even make all poor people to have better lives. You want to borrow money from poor cambodians with promises to for interest. Where are you going get the money from to pay the interest? If everyone of you keep stealing the government's money everyday? Please stop killing my poor cambodian people.
By Norodom Reajeasie
Dear Norodom Reajeasie
Don’t be surprise! A government bond is very important for economic growth and the development a sound financial structure in Cambodia. Cambodia IS restructuring its Financial Infrastructure.
I agree with you that the government has long delay to pass Anti-corruption law.
You are correct that our Kingdom receives millions of dollars annually from donors. The reason for the government to issue bonds is to stop relying on those foreign donors. Thus, if a bond market is well functioning, Cambodia no longer needs foreign aids. Government bonds are issued in almost all developed countries around the world such as USA, Japan…
It takes the US more than 200 years to reach where it is at today. Cambodia’s financial infrastructure is only more than 10 years old. Stop whining, start working!
Ravuth
Finance Student
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