The relatively new trust market of Cambodia is growing fast and the funds invested in the trusts will soon reach the $1 billion mark, according to Sok Dara, Director General of the Trust Regulator, yesterday.
Making the opening remarks at a seminar on ‘Trust Regulation in Cambodia,’ organised by the Malaysian Business Council of Cambodia (MBCC) with the support of the Embassy of Malaysia and the Trust Regulator, the Director General said that there are 512 trusts in the country now with total funds reaching $940 million.
“It is a matter of time before the sector reaches the $1 billion mark which may happen as soon as this month itself,” Dara said.
The trust sector of Cambodia is relatively young with the country adopting the Trust Law in 2019. The Trust Regulator was established later, but the sector has since made remarkable growth in just under two years, especially by attracting foreign investments.
A well-regulated trust market is the reason behind the fast growth of the sector as it helped to build investor confidence, the Director General pointed out.
Of the 512 trusts in the country now, 495 are commercial trusts, while there are nine financial trusts, six individual trusts, one public trust and one social trust as well.
There are also seven licensed companies providing trust services now, apart from five trust operators providing escrow services. The number of independent individual trustees comes to 24 and individual trustees of trust companies to 14. In addition to this, five companies provide valuation services now.
The Director General said that the trust market could generate confidence as it brings certainty, security and flexibility to investors. “Certainty is ensured by following all applicable laws, while the role of the Trust Regulator provides security to the investors. It is mandatory by law that all trusts are registered with the Regulator which also oversees the market operations. Trusts also bring flexibility for investors – for example, foreigners can now own land through a trust,” he said. The title of the land will however be held in the name of a registered trustee.
Datuk Eldeen Husaini Mohd Hashim, Ambassador of Malaysia to Cambodia, in his opening remarks, highlighted the contribution of the non-banking financial sector to an economy’s growth while recalling the relatively long history of the trust sector in Malaysia.
The ambassador further noted that the establishment of the Securities Commission and the Unit Trust scheme were also important landmarks for the Malaysian economy. He also referred to the growing Malaysia-Cambodia friendship, saying that all efforts would be made to strengthen it further.
During his opening remarks, MBCC President Oknha Tan Khee Meng, referred to the key role of the trust sector in Cambodia in attracting foreign investment to the country. “The sector has helped foreigners to invest in land in Cambodia,” he pointed out.
Later while moderating a panel discussion, the MBCC President also brought attention to how investors can save costs on taxes while transferring ownership of land without changing the title by using the services of a trustee.
The Trust Law of Cambodia, promulgated on January 2, 2019, contains comprehensive regulations and rules to govern the rights, duties and responsibilities of the trustor, trustee and beneficiary. It also provides a comprehensive understanding of each type of trust and its purpose.
Under the law, a trust is a three-party legal relationship in which the trustor (or investor) transfers property or fund to a trustee who shall hold, manage, and protect it, apart from its own estate, for the trust’s beneficiary.
A sizeable chunk of the funds invested in trusts in Cambodia came from foreigners, especially as investments in land. More and more foreigners have taken to the trust route to invest in land in Cambodia as they are barred from directly purchasing land in the Kingdom.