What Was Said At The Property, Business & Lifestyle Expo 2024 About TheTrust Market in Cambodia
At the Realestate.com.kh (REAKH) successfully held Property, Business & Lifestyle Expo 2024 in October 2024, speakers presenting at the Cambodian Investment Forum, Hay Sovanna, Acting Director of the Trust Registration Department under the Trust Regulator; and Paul Yang, Director of SM Global Trust spoke about the trust market in Cambodia.
They focused on raising awareness of how trusts function, as well as on their main benefits over other traditional methods of investment.
Since the Trust Regulator was established in Cambodia in 2021, the trust market has increased to more than 1,000 cases as of the end of October 2024 with a total value of approximately US $1.65 billion - between 2022 and 2023, the value of funds invested in the various trusts nearly doubled.
Real estate and property-related trusts account for 62 per cent of all commercial trusts by Q3 2024.
Sovanna said at the EXPO, “It's very easy to see why commercial trusts are the most popular, because to create a commercial trust is to generate profits… and within commercial trusts, real estate trusts, are the dominant one because people see the potential of the real estate market in Cambodia.”
Trusts Allow Foreigners To Invest In Land In Cambodia - Hence Their Popularity
Trusts in Cambodia offer foreigners a secure method of investing in real estate and land. As per Cambodian Law (Article 44 of the Constitution), foreigners do not have the right to own land in Cambodia and until the introduction of the trusts, non-Cambodian investors have relied on the nominee structure.
This entails putting down the name of a Cambodian partner on the property or land hard and as such has some associated risk as the hard title holds full legal claim over that investment.
Trusts provide foreigners with a safer way to invest in Cambodia, acting similarly to a nominee structure but with the secure backing of trust laws and regulations.
Trust Registration System Launched - Digital Platform
A new online Trust Registration System was launched on October 30, 2024, in Phnom Penh as the Cambodian Trust Regulator organised the Trust Forum 2024- the theme was “Trust: Beyond a Platform for Trust Building”.
H.E. SOK Dara, Director General of the Trust Regulator stated that the Trust Forum 2024 aimed to disseminate knowledge as well as best practices in the trust sector.
The launch of the digitalised platform makes it easier for all accredited trust operators to make sure that trust services can be provided conveniently and with transparency. This should also encourage foreign investors who can see their investments are secure and potentially increase the capital flow into the Kingdom.
With its launch, it should help facilitate efficient registration, management, and regulatory compliance for trusts and enhance accessibility and transparency.
H.E. Ros Seilava, Secretary of State, Ministry of Economy and Finance (MEF) stated that the benefits of the trust sector for Cambodia are both the increased domestic investment which boosts national tax revenues and fostering financial sector diversification in response to market demands in the Kingdom. Additionally, this would support macroeconomic management and global anti-money laundering (AML) and counter-terrorist financing (CFT) efforts.
Cambodia’s Trust Market By The Numbers 2024
Under Cambodia’s Trust Law of 2019 and Prakas No.003 (January 26, 2023), there are five types of generic trusts:
- Public Trust
- Commercial Trust
- Social Trust
- Individual Trust
- Financing Trust (This pre-dates 2019 but has since been integrated into the Trust Law)
During Cambodia’s Real Estate Expo 2024, the Trust Regulator reported that the total number of trusts had exceeded one thousand cases amounting to more than US $1.60 billion.
- US $1.16 billion in commercial trusts (1,021 cases)
- US $369 million in financial trusts (9 cases)
- US $2.3 million in individual trusts (8 cases)
- US $122 million in public trusts (3 cases)
- US $1.5 million in social trusts (1 case)
SOK Dara confirmed in August 2024, that the majority of trust cases in Cambodia are commercial trusts:
- Real Estate – 736 cases (+US $700 million)
- Escrow Services – 157 cases (+ US $213 million)
- Fixed Deposits – 30 cases (+US $10 million)
- Pension Funds – 38 cases (+US $63 million)
- Shareholding – 3 cases (+US $92 million)
- Green Bonds – 2 cases (US $1.2 million)
Carbon Credit Trusts might see renewed investments following the Trust Regulator of Cambodia signing a Memorandum of Understanding on the development of carbon credit trusts in Cambodia in August 2024.
H.E. Sok Dara said at the time that it marked “a new bold step into expanding the trust market in Cambodia through an international lens in order to ensure the market demands are met, and market players can seize the opportunities to maximise benefits for the trusts and related services they offer”.
This was done they said, as there had been an increased expression of interest in global carbon offsetting and a carbon credit trend which aims to encourage businesses to consider creating a trust for the trading of carbon credits in Cambodia.
What Do You Need To Know About Cambodian Trusts
Paul Yang, Director of SM Global Trust said at the EXPO, “Trusts are very secure, because the trust regulator, who manages and controls the trust system, is a government party under the Ministry of Economic and Finance, so they guarantee that investment assets held under a trust are secured… Also when creating a trust, it will be secured by a third party (trustee) as well… so property assets are secured under a trust in a way that no one can touch or interrupt those assets.”
- Trusts can last up to 99 years and Cambodian trust ownership is secured and verified through a unique trust ID, trust code and authentic certificate issued by the regulator.
- Trusts are impartial – Under an escrow account for a sale-purchase agreement, the bank acting as the escrow agent (trustee) will enforce the terms without bias to all parties;
- Trusts can support economic diversification such as allowing foreigners to purchase & hold properties which should increase foreign direct investment (FDI);
When choosing to set up a trust in the Kingdom of Cambodia, ensure the company you are establishing the trust with is registered with the Trust Regulator as a licensed trust operator will offer services for properties, inventory, and other valuable assets.
According to the Trust Regulator, currently, there are 13 companies that have been granted trust licenses in Cambodia
- 21 commercial banks approved as Safeguard Keeping/Escrow Services Operators
- 68 individual trustees (35 independent individual trustees and 33 individual trustees from trust companies)
- 16 valuation companies
- 15 auditing companies
The Trust Regulator has also indicated that there is increased investor confidence in the use of escrow services by the 19 viable commercial banks in Cambodia and escrow services have been used for many trusts to date.
Comments