The arrival in Cambodia over the last few years of so many life insurance companies, including Prudential from January 2013, is a bellwether of our industry’s confidence in Cambodia’s economic outlook.
By their nature, life insurance companies are prudent investors in the countries where they operate and invest for the long term in stable, fixed income assets like government bonds or highly-rated corporate bonds, to ensure they can meet their obligations to customers for the duration of their life insurance coverage.
Since Prudential first opened its doors in Cambodia in 2013, we have been following with great interest the emergence of new, potentially investable assets here in the Kingdom - including a fledgling corporate bond market which established local companies are using more frequently to raise capital by issuing bonds.
We have also noted the Royal Government of Cambodia’s recent announcements that it will pilot a sovereign bond program with the aim of issuing sovereign bonds, denominated in riel, by 2022 or 2023.
A sovereign bond market is essential to ensure the riel gains international standing on the foreign exchange markets and to start the gradual process of ‘de-dollarization’ that will allow Cambodia to take full control of its fiscal and monetary policy.
The government has been working hard to promote the Cambodian riel domestically, and its support for the use of new financial technology, including cashless payments, will likely see the riel become more widely used in the medium term.
The signs are encouraging across the board that the country is beginning to move towards a more mature financial market with more stable, long-term assets becoming available and improving market liquidity.
The diversification of Cambodian assets will hopefully continue alongside a controlled approach to limited offshore investment into instruments like US Treasuries (for even safer savings) to facilitate and balance this diversification.
Prudential welcomes this move, and we intend to use the knowledge gained in emerging, developing and mature markets across the globe over our 171-year history to support this process.
By David Nutman,
CEO, Prudential Cambodia Life Assurance