The Cambodian Mine Action Centre (CMAC), with support from JICA, provides training to Ukrainian demining officers in January this year. PHOTO SUPPLIED
In collaboration with the Cambodia Securities Exchange, The Phnom Penh Post is publishing a series of articles related to the securities market. This is the second in the series.
Economic growth and development are primary objectives for every country as they create greater employment, increase domestic income, reduce poverty and result in higher standards of living.
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To achieve economic growth and development, all countries need to efficiently allocate their resources in order to produce more products and services for the market.
The securities market plays an important role in meeting that requirement through the mobilisation of the financial resources necessary for innovation and infrastructure development, as well as to grow large operations and small and medium-sized enterprises (SMEs) in an efficient, regulated and transparent environment.
Here is how the securities market facilitates economic growth:
• Bridging surplus units with deficit units
The securities market allows funds to flow efficiently from surplus units to deficit units.
Savings from the domestic households can be used by deficit units such as corporations to fund innovation, infrastructure and the production of goods and services.
This results in increased productivity in the economy, leading to greater employment, an increase in aggregate consumption and therefore growth and development.
• Promoting investment and savings
The securities market promotes long-term savings among households. It also helps diffuse stress on the banking system by matching long-term investments directly with investors.
By increasing ownership of productive assets, it enables small and individual households to benefit from economic growth and wealth distribution, as well as providing avenues for investment opportunities that increase domestic savings, which translates into economic growth.
• Financing infrastructure development
Infrastructure development is a necessary condition for long-term sustainable growth and development.
The securities market is an ideal financing venue for infrastructure development contributing to socio-economic growth through supplying essential amenities such as roads, water and sewerage systems, public transport, energy, housing and telecommunications, among others.
• Allocating scarce resources
The securities market promotes the allocation of scarce resources by offering a wide variety of investment products with different characteristics. This allows investors to allocate resources efficiently based on their appetite for risk and return.
• Developing SMEs
According to the Ministry of Industry, Science, Technology and Innovation, SMEs contribute 58 per cent to GDP and account for around 70 per cent of total employment in Cambodia, which generates revenue for the low to middle-income, fostering economic growth and social stability.
The securities market plays a part in supporting growth by providing a fundraising platform designed to reduce the cost burden of raising the funds necessary for business expansion.
Contributed by: The Cambodia Securities Exchange, Market Operations Department Email: [email protected]
Tel: 023 95 88 88 / 023 95 88 85
Disclaimer: This article has been compiled solely for informative and educational purposes. It is not intended to offer any recommendations or as investment advice. The Cambodia Securities Exchange is not liable for any losses or damages caused by using it in such a way.
