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Bond Market Development in Cambodia

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Life insurance is a major institutional investor in government bond market. Capital Market ... 2. Investor: development investor base. Institutional investor: ... – PowerPoint PPT presentation

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Title: Bond Market Development in Cambodia


1
Bond Market Development in Cambodia
  • 07-08 April 2007, Shanghai, China
  • Socheat MEY
  • Ministry of Economy and Finance, Cambodia

2
Contents
  • Key Player in Cambodias Financial Sector
  • 4I perspective
  • Legal Infrastructure for Government Bond Market
  • Broadening Investor Base
  • Potential Issuers
  • Intermediary
  • Ways forward

3
Key Players in Financial Sector
  • Banking Sector
  • Dominate financial System in Cambodia
  • Insurance Sector
  • 4 insurance companies provide general insurance
    services, operating in Cambodia.
  • Life insurance is a major institutional investor
    in government bond market
  • Capital Market
  • No equity and securities market, no securities
    firm
  • Inter-Bank/Money Market
  • No

4
4I for Government Bond Market Development
  • 1. Infrastructure
  • Prospective regulatory Framework
  • Regulator MEF (1st M
  • Regulated institutions
  • Law on Government Securities
  • Approved and promulgates
  • Draft law on issuance and trading of
    Non-Government Securities
  • Approved by Council of Minister
  • Submitted to Assembly for adoption

5
4I for Government Bond Market Development (cont.)
  • Draft Sub-degree on Government Securities
  • Issuance strategy government securities may be
    issued to syndicate or underwriters, will
    receive fees for their underwriting
  • Liquidity support MEF may provide subscriber or
    underwriters with short-term purchase financing.
    Is this provision viable and practical?

6
4I for Government Bond Market Development (cont.)
  • 2. Investor development investor base
  • Institutional investor
  • National Social Security Fund ( Law on Security,
    2002)
  • Life insurance a JV company will be establish.
  • Commercial Banks commercial Banks can be major
    source for government securities. However, in
    Cambodia commercial banks are not allow to hold
    government securities as reserve assets at
    central bank. This constraint makes commercial
    banks hesitate to substantial invest in
    government securities.

7
4I for Government Bond Market Development (cont.)
  • Government saving bond
  • Allow individual access to the instrument
  • 3. Issuer
  • Many public entities involved in infrastructure
    and public utilities businesses, such as port,
    road, water supply, electricity,
  • Need huge finance for mid and long-term
    investment
  • For SOEs, however, prior consultation with the
    MEF is need bond issuance

8
4I for Government Bond Market Development (cont.)
  • 4. Intermediaries
  • Given the fact that, the present non-bank
    financial institution is not highly developed
    yet, within the sort-term practice, will be
    eligible as syndicate members or underwriters?
    Commercial banks are potential for this.
  • In case of government saving bond, the
    distribution channel? Central bank? Post office?
    Please, note that central bank and post office
    have branches in almost provinces and
    municipalities.

9
Way Forward
  • Design a training master plan for investor,
    issuers and intermediateries
  • Launch education campaign for these players
  • Continue to develop necessary regulation and
    policy for bond market

10
  • Thank You
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