The latest draft of Cambodia’s long-awaited foreign ownership law restricts real estate acquisition to “useful” foreigners who have already made significant contributions to Cambodia’s development, raising concerns for some that it will fail to attract new investment.
The draft law, which would allow non-Cambodians to own property above the ground floor in multi-owner buildings, has been agreed upon by the ministries of Justice and Land Management and is set to be presented to members of the private sector in a workshop this morning.
With its implementation marked as “urgent,” the draft limits ownership to “legally qualified foreigners who are considered by the Royal Government to be useful to the Kingdom of Cambodia,” according to an English translation obtained yesterday.
More specifically, any foreigner who wants to own property must have, “contributed to national economic development, or have provided assistance in social and cultural sectors or in environmental and natural resource protection, or have provided assistance in the physical infrastructure development in the Kingdom of Cambodia.”
Matthew Rendall, a partner at the Sciaroni and Associates law firm and a member of a government working group on real estate, said yesterday that those restrictions were a new addition since he last saw a draft earlier this year.
“The whole point of this law is to direct foreign investment back into Cambodia…. This is going to limit it again and, in our view, unnecessarily so,” he said.
Mr Rendall said that the restrictions appear to limit ownership to foreigners who already live and work in Cambodia, and added that he would raise this as a concern during today’s meeting. “This isn’t what the developers had in mind when they pushed for the foreign ownership law.”
David Colman, property advisor for Cambodia Angkor Real Estate, said that he had been eager to see a draft of the law, because he hoped it would give foreigners a reason to spend money in Cambodia.
“Our view of this was that it would provide incentive to investment,” Mr Colman said. “On the face of it, it looked like a really good incentive to try and work some initiative in the real estate market. The market is in a very bad way at the moment.”
With the new restrictions, “It doesn’t make the proposition any more attractive than what is existing now,” he said. “It only provides incentive to people already working here…. That’s a bit of a shame. I think they’ve missed a trick.”
Nun Theany, spokeswoman for the Ministry of Land Management, declined yesterday to elaborate on the reasons behind the addition of the restrictions.
She stressed that the ministry still has to consult with the private sector, members of civil society and an inter-ministerial working group before the draft will be finalized. “We sped up the process, and will propose it to the National Assembly before the end of 2009 for approval,” Ms Theany said.
The latest draft stipulates that foreigners can own only up to 49 percent of units in a co-owned building, and forbids non-Cambodians from owning any property within 30 km of an international land border except in the cases of Special Economic Zones. In accordance with the country’s new sub-decree on building co-ownership, although foreigners cannot own land, they will share joint ownership of the land beneath a multi-owner building with their fellow co-owners.
Previous drafts of the law had forbidden any one foreigner from owning more than two pieces of property in Cambodia according to Mr Rendall, but that stipulation was removed from the latest draft after objections from the private sector.