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Developers required to apply for new licence

Developers required to apply for new licence

THE Ministry of Economy and Finance has told property developers to apply for a new real estate development licence from February 1, an official said Monday, following the passing of a prakas, or edict, last month on the management of property.

Firms in the industry would be given until the end of next month to apply, Norng Piseth, chief of real the finance ministry’s Real Estate Division told the Post, adding that firms that failed to apply would be shut down.

The prakas issued on December 15 abolishes official fees on advertising property and their timing. It also ends a requirement that 3 percent of a development be completed before it can go on sale and allows the developer full control of a project bank account, although withdrawals are subject to regulations.

However, another controversial measure was included in the new prakas.

“All real estate developers will be required to deposit 2 percent of the whole development’s value at the inter-ministerial work group’s account,” according to Norng Piseth.

The prakas follows the swift withdrawal from Cambodia in late 2008 of property firms hit by the economic crisis. Afterwards, the government said it would enact strict new rules; however, some developers opposed certain proposals.

Sung Bonna, president and CEO of Bonna Realty Group told the Post on Monday that the measure was good for consumers, some of whom had been cheated by developers in the past, but that it would not help the private sector.

“The prakas will not help the real estate sector do any better,” he said. “It is not the key to a Cambodian property market recovery.”

Representatives of property developers World City Co Ltd of South Korea and the Overseas Cambodian Investment Corporation both welcomed the new regulations Monday, adding they would apply for the necessary licences.

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