Ministry of Finance says just 10 companies have applied so far

THE Ministry of Finance will summon all of the Kingdom’s 60 or more real estate developers to a meeting Tuesday after only a fraction of them applied for newly required licences, a ministry official told the Post Sunday.

“We told property developers to apply for a new real estate development licence from February 1, 2010, but so far we have received only about 10,” said Norng Piseth, head of the Ministry of Finance’s Real Estate Department. “This is a very small amount of real estate developers to come and apply for a new licence. We don’t know why.”

The ministry will discuss the new regulation at Tuesday’s meeting and warn developers they have until April 30 to apply, Norng Piseth said. Those who miss the deadline will be shuttered or penalised, he added.

Prakas No1222, which regulates property developers, was issued in December 2009 in an effort to better manage inspection and licencing in the sector following the flight of developers from the country as the global economic crisis hit at the end of 2008.

The regulation requires developers who use customer financing to post a security deposit of 2 percent of a project’s estimated cost into an Inter-Ministerial Working Group account. It requires developers to have a commercial bank account in Cambodia to prevent transactions from being made independently, exposing customers to risk.

The regulation also abolishes a requirement that a development be 3 percent finished before it is advertised for sale, and drops official advertising fees.

In the past, real estate purchasers have bought directly from developers, leaving them open to losses if the development was unfinished, Norng Piseth said. The rule requires developers to complete projects or forfeit assets.

Developers said Sunday that they were working to meet the April 30 deadline.

“We will follow 100 percent because this law will protect buyers and make them feel confident ... to buy real estate,” said Touch Samnang, a project manager for Canadia Bank’s Overseas Cambodian Investment Corporation, which is building a US$200 million development on Koh Pich, an island in Phnom Penh’s Chamkarmon District.

Sung Bonna, president and CEO of Bonna Realty Group, said developers were likely delaying their applications to see how well the government will shore up the sector.

“They are waiting for government activity in this industry,” he said, adding that now was the “right time” for developers to start doing business.