Members of the Kingdom’s financial community yesterday launched the sector’s development strategy for the next decade, with de-dollaris-ation, improved regulations and better crisis prevention among the main goals.
The Financial Sector Development Strategy (FSDS) 2011-2020, done by the Ministry of Economy and Finance and National Bank of Cambodia with technical and financial support from the Asian Development Bank, lays out key issues in the sector and offers solutions for the coming 10 years.
National Bank of Cambodia Governor Chea Chanto said the most recent FSDS aimed at developing an effective, integral and competitive financial system in Cambodia.
“The strategy will develop a sound, market-oriented finance sector that will enhance resource mobilisation and allocation, and consequently support sustainable economic growth,” he said.
Chea Chanto added the strategy would also “make finance more widely accessible and inclusive to overall poverty reduction.”
The high dollarisation of the Cambodian economy, the domination of banks in the financial industry and a general lack of market infrastructure are as problems that continue to hamper the sector, according to the FSDS report.
The report lists de-dollarisation as a long-term goal. However, the FSDS outlines ways to increase use of the riel in the short to medium-term, including pricing goods and services in the domestic market in the currency. Also, the introduction of investment products such as treasury bills was cited as a way to boost the prevalence of the riel.
At the same time, the FSDS noted increased banking supervision through regulator cooperation, the launch of an interbank lending market to boost confidence in the sector and the establishment of an early-warning system to prevent crises as key parts of development of the sector going forward.
The report also offered plans for the Kingdom’s nascent insurance and capital markets, and called for still greater legal and regulatory reform.
Minister of Economy and Finance Keat Chhon said yesterday that strong relationships among both regulators and operators were vital to growing the domestic financial industry.
He also said that Cambodia’s financial sector over the past decade, especially the banking industry, had withstood a hard hit from the global economic crisis.
“The strategic plan will help to strengthen the capacity of the regulators and all financial operators with codes of ethics and high professionalism,” he said.
He added the FSDS follows closely ASEAN’s plan for economic integration by 2015.
ADB Country Director Putu Kamayana said the strategy, and update from FSDS 2006-2015, provides “regulatory measures to ensure sound management of the country’s financial sector in the next 10 years.”