THE government is pressing ahead with controversial housing regulations, despite an outcry from South Korean developers, a senior official said.
Mao Pov, deputy chief of the Real Estate Division of the Ministry of Economy and Finance, told the Post following a meeting with developers Friday that the ministry would clarify some ambiguous wording, but otherwise not change the rules.
"Korean developers want to stop the real estate development prakas but we can't. We want them to respect the prakas because we are doing it like this to protect everyone doing business in real estate," Mao Pov said.
But Norng Pesith, deputy director of the ministry's Financial Industry Department, contradicted Mao Pov.
He said the ministry was still open to altering the prakas to meet developers' concerns and that it would not be implemented until agreement was reached.
The rules were slated to take effect September 30 but were put on hold early this month following an outcry from Korean developers. They said the prakas could force them to exit the market.
Mao Pov told the Post at the time the ministry would take on board their concerns and look to reintroduce the rules in January.
Ros Monin, managing director of Sewha-Cambodia Law Group, which is coordinating the Korean response to the prakas, said it was clear the ministry did not understand Korean developers' concerns.
"They say Korean developers want to abandon the prakas, but the developers just want it changed. [As it stands] there are some articles that Korean developers cannot accept."
He said Korean developers would meet with the finance ministry working group in the second week of November to outline their concerns again.
The new regulations, which were first circulated by the Finance Ministry in June, required all developers to obtain licences from an Inter-Ministerial Task Force, purchase construction site insurance and deposit two percent of total project costs in a ministry account at the central bank.
They also required developers to create a housing development account into which buyers would make down payments on units before construction is completed. Developers would need approval from the ministry to access the accounts.
Mao Pov said the measures would protect buyers from developer fraud as they could only access buyer funds with ministry approval.
"In the case that the developers do not complete construction, we have the right to take money from the bank account to complete the construction," he said.
Sewha-Cambodia Law Group filed a submission on the prakas on behalf of Korean developers last week. Shinwoo Kim, legal counsel at the law firm and co-author of the submission, said at the time that developers would be unable to find new investors under the terms of the prakas.
"In the real estate industry, usually the financial institutions and investors want to control accounts," he said.
"If we say, ‘No, you can't control the account because it is also subject to the approval of government officials', then it is very difficult to find investors."
He added that key concerns included the lack of criteria in the prakas for approving requests to access the housing development accounts and distrust of government officials.
Cambodia was ranked the world's 14th-most corrupt country and Asia's most corrupt after Myanmar in Transparency International's latest corruption index.
Shinwoo said Korean developers had repeatedly advocated the government implement a unit registration law to protect buyers, but the government had taken no action. It is also added that the ministry will take strict measures against any developers who failed to apply for the real estate development licence not later than September 30.