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Logo of Phnom Penh Post newspaper Phnom Penh Post - Construction investment surges in 2015 despite poor permit ranking

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Construction permits are hard to get in Cambodia, according to the World Bank. POST PROPERTY / WORLD BANK GROUP DATA

Construction investment surges in 2015 despite poor permit ranking

Construction and real estate investments in Cambodia have experienced a 13.75 per cent growth rate in the third quarter of this year, compared to that of last year, despite Cambodia being ranked one of the more difficult countries in which to do business.

According to a report by the Ministry of Land Management, Urban Planning and Construction (MLMUPC), in the first nine months of this year the construction sector and real estate investments in Cambodia have a combined worth of $1,752 million. That is an increased value of $1,540 million since last year and an equivalent to a 13.75 per cent growth rate.

During a phone interview earlier this week, Lao Tip Seyha, Deputy General Director of the Construction Department of Land Management, Urban Planning and Construction told Post Property that “the Korean investors rank first in the sector investment, followed by the Chinese, Japanese, British and Malaysian.”

When asked about the assets of the foreign and local investors in Cambodia, Lao said that from the year 2000 to the first nine months of this year, 239 foreign investment projects worth about $3,292 million have been licensed, covering a total area of 9.6 million square meters. The rest goes to projects either run by local investors or shared between local and foreign investors.

However, according to the annual ‘Doing Business’ report that was published by the World Bank Group yesterday, Cambodia ranked 127 out of the 189 countries surveyed in the study when it came to ease of doing business and occupied the even lower 181st position in dealing with construction permits. For example, the Cambodian permission-giving process on average required 20 procedures and took 652 days until the permit was granted. Neighbouring Thailand, for comparison, requires 17 procedures and 105 days until completion, according to the report.

Despite the very low performance in the permit ranking the MLMUPC’s latest figures seem to imply an improvement of practices as well.

Huy Nara, the ministry’s deputy general told Post Property on the phone yesterday that he doubted the accuracy of the World Bank’s ranking, claiming that getting a construction permit in Cambodia was as easy as anywhere else in the region.
He added that some people blamed the law or criticized the slow process for construction permit giving in Cambodia.

On the other hand, the deputy general admitted improvement in permit giving explaining the positive figures of the last quarter: “The ministry is always keeping the law updated and improves the permit giving process.”

Chrek Soknim, CEO of Century 21 Mekong Company, said that the growth in the construction sector and real estate investment proves that Cambodia still has potential in this sector because Cambodia is new in the field and is open to the opportunity to grow and further development. He continued that, compared to others, it is the leading sector in stimulating the national economy. However, without government support, economic growth and political stability, Cambodia will never have the chance to progress.

Additional reporting by Moeun Nhean

An earlier version of this article stated that foreign investment projects since the year 2000 totaled $3.292 million. The correct figure is $3,292 million.
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