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Southeast Asia

CSX makes an SME push

Cambodia’s stock exchange is working hard to increase its appeal to small and medium-sized enterprises. Could 2021 be the year when those efforts pay off?

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By Rebecca Feng

Cambodia’s lack of new listings has prompted a renewed push to lure small and medium-sized companies – which form the backbone of the economy – to the market.

Since its launch a decade ago, the Cambodian Securities Exchange (CSX) has notched up only seven IPOs and eight bonds. Most of the listings have come from state-owned enterprises; their shares generally went to buy-and-hold strategic investors, keeping secondary liquidity to a minimum.

The regulator, the Securities and Exchange Commission of Cambodia (SECC) “is desperate for more IPOs and bond deals,” an executive at a Cambodian securities house tells Asiamoney.

There are many reasons why SMEs generally shun the kingdom’s capital markets, including a low level of financial literacy among potential investors, the lack of a currency swap market, and the lack of a benchmark.

One hurdle that has been repeatedly cited – and usually with a sense of helplessness – is the difficulty that small companies have faced in obtaining tax clearance.

Before selling bonds or equities on the exchange, companies need sign-off from the tax department. This has proved an obstacle for small companies because it is both expensive and time-consuming – and given the embryonic state of the capital markets, some companies question if it is worth the effort.

However,