Skyscraper expo on diamond island

Models of Koh Pich's skyscrapers

Phnom Penh Post
MONDAY, 28 JUNE 2010 15:00 SOEUN SAY

CAMBODIA’S first international skyscraper expo, CamBuild 2010, will take place later this year, it was announced Sunday. The show will be an international trade show open for architects, civil and building constructors, building consultants and designers, engineers, government departments, interior designers and distributors. It will take place on Phnom Penh’s Diamond Island in October. Organiser Richard Yew, who is Vice President of AMB Events SDN, said Sunday that more than 200 exhibitors are expected at the event including pavilions from Singapore, China, Taiwan, the European Union and the US.

Cambodia to launch new property tax by end this year

PHNOM PENH, Jun. 29, 2010 (Xinhua News Agency)

Buyers of constructions worth more than $25,000 are set to pay new levy if Ministry schedule goes ahead as planned.

THE government is set to launch a new property tax by the end of this year, officials at the Ministry of Economy and Finance said Monday, in a move which has reportedly sparked protest in Cambodia’s capital.

Under the Finance for Management Law, passed in November, purchasers of constructions worth more than 100 million riels (around US$25,000) will be required to pay an annual tax worth 0.1 percent of property value.

“We are preparing a prakas to establish a committee to evaluate property and we will start implementing tax collection in the end of this year, as the National Assembly requires,” Norng Piseth, chief of the Real Estate Division at the Ministry of Economy and Finance, said Monday.

“It is very important for increasing national income,” he added.

Although the new levy is not expected to raise large amounts of additional funds, as Minister of Finance Keat Chhon has estimated tax revenue would be between $3 million and $9 million, the government has voiced its ambition to improve tax administration.

Hang Chuon Naron, secretary of state for the Finance Ministry, said at a meeting of government donors held earlier this month that in 2010 the government aims to improve customs and tax administration, to meet the increased expenditure of sub-national administration and introduce a tax on all land assets.

This view was reiterated by Keat Chhon at a discussion of real estate law late last year.

“We want to establish a tax culture which allows us to collect tax directly in the future,” he said.

About 180,000 houses that are under municipal and provincial administration would be covered under the new property tax, he added.

Some commentators are considering whether it is the right time for a new levy.

Sung Bonna, president and CEO of Bonna Realty Group and president of National Valuers’ Association of Cambodia, said Monday: “In my point of view, I think that government [is acting] too early to collect tax on property while country is facing the [impact of the] global economic crisis.”

He believes that local investment may be affected “a little bit” by the fee, but it is the “duty for everyone to comply”.

But property developers, who are set to pass on the tax to vendors, did not oppose the move.

Kheng Ser, assistant to World City’s Duk Kon Kim, the developer behind Camko City project development, said Monday: “I think that those who are obliged to pay tax are buyers.

“But if the law required to pay – we must to pay to the government. This is a duty.”

However, according to the Deum Ampil News, 100 people representing 490 families living at the Borey Tang Kasang housing development in Phnom Penh’s Dangkor district protested against the tax on Friday. The report said that developer Borey Tang Kasang confirmed to protesters that they must pay the tax.

Investors Positive on Impending Arbitration Center

The Coca-Cola company is one of major foreign investors to Cambodia. (Photo: AP)

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 24 June 2010

Foreign investors doing business in Cambodia say they would like to see the newly formed National Arbitration Center solve commercial disputes, but at least some remain skeptical that it will help them.

The center, due to be established this year, will resolve such disputes within crossing the current court system.

The center will be build with financial and technical assistance from various international partners, including the World Bank, Asian Development Bank and European Union and will house approximately 60 national and international arbitrators.

Analysts believe the center will build confidence among existing investors and draw more businesses.

Janet Hausen, president of the International Business Association, which has 70 members, said the center will encourage investors to expand their businesses here.

“One of the main concerns of foreign investors is dispute resolutions,” she said in an interview. “The court procedures not just in Cambodia but other countries are very tedious. So you tend not to be so aggressive in businesses.”

In addition, a local arbitration facility can cut costs, she said.

Currently, businesses must rely on the courts to solve business disputes. Sometimes, companies will take their disputes to Singapore or Hong Kong, where credible dispute bodies are found.

But a 2009 survey by the International Finance Corporation found a need for a local arbitration center. Court cases can take up to 400 days and can cost more than the original dispute, the survey found.

Sok Reden, executive director of the agro-industry company Enviro Corporation Cambodia, said his company is currently involved in a cash dispute for $350,0000 with a former partner. He has sought court resolution, but in two years has seen no movement, he said.

“We filed a lawsuit in the court in 2008, but we haven’t seen any intervention since then,” he said. “This makes the investors afraid, because we don’t have proper measures.”

Sok Reden said he was optimistic about the upcoming arbitration center.

Cambodia also needs to bring in major investors from Japan, the US and Europe, which currently invest heavily in neighboring Singapore, Thailand and Vietnam, economists say, even as it has gained foreign investment from China, South Korea and Vietnam.

About 200 European countries are here operating small and medium-sized businesses, especially in tourism, garments and import-export. But according to David Lipman, president of the EU’s delegation in Cambodia, only a few are investment companies.

An arbitration center will bring more European companies to Cambodia, he said.

“Direct investment will increase once investors are sure the climate is safe for their investment, and this center is exactly the right direction that we want,” he said in an interview. “Once European investors see their investments are secure and there is a proper system of arbitration when there is a dispute, then even more investors will come to Cambodia. And I do believe that we will see the fruit from this within the coming year or two.”

That fruit may not extend to the potentially lucrative oil and gas sector, said Michael McWalter, an adviser to the National Petroleum Authority.

“With respect to the establishment of an Arbitration Center in Cambodia, I do not believe that it will have any effect on the willingness of the petroleum industry to invest in Cambodia at all,” he wrote in an e-mail.

The international nature of most petroleum contracts means an international arbitration site is already agreed on at the early stages of deals, he said.

A national arbitration center would not be seen as “neutral ground” unless the dispute was between Cambodians, he said.

Meanwhile, the quality of the arbitration remains to be seen.

“The quality of the people and the quality of the center are very important to the private sector,“ said Billie Jean Slott, a law consultant for Sciaroni and Associates. If it looks like poor quality, disputes will be settled elsewhere.

Arbitrators will have to speak many foreign languages and must learn about international commercial law, such as Singaporean law and Hong Kong law, which would be used in arbitration, Slott said.

Mao Thura, secretary of state for the Ministry of Commerce, said a lack of support for the center from the private sector will mean its collapse. So the ministry has been working on strengthening its quality and to provide training to arbitrators.

Finally, arbitrators will have to be above corruption, Commerce Minister Cham Prasidh said.

Cambodia Foreign Ownership Property Law 2010

Phom Penh Post

Friday, 18 June 2010 15:01
Catherine James and Soeun Say

Analysts say property law sub-decree would boost foreign investment potential

Developers have welcomed a government move towards allowing foreign property ownership in private units to be up to 80 percent of a building, with stakeholders applauding it as a sign that Cambodia is opening up to more investment.

The government is considering a sub-decree on the foreign property ownership law to clarify the percentage of a building that can be privately owned by a foreigner, the Land Ministry said Wednesday. Previously the law had no limit, and it was not clear what the allowances were.

Reactions among key players in the property market and investment experts, interviewed by the Post on Thursday, were largely positive. Many predicted that the sub-decree would boost Cambodia’s market potential; however, some are uncertain of the time frame for change.

Douglas Clayton, chief executive officer of fund manager Leopard Capital, which has a US$1.5 million investment in residential housing in Siem
Reap, said the sub-decree would be a positive indication the government was opening to foreign direct investment.

“This will obviously be very favourable news if they pass this sub-decree,” he said.

Although he did not expect immediate results, at least not in cities such as Phnom Penh and Siem Reap, he pointed to Cambodia’s coastline as an area of potential growth.

“I’m not sure it would immediately stimulate the foreign property market – at the moment there’s not as much interest because of the global financial crisis,” he said.

“I think what we’ll see is the demand for property along the coast will increase. Foreigners tend to want to have a place more for the holidays, so I think that’s where you’ll see more developers targeting.”

Matthew Rendall, partner at law firm Sciaroni & Associates, said there is definitely a market for foreign ownership – “we get enquiries about that all the time” – but that just how big the market is, or could become, isn’t clear.

He said that demand from developers would probably increase as their sales scope went from being concentrated in Cambodia to global in nature.

“The higher the government makes the level of foreign ownership, the better it is for the property market generally because it increases the customer base,” he said.

Daniel Parkes, country manager for Cambodia at global property firm CB Richard Ellis, agreed. He said an 80 percent limit would help expand the market, opening it up to new foreign investment, which he deemed “very important” to the sector.

However, he said that only “time would tell” how it would affect the property market in terms of levels of both construction and development.
“This doesn’t give all the answers, but it is a good step along the way,” he added.

Commentators, however, said that some points remained to be clarified in the sub-decree to prevent a “dual economy” within a single apartment block.

“The idea 100 percent cannot be sold to foreigners will be a factor developers take into consideration when they design these apartments. If x amount can be sold to Cambodian’s only and the rest to foreigners, it would potentially create two different pricing structures,” Rendall said.

He said details of whether the 80 percent refers to the number of units or floor space could also have similar design ramifications.

But he played down fears that a broader customer base could inflate housing prices to the detriment of local Cambodians, saying there will always be a market for different levels of income.

Among property developers, the reaction was overwhelmingly positive.

Un Mouy, sales and marketing manager for Tow Town Co, a Taiwanese developer behind Bali Resort housing development project, said it has already seen a jump in demand from foreigners following the foreign property law’s introduction earlier this year and expects the sub-decree to drive demand.

“It is good news for us to build more apartments and condominiums to sell,” she said.

She said the company is preparing documents to ask permission for the Ministry of Land Management to build another apartment to meet client demand.

Kheng Ser, assistant to South Korean developer World City’s vice president, said the move would attract more investors as property opportunities opened up.

“I think it’s a good idea to allow up to 80 percent of units to be owned by foreigners,” he said. He added that his company had also sold the vast majority of condos at its $2 billion development in Camko City.

Foreigners “will come more and more to invest and live in our country because they can own property here,” he added.

According to the Ministry of Land Management, the sub-decree is awaiting approval from the Council of Ministers and is set to be passed within
the next month. ADDITIONAL REPORTING BY ELLIE DYER