Cambodia Investment Review
CamEd Business School and the American Chamber of Commerce in Cambodia supported an Information Day on Cambodia’s Trust Law, aimed at teaching students and the general public about the country’s new legislation. The event, was organized and implemented by the CamEd Business Law Club and was sponsored by Phillip Trustee, Stronghold Trustee, HBS Law and ACLEDA Bank.
The Royal Cambodian Government implemented the Trust Law in 2019, which established guidelines and procedures for four types of trusts: Commercial Trust, Public Trust, Social Trust, and Personal Trust.
Since its inception, 512 trusts have been registered, with a total value of approximately $939 million as of March 2023. However, there remains a pressing need for increased awareness and understanding of trusts among both local and international investors.
Building the capacity of legal professionals in Cambodia
In his welcoming remarks, Casey Barnett, President of CamEd Business School, praised the CamEd Business Law Club students for organizing and implementing the event.
He highlighted the potential for the trust law to facilitate a high number of transactions, enabling foreigners to buy land in Cambodia and boosting foreign direct investment (FDI) into the real estate sector. “FDI would benefit the Cambodian economy, particularly in a developing country like Cambodia,” said Barnett.
Read more: Cambodia’s Trust Regulator Awards Inaugural Trust Licenses to Six Firms
Ruwan S, Chairman of AmCham’s Law Committee and Legal Consultant at BNG Legal, discussed the AmCham Law Committee’s launch, aiming to help better understand new laws like the trust law.
“The committee plans to work with relevant government authorities and entities to develop the law and build the capacity of legal professionals in Cambodia, ultimately promoting international norms of legal practice,” Ruwan said. He expressed hope that the committee could create a good system of corporate governance that could be used as a template for future leaders.
The trust sector and its regulation in Cambodia
Speakers at the event provided valuable insights into the trust sector and its regulation in Cambodia. Mr. Kheng Taingpor, Law Consultant at Grand Cathay Investment Trustee, emphasized the various types of trusts in Cambodia, such as public trusts, financial trusts, social trusts, commercial trusts, and individual trusts.
He elaborated on the benefits of trusts in Cambodia, which include investor protection, financial diversification, monitoring and managing capital inflow, business potential, job opportunities, and tax revenue.
“Trusts in Cambodia have great potential, but they face challenges like governance and institution management, infrastructure to support the operation, human resource capability and quality, public awareness, information technology and innovation, and the lack of incentive or exceptional support,” said Taingpor.
He called for concerted efforts to address these challenges to unlock the full potential of the trust market in Cambodia.
The process of operating a trust company
Mr. Proeung Sopheap, General Manager of Phillip Trustee, discussed the process of operating a trust company in Cambodia and the various trust services offered, including holding trust property, sales and purchase agreement (SPA) services, and escrow services for commercial, social, and individual trusts.
He detailed the objectives for setting up trusts in Cambodia, which can range from commercial and social purposes to property development, personal interest or benefits, estate and succession planning, and wealth preservation.
“Trust services in Cambodia come with fees associated, such as legal and property due diligence charges, ownership transfer fees, trust registration fees, administration fees for drafting trust deeds, and trustee management fees,” Sopheap explained.
Opportunities of escrow services for businesses
Mr. Siya Malida, VP and Head of Securities Operations at ACLEDA Bank Plc, presented the opportunities of escrow services for businesses in the Kingdom of Cambodia. He explained the various types of accounts, such as Trust Fund Accounts (for retirement benefits), Education Savings Accounts (to pay for education fees), Health Savings Accounts (to cover health care expenses), and Safe Box Services (to safeguard valuable documents).
Malida noted that these accounts offer clients higher interest rates than regular savings accounts, making them attractive options for customers looking to secure their financial futures. “Escrow services provide a secure way for businesses to manage their transactions, and the specialized accounts offer a range of benefits to clients,” said Malida.
The Trust Regulator of Cambodia has officially approved inaugural licenses for six companies to operate trust businesses in the Kingdom. The announcement was made during the “Trust Forum 2023” event held at the Phnom Penh Hotel, which aimed to disseminate progress in the development process of the trust sector in Cambodia to relevant stakeholders.
The Information Day on Cambodia’s Trust Law successfully educated students and the public on the potential benefits and opportunities offered by the new legislation. As the law continues to develop and evolve, it is expected to drive economic growth and attract more foreign investment in the country.
