One of the most important Malaysian-owned companies in Cambodia is Cambodian Public Bank (Campu Bank), headed by Malaysian Phan Ying Tong, who completes his second term this year as Chairman of the Association of Banks of Cambodia (ABC).
Campu Bank became the first Malaysian bank in Cambodia, starting in 1992 with a single branch and growing to 21 branches today and a staff of 550 employees, with an additional three bank branches slated to open by end of this year.
Phan first arrived in Cambodia in 2002.
“We came in as a locally incorporated bank, Cambodian in every sense because we are committed to invest in Cambodia which was undergoing massive reconstruction after the civil war at that time. We want to build long term relationships here and immerse ourselves in the Cambodian environment. Most of our customers today are Cambodians. We don’t say that we cater more for Malaysian businessmen. All are welcome to bank with Campu Bank including investors from Hong Kong, Malaysia, Singapore China or anywhere,” Phan said.
A significant banking law change in 2000 or 2001 by National Bank of Cambodia increased the required minimum capital for fully-licensed banks to $13 million, was a wise move according to Phan.
“That resulted in a shrinking in the number of players from 32 to 16 and that was about the year 2000. Then one could see the withdrawal of some banks, the downsizing of some and collapse of some others.”
Phan described the NBC effort as “definitely a good move as part of the reform process for the financial institutions.”
Campu Bank is wholly owned by Public Bank in Malaysia, among the top three largest banks in Malaysia. Similarly, Campu Bank is one of the top three largest banks in Cambodia, along with ACELEDA Bank and Canadia Bank. Campu Bank’s new headquarters are located just adjacent to the Canadia Bank Tower.
Phan says the banking business really started to take off in 2003, with a big increase in business activities.
“After 2003 we have been growing by leaps and bounds. Cambodia was more stabilized politically. They created a very pro-business environment, incentive-driven to encourage foreign direct investment especially in Special Economic Zones. Since then, one can come in, apply for licenses and you can own 100% of your business. There is exchange control and a US dollar dominated economy.”
In those days, banks were charging interest rates of up to 20 percent, so Phan decided to reduce Campu Bank’s rates to be more competitive in the marketplace.
“We lowered the interest rate, attracted good customers and were able to be selective. Funding became more affordable. That actually helped to stimulate the economic growth. You could say that we were the market leader at that time.”
Earlier this year, Campu Bank opened Campu Securities, a licensed underwriter for the Cambodian Securities Exchange (CSX). Campu Securities is now engaged with a number of private clients helping prepare them for possible CSX listing including companies in the power sector, manufacturing, trading and construction.
“We have a strong customer base and have been working very closely with our potential customers who are probably ready or willing to go for listing. Right now we are actually quite busy talking to quite a few companies. Some of them have already requested us to do a preliminary feasibility study on the possible listing of their companies on the CSX. They are all private companies,” Phan said.
Goh Keat Lye, CEO of Campu Securities says companies choosing to do an IPO on the Cambodia Securities Exchange can have access to cheaper capital than they could have by borrowing from the bank.
“The stock market is a much cheaper avenue of raising capital. Also, the shares are more liquid.” Goh said.
“If you are a private company and you want to sell your company it is difficult to find a buyer, but if your company is listed, you can sell the shares any time in the stock market and become more liquid. There are many advantages. The advantage over borrowing from a bank is that you don’t have to give a personal guarantee,” he said.
Goh said the valuation of a company depends on three main things: operating performance, capital structure and public perception.
“A lot of people are looking for the right timing to list their companies. It comes down to timing and perception.”
Another benefit of listing, according to Goh, is once your company is listed, you can issue shares to take over a non-listed company.
“Rather than going to the bank and borrowing and paying money for a company, you can issue shares.”
Another benefit of listing is visibility and public perception.
“When you list on the stock exchange you can enhance your visibility as a company. When you are listed on the stock exchange the world knows about you. You enhance you image and credibility.”
Phan said companies who choose to list on the CSX would be more reputable in the eyes of investors especially from Europe and US.
“International companies prefer to deal with reputable companies that are transparent and governance compliant. Hence, the stock exchange is an environment for disclosure and full transparency. So, to them they feel full confidence, rather than to deal with companies who have so many things not disclosed and you do not know whether they have complied with the laws. Once you’re listed you’re clear.
You feel confident,” Phan said, citing the example of an ISO accreditation.
“ISO, it means that you have been through the process and it is recognized that you have complied with certain levels and certain standards, so companies feel comfortable dealing with you.”
Campu Securities CEO Goh said another advantage of listing was the ability to give employees company shares as performance incentives.
“You can give share options to your staff at a low price to instill loyalty. When you work harder, and the company progresses, you can profit from the sale of your shares when their value appreciates.”
For the long term in Cambodia, Phan remains very optimistic, having talked to representatives of Moody’s credit rating agency who came to see him.
“We are very positive about Cambodia. If you look at this region, which country has so much potential compared to Cambodia? Cambodia is coming up from the bottom, so you have more opportunities for investors and for businesses. Of course the country has the resources, incentive for people to come in, and many other factors for e.g. low labour cost and improving infrastructure especially in the transport system. For example, we are talking about export from Cambodia to European countries, Canada, New Zealand and Australia; tax free on almost all of the items.”