A $6 million, four-story, 71,900-sq. foot Cambodian stock market building located in Phnom Penh’s financial district on the outskirts of the capital is currently being constructed by World City Co. Ltd., a South Korean firm, and will be completed by the end of 2010. Leopard Capital founder Douglas Clayton notes in his most recent newsletter that “according to a finance ministry official, the Exchange might have a ‘soft opening’ in January or February [in order] to receive applications from companies to list, including the four state enterprises that have been instructed to do so.”  Hoping to follow in the footsteps of Vietnam, whose exchange opened in 2000 and has been a boon for companies and investors alike, Cambodian officials aim to use capital markets to ultimately move beyond relying chiefly on international aid and banks loans to subsidize their annual budgets.

At the moment, Cambodia’s economy is small and primarily driven by textiles, which account for nearly 80% of exports. The economy is projected to grow at 3.5% in 2010, though as 2009 showed, its fortunes are largely correlated to international buyers elsewhere. U.S. Department of Commerce data showed, for instance, that Cambodian clothing exports to the U.S. dropped by 27% in the first five months of 2009, from the corresponding period of 2008. Moreover, tourist arrivals fell by 3% in the first four months of 2009, due mainly to a decline in construction activity due to falling FDI, notably from South Korea.

Finally, serious questions linger vis a vis the state of institutions (or lack thereof) underpinning the country’s governance. Reuters reports that “the country’s junk-level credit ratings suggest it is a risky bet because of its weak oversight and rampant corruption.”