The Cambodia Association of Securities Firms (CASF) was officially inaugurated on December 15, 2023 at the Non-Bank Financial Services Authority Building in Phnom Penh, marking a significant new step for Cambodia’s financial sector.
Originally established on July 19, 2023, the CASF is the only national-level association recognised by the Securities and Exchange Regulator of Cambodia (SERC) to represent all securities firms in the country. The association’s main stated objective is to promote and develop the local securities industry, implement its actions with close collaboration and serve as a channel of communication with the SERC.
Watch B2B Cambodia’s interview with Iv Ranarith, Chairman of the CASF:
In his welcome address, Iv Ranarith, the Chairman of CASF, shared that all 16 firms currently licensed by the SERC in Cambodia became members of the association by default upon its official launch on December 15, 2023. This includes 13 securities firms and three financial and investment advisory firms.
“We are the centre of gravity of the market and are the only actor that deals directly with all stakeholders in the industry on a regular basis – we deal with investors, listed companies, potential issuers, AND the exchange regulator,” said Ranarith.
H.E. Sou Socheat, Director General of the SERC, delivered opening remarks where he congratulated all relevant parties over the official launch of the CASF and shared a few of the achievements made by Cambodia’s securities market in 2023, including the listing of five companies and the issuance of the country’s first green and sustainable bonds.
“This is just a starting point to make Cambodia’s securities market move forward to be an attractive market for national and international investors,” said Socheat.
What Role Will The Cambodia Association Of Securities Firms Play?
Working in partnership with the SERC, the CASF will direct its efforts towards strengthening the financial sector, with the collaboration expected to improve market resilience, build investor confidence, and make a considerable contribution to Cambodia’s economy.
“We are the only actor to obtain the most information, feedback, and input, so we know what the requirements of all stakeholders are,” Ranarith further remarked in his speech. “It is, therefore, the role of the CASF to cooperate with all parties and work with the SERC to help shape industry policy and regulation, and to help propose an impactful incentive policy for listed companies and investors.”
During an interview with B2B Cambodia, Ranarith underscored the importance of engaging with a wide range of stakeholders, including the broader business community, public associations and stakeholders from other industries, in order to spread awareness and knowledge on Cambodia’s securities market and ensure that it can be framed to broadly meet all stakeholder needs.
“We want to have a proper dialogue on all of this,” stressed Ranarith. “There have been some communications spread across various parties, but through this association we really want to get down to the details of what is required so that we can get things done and make a real impact.”
He shared that the association intends to propose a new regulatory framework to the SERC that will help to scale up the number of listed companies even faster through certain specific avenues, as he believes getting as many companies to list in the shortest period of time is a main priority.
“in essence, we seek to make the IPO (initial public offering) process and getting to list as simple as possible, while in the meantime also making sure that proper due diligence on business is being taken in order to protect public interest,” said Ranarith.
“This is very important for the market to develop, we need many, many more companies to list and we need to reach certain scale for it to be attractive enough for investors, especially those seasoned and professional investors, because they won’t just be coming here to invest in one or two companies, they will have to invest in a range of companies for it to make sense and for the returns to be sizable enough for them,” he added.
What Makes Cambodia’s Securities Markets Attractive For Investors?
Ranarith suggested that the nascent securities market in Cambodia holds many potential opportunities for early-stage investors, particularly since regulations are currently less strict compared to certain markets in other countries.
“early stage involvement provides opportunity for both sides of the market, for the potential listed companies to be able to raise funds from this early stage when regulation is still early, so it’s not As stringent as it is in other developed markets,” said Ranarith. “You want to be early into the market so that you can get that sort of early juice of the potential return.”
He emphasised that early investors in Cambodia’s securities market can benefit from undervalued and underappreciated opportunities, similar to early property investors in emerging areas.
“It is those early investors who invest in certain land, for example, that can benefit the most when the market becomes developed, and I am convinced the same thing can happen with investment in the stock market because not many people are looking at it yet,” said Ranarith. “Of course, you have to be patient because the market is still very young, but it’s just like investing in property for 10-20 years, only after that is when you can really get the most benefit out of it.”
Ranarith also highlighted some of the main policy incentives in place to attract investors and listed companies to the Cambodian market, including tax benefits such as tax amnesty and a reduction in income tax and profit tax for listed companies up to 50 per cent for a period of three years.
“That’s a lot of tax savings for listed companies and investors, especially foreign investors, as the withholding tax on dividends is reduced by 50 per cent, so you effectively only pay 7 per cent instead of 14 per cent withholding tax on dividend payment,” he explained.
Ranarith affirmed that the CASF, in collaboration with regulators, is actively exploring additional incentives to further stimulate the market for both issuers and investors, underscoring the association’s commitment to the market’s growth and development.
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