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Through extended tax incentives, the government hopes to stimulate more SMEs to become listed on the Cambodian stock exchange, which has already seen modest gains between 2020 and 2021
PHNNOM PENH--Cambodian Prime Minister Hun Sen decided to continue providing tax incentives for the next three years to companies and enterprises that issue shares and bonds in the securities exchange sector to boost the stock exchange sector in the country.
The sub-decree on tax incentives in the securities sector, which came into force on Feb. 24 indicated that the companies or enterprises licensed by the Securities and Exchange Commission of Cambodia (NCCC) for the initial public offering of equity bonds will be granted tax incentives by the government for another three years.
The three-year tax incentive will be counted from the beginning of the taxable year in which the securities are issued to the public that the issuance takes place during the first six months of the year, the beginning of the taxable year after the taxable year in which the securities are issued to the public during the last six months of the taxable year, and during any period authorized by Minister of Economy and Finance.
The new regulation also added that companies and enterprises that issue bonds with value of more than 20 percent of their voting rights or more than 20 percent of their total assets and have at least seven years of credit will receive income tax deduction by 50 percent.
The companies and enterprises that issue shares or bonds of 20 percent or less will receive a proportional tax incentive based on 20,001. In that, for the issuance of shares, the income tax incentive shall not exceed 20 billion riel and for the issuance of bonds, the income tax incentive shall not exceed 8 billion riel.
Hong Sokhour, chief executive officer of the Cambodia Securities Exchange (CSX), said the tax incentives for the Cambodian securities sector represents huge support from the government, which could allow this sector flourish.
“The government continues to support tax incentives for the securities sector to promote and encourage potential companies to become listed on the stock exchange to raise capital to expand their business for the growth of our national economy,” Sokhour said.
He added that there are currently 15 companies listed in the stock exchange market, which raised the value to about $280 million. Nine companies have registered to sell shares and six companies to issue bonds.
In 2022, he expects to get six to seven companies listed on the stock exchange, most of them are small and medium enterprises.
“There will be more companies on the stock market, and our stock market will be bigger. Investors can have more options to invest more and have more profit-making opportunities accordingly,” he emphasized.
According to a report on achievements of Cambodia Securities Exchange 2021 and the outlook for 2022 released on Jan. 17, CSE listed two more companies such as DBDE, with 15 billion riel in capital and Telcotech, with 80 billion riel capital in 2021.
The average volume and price of shares on the stock market in 2021 broke the record high since the opening of the market with 234,628 shares issued and with capital of about 1 billion riel per day.
Compared to 2020, the volume and the average trading price increased by about 400 percent and 127 percent, respectively.