The biggest story from Cambodia in the world's press lately was the sentencing of a man convicted of mass murder that occurred during the Khmer Rouge rule in the 1970s and 1980s. One can probably forgive the world's press for neglecting the news about Cambodia delaying the opening of its own stock exchange from last month to next year.
But while the foreigners might still be interested in the "killing fields" of Cambodia, the locals, or at least those benefiting from it, are more interested in the economy and its growth. This year the Cambodian economy is expected to grow by just 5 per cent, but for most of the past decade the economy has registered an annual growth rate of about 10 per cent - an almost China-style growth story that the world press has largely ignored.
Given this economic background, outsiders should not regard the Cambodia Stock Exchange as some sort of vanity project. If it opens and succeeds it can serve as another avenue for attracting foreign capital to a country desperately in need of development funds. Last December, the Cambodian government awarded a contract to a South Korean firm, World City, to build the US$6 million (Dh22m), four-storey, 71,900 square foot stock market building in Phnom Penh's planned financial district on the outskirts of the capital.
Just last week, the Securities and Exchange Commission of Cambodia (SECC) announced it had provisionally selected 22 financial companies to operate on its market, which is being set up with the help of the Seoul stock market operator. "We have had 22 firms applying to be underwriters, brokers and investment advisers," Ming Bankosal, the director general of the SECC, was quoted by Reuters as saying.
"We have chosen some of the companies, which now need to fulfil requirements on capital and other things within a month in order to get licences." Of course, the situation on the ground in this emerging Asian economy is not a bed of roses. Despite the growth, Cambodia is still one of the poorest economies in the world, with about 40 per cent of the government budget coming from foreign aid. Cambodia remains a largely agrarian economy and the only sector of significance is the garment industry, which relies on cheap labour to export low value-added garments.
Producing garments for export employs about 280,000 people, or about 30 per cent of the workforce, while nearly 50 per cent of the workforce remains in agriculture and peasant farming. In 2005, Cambodia announced it had found oil in its territorial waters. Production has yet to begin, although the French oil company Total has signed production deals. If and when production starts, it should help wean government revenue off foreign aid.
Possibilities for the mining of bauxite and even gold exist in the northern part of Cambodia, near the border with Thailand. But Cambodia's relations with its bigger, richer neighbour have always been troubled, and there have has even been minor shooting skirmishes near the border over disputed temples that are culturally significant to both countries More than half of Cambodia's population is less than 21 years old, meaning most have no direct experience of the Khmer Rouge or the "killing fields".
But the young population lacks education and productive skills, particularly in the countryside, which suffers from a severe lack of basic infrastructure. The most important economic and political challenge facing Cambodia is how to create an economy in which the private sector can create enough jobs to fulfil the aspirations of its young people. The opening of the stock exchange will have more than symbolic significance, signalling the "arrival" of a modern nation.
The exchange will allow at least of some of the funds to be used for investment in local companies. It will also allow foreigners to help in Cambodia's development. It will not be not long before some analyst in a major investment bank is tipping Cambodia as the next "hot" market. Watch this space. business@thenational.ae