Cambodia's riel survives alongside the dollar

People use the Cambodian currency for anything less than a dollar

30 March 2011
By Guy De Launey
BBC News, Phnom Penh

In Cambodia, money talks as loudly as it does anywhere else in the world - but at least it never burns a hole in your pocket.

That's because there aren't any coins. You can't talk about coppers or nickels in Cambodian riel. The national bank gave up striking anything metallic more than a decade ago.

Instead there's a lot of paper. Right down to the seldom-seen 50 riel note. That's worth all of a cent and a quarter - and it's regarded with about as much affection as the pitifully lightweight one yen coin in Japan.

So wallets, billfolds and purses bulge with dozens of notes - ranging from the crisply-minted to the well-used and filthy. But to many people, the riel is simply small change.

Cambodian PM names 3 likely listings on new bourse

PHNOM PENH, Feb 3 (Reuters) - Prime Minister Hun Sen said on Wednesday three state firms could be among the first to list on Cambodia's new stock market, although an official involved in the project said it may not be ready until the end of the year.

"Our Cambodia is creating a stock market, its headquarters are almost finished," Hun Sen told more than 1,000 accountancy graduates in Phnom Penh.

"So, in a short time, we will have a stock market, and some state firms and private enterprises will get listed there."

Hun Sen mentioned three candidates for a listing -- Sihanoukville Autonomous Port, the Phnom Penh Water Supply Authority and Electricite du Cambodge, the state power company.

The finance ministry has previously suggested the port operator, the water utility and Telecom Cambodia, the national phone company, could seek a listing.

The exchange will be in a new financial district being built by South Korean-backed World City on the outskirts of Phnom Penh, the capital of the Southeast Asian country.

It was supposed to open in September 2009. When that date passed, government officials mentioned January or February as a possible start date for trading, even if the headquarters wasn't fully ready by then.

Ming Bankosal, director general of the Securities Exchange Commission of Cambodia, told Reuters on Wednesday the bourse would probably be up and running at the end of this year, adding that some regulatory laws had already been drawn up.

"We planned to operate at the end of 2009 but the situation was not fruitful. The economic crisis also affected us," Ming Bankosal said.

"We would rather be late than have it one or two years and then it collapses," he said.

"We plan to open it at the end of the year but that will depend on whether companies are ready," he said, adding Cambodian firms would need to be more transparent.

Ming Bankosal said some private companies had expressed an interest in listing shares, but he declined to name them. Financial companies have until March 1 to submit applications to operate as underwriters, brokers, dealers and investment advisers.

(Reporting by Prak Chan Thul; Editing by Alan Raybould)

Dow Jones Dharma India Index anyone? The venerable Sangharaja, chief spirit advisor to King Sihamoni, is also involved

Indian index has a religious edge

Jan 23, 2008
By Raja M
Asia Times (Hong Kong)

MUMBAI - The global trend towards socially responsible investing has gone religious in India, with Dow Jones Indexes and its US-based partner investment firm Dharma Investments Ltd launching the Dow Jones Dharma India Index in Mumbai on January 15, the first major faith-based investment product in South Asia.

The Dharma India index is the latest addition to the 130,000 stock indexes Dow Jones publishes globally, including the US, Britain and Japan versions of The Dow Jones Dharma Index.

The Dharma India Index, with 250 Indian companies, features stocks compliant with the code of moral conduct according to Hinduism, teachings of the Buddha and which also incorporate principles of the Sikh and Jain religious tenets - together, ways of life with billions of followers in Asia and forming nearly 20% of the human race.

The index license is sold to asset managers and others wishing to commercially use the Dow Jones Indexes information to market investment products or for publication in the media, such as television and the Internet.

According to a Dow Jones presentation in Mumbai, socially responsible investing (SRI), including faith-based investing, accounts for US$4 trillion worth of assets under management, a figure growing 20% annually.

European SRI assets are worth nearly $1.75 trillion and such assets are worth $22 billion in the Asia-Pacific region, according to Dow Jones. "Historically, the increase of wealth within any population has resulted in an interest in ethical investing," the Dow Jones Dharma Investment presentation noted.

India's first SRI product was the ABN AMRO Sustainable Development Fund, launched in March 2007. The Dow Jones Dharma Index is the first major faith-based SRI product in India.

"Mid-to-long term, we expect products like funds, open-ended funds, index funds, certificates but also exchange-traded funds" to be potential investors to the index, said Nicole Wesch, from the Frankfurt office of Dow Jones.

The DJ Dharma India Index value will be updated daily with a quarterly review. "The review frequency of indexes depends on the use of the indexes," said Wesch. "For example, the Dow Jones Wilshire 5000 is reviewed monthly and the Dow Jones Global Titans 50 is reviewed annually." Most Dow Jones indexes are reviewed quarterly.

The DJ Dharma Index aims to meet the needs of socially aware investors seeking to avoid companies with harmful practices, services or products. Environmental screening in the DJ Dharma Index will consider corporate performance on emissions, climate change and carbon footprint analysis, oil and chemical spills, waste management and recycling. Corporate governance filtering will involve labor relations and disputes and discrimination allegations, human-rights violations, working conditions and wages.

The launch of Dow Jones Dharma Indexes comes as stocks compliant with the Islamic code of conduct, or sharia, are attracting more attention worldwide, with the Islamic investment market estimated between $400 billion to $500 billion.

The 51 Dow Jones Islamic Market Indexes, the world's first faith-based ethical investment products, made their debut in 1999, with input from an independent advisory Sharia Supervisory Board with a member each from from Syria, Pakistan, Bahrain, Saudi Arabia, the United States and Malaysia.

Data available from the Dow Jones Indexes website says the DJ Dharma India Index of 250 companies has a total market capitalization $919 billion, compared with $1.6 trillion among 415 companies in the Dow Jones Dharma Japan Index.

The DJ Dharma US Index features 1,065 companies with a total $5.3 trillion in market capitalization. The full list of companies in the Dharma Indexes is made available only to their licensees, which denies an independent chance to verify how accurate their filtering mechanisms are.

For instance, the Indian companies Dow Jones gave out as examples in their Dharma India Index - ICICI Bank Ltd, Larsen & Toubro Ltd, Infosys Technologies Ltd, Housing Development Finance Corp and Bharti Airtel Ltd - did not include any units of the $70.3 billion Tata Group, India's most respected corporate house, India's largest corporate taxpayer and among the world's most socially responsible companies.

Philanthropic trusts own about 66% equity capital of Tata Sons, the primary promoter, making Tata Group possibly the largest corporate group of its kind in the world where the majority shareholder is Messrs Compassion and Charity.

"Until now, faith-based investing has been restricted to Islamic and Christian religions only," Nitesh Gor, chief executive of Dharma Investments, told the media. "But 20% of the world population consists of dharmic religions such as Hinduism and Buddhism. The idea [of the Dow Jones Dharma Indexes] is to promote faith-based investing through dharmic religion."

The word dharma in the ancient Indian languages of Sanskrit and in Pali dhamma has vast connotations that defies exact translation into English, but the primary meaning is "universal laws of nature" without any sectarian divisions.

Dow Jones Indexes acknowledges that dharma or dhamma is a "spiritual concept central to the many religions originating in South Asia, including Hinduism, the Buddha's non-sectarian teachings, Jainism, and Sikhism."

The Dharma Index subscribes to the core of all spiritual thought originating in India: non-violence, respect for all forms of life, compassion and loving kindness.

The investment potential for the so-called faith-based investment products following a moral code of conduct is particularly big in India and offers a combination of the country's ancient spiritual riches with new-found economic wealth.

India, after millennia, is seeing a resurgence in the teachings of the Buddha, not least in the increasingly widespread practice of Vipassana meditation. For the growing hundreds of thousands of Vipassana practitioners from all religions, including those from the business community for whom brief but intense workshops are available in numerous centers throughout the world, products such as the Dow Jones Dharma index make for easier choices on how to incorporate non-sectarian, practical self-realization into their daily lives.

Many leading Indian businessmen are serious practitioners of Vipassana, including media baron Subash Chandra Goel, owner of Zee Television, Asia's leading Hindi satellite channel. Companies such as the Oil and Natural Gas Corporation of India and Indian Railways offer paid leave for senior officials and other employees to take Vipassana courses.

In Maharashtra state, of which Mumbai is the capital, the government training center in Pune city for senior Indian Administrative Service officers, the Yeshwantrao Chavan Academy of Development Administration, offers Vipassana courses as part of the curriculum.

Mumbai, India's busiest and most workaholic city, always finds time for investing in spiritual health. A long queue can invariably be found even on mornings of working days outside the famous Siddhivinayak Temple to Lord Ganesha, the deity for enterprises. Christians in the city drop into churches during the mid-day break and Friday prayers in mosques are well attended. In the miserably crowded suburban trains, many commuters quietly read prayer books or sing bhajans (devotional songs).

Faith-based investing in India took off with the world's first online sharia compliant online brokerage that opened in November 2007. Parsoli Corporation Limited, a Mumbai-based brokerage with a market capitalization of $25 million, launched Stockmultiplier.co.in, an online trading facility following the sharia, the life code of conduct, that forbids investing in businesses relating to alcohol, gambling, pornography and entertainment and those earning high income only from interest, such as financial institutions and commercial banks.

The company's Parsoli Islamic Equity Index tracks sharia-compliant stocks from listed equities in India's stock exchanges. "The response was overwhelming barely two days after we opened," Parsoli chief executive Jafar Sareshwala told Asia Times Online. "We received over 700 enquiries of which about 20% were non-Muslims. The idea of making money with clean investments appeals to a lot of people.''

The growth of Asian economies has helped to set the stage for the present concerns with investments anchored in religious values, according to Nitesh Gor of Dharma Investments, speaking at the Mumbai launch of the Dow Jones Dharma India Index.

"India and Asia have made remarkable advances economically over the last few years and in parallel we believe that bringing our religious values onto the global stage offers sustainable solutions to the problems facing the world today," he said.

The Dow Jones Dharma India Index is to be screened by three committees of academicians and religion practitioners - the academic advisory committee, a dharma supervisory committee and a religious council providing guidance and establishing the principles for the methodology.

Advisors include faculty members from Harvard University, the School of Oriental and African Studies in London, Britain's Oxford Center for Hindu Studies and the Oxford Center for Buddhist Studies, Yokohama University, Japan, Columbia University in the US, Thammasat University, Bangkok, and Jawaharlal Nehru University, New Delhi. such as the venerable monks Dr Ashin Nyanissara, chancellor of Sitagu International Buddhist Academy, Myanmar, and Religious figures involved includethe venerable Sangharaja, the patriarch of Cambodia, chief spiritual advisor to the king of Cambodia.

SRI evaluation clearly can be subjective, and what passes the SRI test for some fails for others. For instance, the Mumbai-based RO Somani Charitable Trust published its Karmayog corporate social responsibility ratings on January 4, with what it called India's first corporate social responsibility ratings of India's largest 500 companies based on sales.

"The results of the Karmayog CSR rating are extremely disappointing," the survey declared, "with no company meriting the highest five rating and with 46% of companies condemned with the lowest zero rating ... The only four companies with a four out of five rating were HDFC, Infosys Technologies, Tata Steel and Titan Industries."

Stock Market a Worry for Some

Soth Virak, Kruy Virak
VOA Khmer
Original report from Phnom Penh
29 October 2007

Cambodia approved a securities law in September to prepare the country for a stock market in 2009. The stock market will be managed by the Finance Ministry in cooperation with the South Korean stock market and is expected to open its trading in 2009. But critics say Cambodia's laws are too weak to instill the kind of confidence a stock market requires.

Opposition party lawmaker Son Chhay told VOA Khmer recently he worried that the government is moving too fast.

"We need at least three to five years to make sure we have capable people or else we will have bogus companies that will take investors' money and run," he said.

Finance Minister Keat Chhon has said his ministry is evaluation about 400 companies, foreign and local. He said foreign and local companies have equal rights in participating in the stock market.

Cheam Yeap, a lawmaker from the ruling Cambodian People's Party. He said the securities law has strict rules and punishment for those who violate it.

"Article 9 makes it clear that anyone who sells stocks illegally will be punished from 1 million to 1 billion riel and a jail term from 1 to 20 years," he said.

Critics say Cambodia cannot yet rely on its laws to stabilize a securities market.

"For a stock market to succeed, there must be strict laws governing the market, and an independent court must be in place," Tith Naranhkiri, a former professor of economics and international finance at Johns Hopkins University in the US, told VOA Khmer. "In Cambodia, corruption is rampant, so a clean agency in charge of monitoring and investigating the companies registering in the stock markets is not feasible."

But supporters say a stock market will never work if they never try.

"Prime Minister Hun Sen has always advised us that a 1,000-mile journey cannot be completed unless the first step is taken. And that first step needs to be bold in order to finish the journey," said CPP lawmaker Chea Peng Chheang. "So, I do not worry that much. It is important that we have so-called on-the-job training to make the introduction of the stock market a success. If something happens along the way, we just need to fix it, and continue the journey."

Government's stock market plans under fire [-Sam Rainsy: they can manipulate the market, so that their cronies make money at the expense of the poor]

17/09/2007
Radio Australia
Australian Broadcasting Corporation

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;

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".

Official: Without Rule of Law, Stock Market Won't Fly

Sok Khemara, VOA Khmer
Washington
13 September 2007

Click here to listen to Sok Khemara hosts 'Hello VOA' in Khmer

Cambodia may want a stock market, but without a strong rule of law, no one will buy into it, according to lawmaker Monh Sophan, a member of the government coalition party, Funcinpec.

The law aims to encourage investment through a stock market, a new concept to Cambodia that includes the printing of bonds for sale, Monh Sophan said Thursday on "Hello VOA."

The law, on issuance and trading, would pave the way for a stock market in the next two years. It was passed one week after the government announced it wanted to have a stock market by 2009.

A strong market requires investor confidence, something that Cambodia has a hard time generating.

The rule of law must be stronger before investors will entrust their money to a stock market or other securities, Monh Sophan said.

A non-transparent, non-neutral stock market will not succeed, he added.

Kang Chandararoth, a Cambodian economist, has said that a committee of nine leaders from various national agencies will have to keep politics out of the securities market.

"This is critical to its survival," he said recently.

Seventy-nine lawmakers voted for the law, which was based on international best practices, officials said. The law is awaiting final approval by King Norodom Sihamoni.

Cambodia Gets Firms Ready for Audits

08.09.07
Associated Press

PHNOM PENH, Cambodia - Cambodia's government for the first time has begun enforcing a law requiring firms to undergo financial audits, one of a series of steps meant to prepare for launching a stock market in 2009, officials said Thursday.

Some 400 enterprises will be obliged in the initial stage to submit their financial statements to independent auditors by December this year, said Ngy Tayi, an undersecretary of state for Cambodia's Finance Ministry.

Preparing firms for regular audits will help improve financial transparency, which is a "foundation for the successful opening of a stock market," he said. "We must have everything in place before we open a stock market in 2009."

He also said the number of firms requiring outside audits could go higher but he was unable to be precise.

Firms that are subject to auditing are those meeting at least two of three criteria - having annual turnover of three billion riel ($731,700), total assets of two billion riel ($487,800) and 100 employees - according to a Finance Ministry regulation issued Tuesday.

Cambodia passed an audit law in 2002.

But it didn't set clear criteria to stipulate which companies would be audited, said Bretton Sciaroni, a partner of Sciaroni and Associates law firm in the capital Phnom Penh.

"Now the initial criteria are established," Sciaroni said, adding that the new regulation also "lends itself to transparency in the private sector."

"It is widely assumed that most companies do not have audits. Companies that are forced to have audits likely will find it is a useful management tool so that they can be assured of what is going on inside their own company," he said.

He said audits can also be used to help secure financing for companies, and facilitate mergers, acquisitions and joint ventures.

"If Cambodia's stock exchange follows established international models, the audit requirement is a necessary precondition for listing," he said.

Cambodia asks companies to prepare for opening stock market in 2009 [-If the private sector is ready for transparency, how about Hun Sen's gov't?]

PHNOM PENH, Aug. 7 (Xinhua) -- The Cambodian government has told entrepreneurs to prepare their financial reports for audit to pave the way for opening stock market in 2009, an official said on Tuesday.

Ngy Tayi, under-secretary of state of the Ministry of Economics and Finance, said that about 400 companies, which have current asset over 500,000 U.S. dollars and have over 100 employees, have the obligation to prepare the financial reports.

The audit is a new step to promote the management climate of stock market and it also shows transparency, accountability and fairness in opening the stock market, he told a press conference here on promotion of the financial reports for audit.

The stock exchange market will improve the investment climate here and it can help accelerate the economic growth of the country, he added.

Cambodia is set to establish a limited stock market in 2009, Prime Minister Hun Sen said in June, adding that this would encourage long-term investments by the public.

Cambodia to establish stock market in 2009: PM

June 07, 2007

Cambodia will establish a limited stock market in 2009, Prime Minister Hun Sen said on Thursday, adding that this would encourage long-term investments by the public.

The Cambodian government is currently finalizing draft legislation on corporate bonds, which aims to establish a capital market in this country in 2009, Hun Sen said at a financial sector development symposium.

The introduction of a financial market is very important, he said, adding that it can help to mobilize the Cambodian people's savings and channel them into long-term investments in social, economic and infrastructure projects.

Cambodian finance sector is expanding, with new bank loans and deposits increasing by around 40 percent, setting the stage for further development, the International Monetary Fund (IMF) said earlier this week.

In April, Cambodia was assigned its first-ever sovereign debt rating by the credit rating agency Standard and Poor's, which said the country's outlook was stable.

The B+ rating is below investment grade status, restricting many institutional investors, but it is the first step in Cambodia's bid for economic respectability.

Source: Xinhua