Trusts in Cambodia are turning out to be the new vehicles routing foreign investment into the country. The concept is relatively new in the Kingdom, but it has generated much interest within a short span of time that nearly 500 trust companies have queued up for registration with over $300 million funds in their hands.
According to Sok Dara, Director General of the Trust Regulator (TR), this could even go up to $600 million by the end of the year, considering the enthusiasm the new Trust Law has created in the market.
Of course, not all trust funds are foreign investments, but a sizeable chunk can be so, according to the market vibes, especially as investments in land. More and more foreigners have taken to the trust route to invest in land in Cambodia as they are barred from directly purchasing land in the Kingdom.
According to the Constitution of Cambodia, adopted in 1993, foreigners cannot own landed property in the country. But they are allowed to purchase apartments or condominiums from the first floor upwards.
However, the Trust Law, enacted in 2019, gives foreigners an opportunity to invest in land in Cambodia, indirectly though, with the title of the property to be held by a trust. “Foreigners can now make a profit from land price appreciation without acquiring the land in their name. They can also do so without relinquishing their nationality or without obtaining Cambodian nationality,” said Vichet Lor, Phnom Penh President of Global Real Estate Association.
Under Prakas 003 on the establishment, function, and management of trusts in the country, issued in January this year by the Non-Banking Financial Services Authority (NBFSA) of Cambodia, a trust operation is any activity pertaining to the transfer of property from its owner (the trustor) to an entity or person to control, manage, and maintain it for the benefit of another person or entity (the beneficiary).
Sok Dara, Director General of the Trust Regulator (TR), told Khmer Times that so far there are 52 trusts that have been registered with the Regulator under the Trust Law. “Under the law, trusts can be of varied types such as public trust, commercial trust, financial trust, social trust, and individual trust.
But all trusts established by trustor or settlor in Cambodia shall register with the TR in accordance with the law and regulations,” Dara pointed out.
Source: Khmer Times
