Many in the sector point to high informal charges as reason for delay, a problem previously cited by the World Bank and IFC.

THE government’s top real estate official has warned unregistered agents and valuers that they face fines if they don’t get their paperwork in order.

Norng Piseth, chief of the real estate division at the Ministry of Economy and Finance, said just 38 of the country’s 100 real estate and valuation companies were properly licensed.

“The others must renew their licences again,” he said. “We will inspect them, and if we find they are still doing business and haven’t renewed their licences they will be fined 5 million riels [US$1,250].”

Both a licence and a practicing certificate is required, both costing 700,000 riels ($167), and both need to be renewed annually, he said.

Some real estate agents blamed the need to pay high informal fees to avoid licensing delays as reason for not having renewed. Most used brokers as go-betweens to speed up the process, they said. The practice added to the overall cost, but the brokers were close to officials and so could navigate hurdles, they added.

Visal Real Estate Director Sear Chailin acknowledged his company’s licence expired last month. He said that he was too busy to get it renewed, but also that the company was struggling to afford the fee because of the lack of activity in the real estate market. “I don’t have money yet, but I will go to renew again next month,” he said.

Last year’s licence cost him $700 through a broker, he said, well above the official price.

VTrust Property Co Deputy Director Chrek Soknin said he paid $740 to renew his licence in August, adding he used a broker to smooth the process.

Norng Piseth denied that informal charges were required to process licences and certificates. “[Real estate agents] don’t want to bring their documents directly to the ministry; they ask brokers to do it for them, and we don’t know how much the brokers charge,” he said.

Ministry officials charged the brokers only the fee as set out in a prakas, or edict, that took effect in February 2007.

The International Finance Corporation and World Bank identified the prevalence of informal licensing fees in their “Second Investment Climate Assessment” report in April. Though only 11 percent of firms identified permits and licences as a severe constraint on business, “they find that in most of the cases, they are charged informal fees”, it said.

The Asian Development Bank is helping the Ministry of Industry, Mines and Energy review the licensing process across all sectors in Cambodia, the report said.