Prime Minister Hun Sen said the draft legislation allowing foreigners to own apartments will - once completed - give momentum to other sectors of the economy ("PM pushes for property law to boost foreign investment", June 22, 2009).
Yes, of course it will. Many countries in this world allow foreigners to buy properties, include landed properties in their countries. Cambodia's existing laws prohibit foreigners from owning property, which supporters say will prevent speculation and price volatility.
Under existing laws, the property market in Cambodia has been filled with speculators for the last two years prior to the world financial crisis!
There are many other ways to curb excessive speculative activities. Capital gains tax on property is one of the most effective ways. If people buy and sell off property within a short period of time, there must be a reason for it. In most cases, there is a good profit to be made. The government can tax on the price differential. The tax rate could depend on the number of years that the owner possessed the property. The tax rate would be higher for properties held for a shorter period of time.
The government can also impose a property transaction tax to discourage property transaction activities when the market heats up.
Property is an asset that foreigners cannot bring away with them. There is no reason for the government to put restrictions on foreigners, especially those with investments that plan to stay here for the long term to buy property in the country. There are investors who have been here for more than 10 years. They would like to have a house of their own which they can modify after their own taste. They do not want to shift their home every 3 or 5 years because landlords want to take back their properties.
It should be noted that many countries offer permanent resident status to foreigners to encourage them to buy properties. Under the Second Home Scheme, the Malaysian government offers foreigners who buy properties the permanent resident status. This will not only attract capital into the property market, but the brains and long-term investments.
Do remember that the government has to spend huge amounts of money to attract tourists to stay just four to five days. But if you attract a foreigner to set up a second home, they could stay substantial portions of each year!
Of course, to protect the interest of the local people the government can impose certain restrictions on the purchase of property by foreigners. For example, they could restrict foreigners from buying property that costs less than, say, US$50,000. However, the government should not prohibit foreigners from buying landed properties. Those who plan to stay here long-term and are financially capable of doing so would like to own a landed property for a more comfortable stay.
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