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Updated Tuesday, October 6, 2009 11:59 am TWN, By Jason Szep, Reuters

Cambodia rekindles stocks dream

Others say the timing may not be right for some time. Foreign direct investment nearly halved to an estimated US$490 million from US$815 million in 2008, according to the International Monetary Fund, which expects Cambodia's economy to shrink nearly 3 percent this year before growing about 4 percent next year.

Most of the disappearing capital had flowed into construction projects, including a US$2 billion satellite city on the outskirts of the capital Phnom Penh where the exchange will be built.

Developed by South Korean-backed World City, the two-year-old project known as Camko City aims to create a new financial district by 2018 spread over 125 hectares, complete with glass-walled office towers for stockbrokers, upmarket apartments, securities regulator offices and sleek retail spaces.

But construction has slowed, said Kim Duk-kon, a vice president at World City. Although the first phase is nearly complete with many of the residential villas built and sold, subsequent phases are on hold after capital dried up.

The area where the stock exchange will be built is flooded swampland on the edge of Boeung Kak Lake in the heart of the city. The Finance Ministry said the end of the rainy season this month will allow workers to begin building the exchange on the corner of what developers are calling Phnom Penh Boulevard.

Cambodian officials rejected an initial design, saying the exchange's exterior was too modern and not Cambodian enough. It has since been redesigned using traditional Khmer accents.

Vann at the Finance Ministry and Kim said a news conference this month will announce construction of the exchange. A new Securities and Exchange Commission of Cambodia, he added, is drafting market regulations that will be issued soon.

Some observers are unconvinced and say authorities need to demonstrate how investors will be protected in a country with a reputation for corruption at nearly every level of the bureaucracy. Some fear speculative gambling by public employees.

David Cowen, deputy division chief for the International Monetary Fund's Asia and Pacific Department, met recently with the new securities regulator and urged its officials to work closely with the central National Bank of Cambodia.

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Kim Duk-kon, vice president of World City Co Ltd, a South Korean-backed developer who is developing Camko City, shows a model of the stock exchange at his office in Phnom Penh, ...

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