A Hong Kong consulting firm that helped to set up a stock exchange in Mongolia is

working with the Cambodian government to draft a securities law with the aim of creating

a small stock exchange in 1997.

Few, if any, companies have enough of an audited track record to be listed today.

But Chanthol Sun, secretary general for the Council for the Development of Cambodia

(CDC), said in the future some will.

He identified likely candidates as Royal Air Cambodge, the government airline partly

owned by Malaysians, and state run companies targeted for privatization.

These include the oil company, Compagnie de Distribution des Carburants, the insurance

company Caminco; and the electric utility, Electricité du Cambodge. Some private

commercial banks and construction companies are also interested, he said.

Chanthol Sun said a stock exchange would encourage equity investment, help companies

raise capital and give investors an opportunity to put savings into Cambodian companies.

"If we can open up capital markets in Cambodia, we'll be able to help mobilize

savings," he said.

Officials who work in credit told the Post that Cambodia's rate of personal savings

is believed to be 5 or 6 percent, with a lot of the money held in gold, jewels and

real estate. There aren't any investment options such as government bonds or treasury

bills.

The International Securities Consultancy of Hong Kong has been retained to help draft

the securities law.

"They set up the stock exchanges in Mongolia and Bhutan," said Chanthol

Sun.

Financial analysts said it is important to get a securities law on the books, but

whether there is a stock exchange is question-able.

They say there aren't enough companies ready to sell shares, none of the companies

targeted for privatization are yet privatized and even the private companies that

might be eligible generally haven't been subjected to auditing that would pass international

standards.

"It's a big drawback, not having an audit history," said Craig Martin,

of International Managment and Investment Consultants.

"No international auditing standards are in place yet.

"So there are very few companies to go on it (an exchange) and there is very

little information about the companies which an investor would want to know,"

he said.

But Chantol Sun said demand for an exchange exists. "A lot of companies have

approached us already to be listed," he said.

"We don't have to have 50 companies. We can start with five good ones,"

he said.

He said after the securities law is adopted, a securities and exchange commission

will be put in place and by 1997 "we hope to set up trading."

The securities law is being drafted at the same time as the commercial banking law.

Between the two laws, it will have to be determined whether banks will ultimately

have the right to sell securities or to invest in them as institutional investors.

New accounting standards are also being worked on.