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The magnificent temples of Angkor Wat, Siem Reap, Cambodia

The magnificent temples of Angkor Wat, Siem Reap, Cambodia

  • Low  wages, liberal government policy on business, access to larger markets, and a country that offers extensive opportunities for tourism.
  • Cambodia is heavily reliant on international trade. The country’s economy is supported by the garment, tourism, agriculture and construction sectors.
  • Cambodia’s membership of the World Trade Organisation and ASEAN; bilateral trade agreements under the ASEAN framework with India, China, Japan, Korea, Australia, New Zealand, EU and the USA; as well as development initiatives at regional and sub-regional levels; have provided investors in Cambodia with access to the markets of almost all countries around the world.
  • Cambodia’s main trading partners are the United States, European Union, China, South Korea, Thailand, Vietnam, Malaysia and Canada.
    English: Busy restaurant in Siem Reap City

    English: Busy restaurant in Siem Reap City (Photo credit: Wikipedia)

  • The number of international tourists visiting Cambodia increased 26.8 percent to 1,756,652 visitors in the first six months of
    2012 compared to 1,385,029 tourists in the same period last year. According to the Ministry of Tourism, 2,881,862 international tourists visited Cambodia in 2011, an increase of 15 percent over the 2.5 million arrivals in 2010.
  • Despite the global economic uncertainty, traffics growth to Cambodia has been robust and consistent, a testament to the attractiveness of the country, both as a business and a tourism destination. Phnom Penh and Siem Reap international airports are expecting to break the 2-million passenger mark a year in 2012. To accommodate the steady increases, Cambodia Airports, the developer and operator of the international airports, is launching this year-end a comprehensive expansion program to double the capacities of the two platforms to 4 million passengers by 2015.
  • Travel Facilitation and Tourist Transportation continues to grow
    • Cambodia Angkor Air commenced domestic flights from Siem Reap to Sihanoukville in December 2011 operating 3 flights per week. Sihanoukville is the gateway to Cambodia’s coastal and ecotourism region in the southwest – the country’s second largest tourist destination.
    • Air Myanmar increased from Yangon-Siem Reap-Phnom Penh-Yangon (two flights per week) in November 2011.
    • Cebu Pacific Airlines began operating direct flights between Manila and Siem Reap (three flights per week) in April 2012.
    • From November 2012, German airline Condor plans to operate one flight a week between Frankfurt and Siem Reap
    • Charter flights to Cambodia, particularly from China, Korea and Japan has increased. And in April 2012, charter flights from Spain arrived in Siem Reap for the first time.
    • new direct bus service will be launched between Thailand and Cambodia, linking Bangkok and Phnom Penh via the Aranyaprathet/Poipet border crossing and the other route via Trat in Southern Thailand and Koh Kong.
Can foreigners buy Real Estate in Cambodia?
Yes, but with some restrictions...

Legislation passed at the beginning of April 2010 allows foreigners to own property in Cambodian buildings above the ground floor. This works well for apartments in condominiums or even older buildings in cities but not for a villa in a residential area except if you can manage to buy the upper floor.

The following options show how it is possible to buy almost anything.

Buying Real Property in Cambodia
Under Cambodian Land Law, foreign nationals cannot hold a 100% stake in real property within the Kingdom (except for the case above mentioned). However, legal mechanisms and documentation exist that allow foreigners to fully control the purchase, sale and use of real property in which they have invested, and benefit fully from any profits they make.

There are basically 5 Options for buying real estate and details of these follow.

Option 1: Forming a Company with a Cambodian Citizen
The safest method by which foreign nationals can purchase real property within Cambodia is to form a limited company in partnership with a Cambodian citizen. Any real property purchased for investment is then registered in the name of the company. The company must have a minimum 51% Cambodian shareholding. However, careful allocation of shares, and careful drafting of the rights attached to share certificates can ensure the foreigner’s full control of the company and its assets. Additional mortgage, security and Power of Attorney documents can also be created to accompany ownership documentation. Following this procedure ensures security for the foreigner’s investment.

Under this Option, the foreigner is expected to pay 100% of the purchase cost of real property plus any construction costs. If the real property is later sold, 100% of the sale price goes directly to the foreigner. This includes any profit accrued as a result of the property increasing in value. This issue should be detailed carefully in any company and/or sales documentation.

Of course the choice of your partners is of prime importance.

Option 2: Purchase plus long-term Rental
This method allows foreign nationals to purchase real property and register the Title Deed in the name of a Cambodian citizen. The foreigner and the Cambodian then enter into a long-term rental agreement by which the Cambodian citizen leases the property back to the foreigner. Lease periods can last up to 99 years.

The problem with this method, and why it has few takers, is the psychological attachment to freehold ‘ownership’. Most foreign investors expect full ‘ownership’ of something they buy. The principal of renting back property that has already been purchased is an anathema to most foreigners.

However, correct drafting of the terms of the property holding and lease arrangements make this a reasonably secure method of controlling real property in Cambodia. Under this method, the foreigner may sell the property at any time and keep 100% of the revenue from the sale. The Cambodian citizen is not permitted to disagree with or obstruct the sale. The foreigner retains the original copy of the new Title Deed as a security precaution: sale of real property is impossible without the original copy of the Title Deed.

Though the foreigner can sell the property at any time, the Cambodian citizen’s signature or thumbprint is generally required before any sale can take place. A good working relationship between both parties is therefore very important.

Option 3: Registering Real Property with a Cambodian Citizen
This method is very similar to Option 2 but requires 100% trust in the Cambodian citizen.

Foreign nationals have rights, under the Kingdom’s Statutes, to choose a Cambodian in whose name their Title Deed is registered. That is, a foreign national can purchase property and register the purchased property in the name of the Cambodian citizen.

Once the Title Deed is transferred to the Cambodian citizen, the foreigner retains possession of the new Title Deed. This is a security precaution that protects the foreigner’s interests by preventing the Cambodian citizen selling the land or property: sales are impossible without the Title Deed. Transferring the Cambodian’s rights to the foreigner via a Mortgage or Lease Agreement provides additional security for the foreigner’s investment.

Copies of the Title Deed and any Mortgage or Lease Agreements must be registered with the Department of Provincial Land Management, Urban Planning and Construction, as well as the appropriate District and central government departments that handle land registry. Most importantly, a copy of the Land Title and any Mortgage or Lease Agreements must be lodged with the Cadastral Land Registry Office.

The Cambodian citizen in whose name the Title is registered does not need to be resident in Cambodia. For example, the Title can be registered with a Cambodian citizen living in the USA or Australia. The Cambodian citizen must be able to prove Cambodian nationality.

Option 4: Marriage to a Cambodian National
Foreign buyers who are married to a Cambodian national can register real property using the name of their wife/husband on the Title Deed. It is also possible for a foreign national married to a Cambodian citizen and resident in the country for a long period to apply for Cambodian citizenship. In the event of citizenship being granted, Cambodian Law holds that land can be registered in the names of both parties. Neither partner can subsequently sell the land or property without mutual agreement.

In the event of divorce or separation, division of the land or property is dependent on the conditions under which divorce or separation takes place, and the decision of any court ruling or arbitration relating to the divorce. It is often source of conflict between the divorcees.

Option 5: Acquisition of Honorary Cambodian Citizenship
A foreigner may be granted honorary Cambodian citizenship if he or she donates a significant sum of money to the Royal Government of Cambodia for the purposes of benefiting the people of Cambodia. Foreigners who have made a special impact or rendered exceptional help to the Kingdom may also be granted this honor in recognition of their expertise or altruism.

One consequence of being granted honorary citizenship is that it becomes possible for a foreign national to acquire a 100% right of ownership over real property purchased within the Kingdom. This arrangement is recognized by the Ministry of Land Management, Urban Planning and Construction for the Kingdom of Cambodia, and by the Royal Government.

Honorary citizenship is recognized by the Royal Government of Cambodia as a legitimate means of purchasing real property within the Kingdom but it does not affect the foreigner’s original nationality or citizenship in any way.

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