Author：Harrison White (Cambodia Investment Review)
Foreign investors wanting to purchase land in Cambodia can now access more secure, simple, and affordable trust arrangements using one of Cambodia’s leading trust provider firms Stronghold Trustee.
Speaking to Cambodia Investment Review Mr. Hans Chen spokesperson for Stronghold Trustee explained that several trust options were now available for foreign investors through the 2019 Cambodian Trust Law
“Under the 1993 Cambodian constitution foreigners are not able to legally hold land titles in their name and have previously navigated this requirement through a Nominee structure or a Land Holding Company when investing in Cambodian property,” Hans said.
“Although these methods solve the title-holding problem for investors, ongoing concerns including fraudulence or high hidden fees can happen and hurt property buyers’ confidence for investing in Cambodia,” Hans added.
In 2019, the Royal Cambodian Government implemented its Trust Law to set out rules and procedures to establish, register, manage and control four types of trusts which are Commercial Trust, Public Trust, Social Trust, and Personal Trust.
“A Trustee is a legal entity that manages assets on behalf of a person or business and eventually transfers them to a beneficiary,” Hans said.
“There are many types of trusts, and the structures are fairly flexible. For example, except for using a land trust when buying the land, investors could also combine the land trust with a money trust or use a money trust directly for flexibility in investing,” he added.
Trust services are a new concept in Cambodia
Although trust structures have been commonplace in many developed economies around the world for many years, the concept is still relatively new in Cambodia.
“In the past, investors tended to use a similar structure called Nominee. However, the safety and hidden charges have remained an issue. To address these ongoing problems the Cambodian government has decided to implement the current Trust structure to better protect investors,” Hans said.
However, according to Hans buying real estate through a trust structure or transferring an asset that an individual or private company currently holds to a trustee however does have its pros and cons like any structure.
“The most significant advantage is that the property would receive higher protection if held by a licensed trustee,” Hans said.
“A licensed trustee should follow regulations and the process of registering every property and getting the certificate of trust registration. However, of course, there will be some extra expenses for registration, such as application fees, valuation reports, and documents to fulfill the requirement,” he added.
To address these higher registration fee issues the regulator has now lowered the application fee to encourage investors to use trust structures with many investors firmly believing this is an investment that is worth spending to provide safety for their property.
“Because the trust structure is still a new concept in Cambodia the market is currently ironing out any issues that need to be solved between regulators, trustees, and investors, and this is where Stronghold Trust’s expertise is important when promoting this to the market,” Hans said.
Residential and Commercial land values have recorded an ultra-high level of average growth from 2000 to 2019 after the Royal Cambodian Government opened its doors to foreign investments, leading to the increase in sales of land properties.
For investors looking to access Stronghold Trust services, the costs associated with implementing a trust structure are calculated on the cost based on the property value.
Other costs are then separated depending on the requirement of different services like property valuation or title transfer. The estimated timeframe would be three months to finish a case.
“Stronghold Trustee is a licensed trust company in Cambodia that specializes in trust services, including Collective Investment Scheme and Personal and Commercial trusts tailored to your needs,” Hans said.
“At Stronghold Trust we have a number of professionals in various industries and high-quality financial services to fulfill client’s needs and become a trusted financial Stronghold for everyone,” he added.