THE uncertainty surrounding the stock listing of Sihanoukville Port reflects the dilemma facing Cambodia’s new exchange and serves as a reminder that a successful launch is as much about PR as it is preparations.
In June, port CEO Luu Kim Chhum told The Post the facility’s accounts had not yet been audited by an international firm. But more worrying is the lack of transparency and uncertainty over the issue when potential investors in Cambodia’s first IPOs will be looking for the exact opposite in a country still considered a high-risk frontier market.
Given the most successful stock exchanges are an exercise in investor confidence and overall operational transparency, Sihanoukville Port is already failing the first test, with help from the government.
Ultimately, the government decides when it comes to the new exchange – as shown by Luu Kim Chhum’s deference to the authorities on all questions of timing and preparations related to the IPO.
The best course of action now would therefore be to clarify what is going on. If Sihanoukville Port is not absolutely ready to list by mid-2011 then it should not do so. Question marks around the IPO would simply undermine what will likely be jittery confidence surrounding the exchange.
The port has faced a number of uncertainties recently including the debate over whether the new rail network would connect to the facility. Ultimately it will, but the ambiguity afflicting such a key element in the port’s future success was certainly not helpful as part of overall preparations.
This all points to Cambodia’s inexperience in thinking of how uncertainty is viewed from outside a company, the key to good public relations when the investor is all-important. There is little doubt that Sihanoukville Port is making a successful rebound following a difficult 2009. Plans are to develop the nearby special economic zone and Luu Kim Chhum said previously he had already sought potential Japanese investors for the zone and the port. Also, the port is scheduled to add a facility for the delivery of oil by 2014. There are plans to deepen the draft, which would allow bigger ships to enter.
These are all huge positives for growth that potential investors will view as a guarantee that Cambodia’s largest port means business. However, a rushed IPO could undermine investor appetite from the outset.
The best way to make sure the IPO launch is steady is to think about preemptive PR. Anything less and the port’s buoyant plans for the future could sink not only itself but the whole of the exchange.