Cambodia Warming to Idea of Foreign Ownership

Just three decades after the downfall of the Khmer Rouge, a deadly regime that left behind little notion of private property, a law that would allow foreigners to buy some kinds of real estate here appears to be nearing approval.

And while the proposed law is focused on the property market, experts agree it also would be a general boost for the country, which has been struggling through its own version of the global economic downturn.

“The law, in essence, will not help the whole economy recover. But it’s part of a wider picture,” said Daniel Parkes, country manager for the CB Richard Ellis real estate company. “What it is doing is making investment in Cambodia more transparent and easier.”

The law, which is expected to go to the National Assembly for a vote in the coming months, would allow foreigners to own apartments and condominiums on buildings’ upper floors. Now they are limited to 99-year leaseholds on any property.

Ground-level residences, which include ownership of the land that the units stand on, would continue to be reserved for Cambodians.

There are some controversial details in the draft. But over all, Mr. Parkes said, the proposed law would improve confidence in the market — especially in comparison with neighboring countries like Thailand, where foreigners are limited to 30-year leases on homes or land, and Singapore, where they are barred from owning property below the sixth floor.

Mr. Parkes’s own presence in Cambodia is due to great expectations for its real estate sector. The 27-year-old arrived here four months ago from Britain; his assignment was to open the first office of CB Richard Ellis in the capital to meet a growing demand for professional real estate services.

“Working in the U.K., it has become obvious over the last two years or so that it is a mature market,” Mr. Parkes said. “Where the future is, is in Asia.”

He says he considers the assignment to be a long-term one, and he spends weekends riding around the city on his 1967 Vespa, keeping his eyes peeled for a property that he might like to buy himself.

Over all, the country’s financial forecasts and Phnom Penh’s growth seem to support his optimism.

Economists here generally agree that Cambodia will emerge from its year-long recession in 2010. And the International Monetary Fund said in September that, while the country’s G.D.P. would contract 2.75 percent this year, it would climb about 4 percent in 2010.

The capital’s 1.3 million inhabitants mostly live in low-grade concrete apartment blocks that form the city’s low skyline. But Cambodia’s tallest building, the 30-story Canadia Tower, opened Nov. 5. And the structure, which includes apartments for some Canadia Bank employees, is the first of several such projects planned for the city center.

Like many housing markets across the world, speculative buying and inflated land values produced a lot of phantom growth in Cambodia in recent years.

From 2005 to mid-2008, prices for some houses in Phnom Penh rose tenfold. Increasing foreign investment and large-scale residential projects like Gold Tower 42, a South Korean-funded 42-story skyscraper that is still being built, were just some of the factors that led industry observers to have faith in the country’s market.

But as the effects of the global economic crisis spilled over into Cambodia in late 2008, demand dried up, and housing prices tumbled dramatically — 40 percent compared with the same period last year, according to real estate agents.

“Before there was so much investment from developers in China and South Korea,” said Soush Saroeun, executive director of Asia Real Property, a Cambodian real estate agency. He said prices in Phnom Penh’s most affluent neighborhoods had fallen to about $3,000 per square meter, or $280 a square foot, from around $4,500 per square meter in July 2008. (High-end real estate in Cambodia is generally valued in U.S. dollars.)

Some observers here say that confidence in the market actually was boosted when the long-awaited proposal to allow foreign ownership was introduced by the Ministry of Land Management in April.

Some investors and analysts say, however, that the draft contains stipulations that would cause unnecessary complications, like the rule that no more than 49 percent of a condominium building’s units may be owned by foreigners.

The rule would cause “big problems for developers in the region in their initial business plans,” forcing them to sell to two distinct markets, said Matthew Rendall, a managing partner with the legal consultancy Sciaroni & Associates, based in Phnom Penh.

Sek Sitha, an under secretary of state for the land management ministry, said the restriction was included because the government wants “Cambodians to have priority over foreigners.” But he said the Council of Ministers, which is now reviewing the draft law, and the assembly would consider the concerns.

In Channy, chief executive of Acleda Bank, one of the country’s largest banks, said that expecting Cambodians to buy 51 percent of the units in a building created to appeal to foreigners was unlikely because few would be interested in such a costly investment. “Demand is very low,” he said. “Most of our loans go to local Cambodians, but it depends on the cash flow of the individual borrower.”

The proposal also says foreigners cannot be co-owners in land purchases, nor can they buy any properties within 30 kilometers, or 18.5 miles, of the borders, except in special economic zones.

Rory Hunter, chief executive of the local property developer Brocon Group, said developers could bypass the proportional ownership issue by offering long-term leases, rather than sales, on the balance of the units in a building meant for the foreign market.

And while the current 99-year lease is not, practically, very different from an outright purchase, “psychologically, people want to own freehold, not leasehold,” Mr. Hunter said. “It will give foreign investors more confidence regarding the security of their investment.”

Khmer Rouge jail chief Duch seeks acquittal

PHNOM PENH (AFP) – Former Khmer Rouge prison chief Duch asked Cambodia's UN-backed war crimes court Friday to acquit and release him, in a surprise development on the final day of arguments in his nine-month trial.

"I would ask the chambers to release me. Thank you very much," Duch said at the end of his closing statement to the court, officially known as the Extraordinary Chambers in the Courts of Cambodia.

Following a query by judges, his Cambodian lawyer Kar Savuth then confirmed that Duch was asking to be acquitted on the grounds that he was not a senior member of the brutal 1975-1979 communist regime.

Cambodia hosts international ministerial meeting on transnational crimes

SIEM REAP, Cambodia, Nov. 16 (Xinhua) -- Cambodia on Monday hosts a four-day meeting of the Seventh ASEAN Ministerial Meeting on Transnational Crime (7th AMMTC), the Fourth ASEAN Ministerial Meeting on Transnational Crime with their dialogue partners from China, Japan and Republic of Korea, and also the First ASEAN plus China Ministerial Meeting on Transnational Crime.

In a statement released Monday by Cambodia's Ministry of Interior said the meeting began on Nov. 16 to 19 in Siem Reap province in northern Cambodia.

The statement said that the countries of the ASEAN (Association of Southeast Asian Nations) share many common perspectives, and many common challenges.

"The relationship within ASEAN has always been characterized by understanding and cooperation. Together, within the ASEAN framework, ASEAN Member States (AMS) have faced many challenges and accomplished many things," the statement said, adding that today, ASEAN Member States face many challenges within their region. Chief among these is the problem of transnational crime. AMS realized that this is not Cambodia's problem alone. This is all ASEAN Member States face.

"And to meet this problem, and to effectively combat it, ASEAN recently have adopted an important new additional guiding mechanism, the ASEAN Charter," it said.

The perpetrators of international crime are well organized and highly motivated. The ASEAN countries, acting together, are even more organized and even more motivated than them.

The ASEAN Charter provides ASEAN Member States with strength and resolve to commit the ASEAN law enforcement to combat and prevent organized crimes.

ASEAN objective is clear: to stamp out international crime completely, in all its forms. For the safety and long term stability of the entire ASEAN region, ASEAN may not fail at this task. That demonstrates ASEAN: one vision, one identity and one community.

Founded in 1967, the ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Cambodia, Thailand in new row

PHNOM PENH - CAMBODIA and Thailand reignited their diplomatic row on Monday over fugitive former Thai premier Thaksin Shinawatra, giving disputing accounts over consular visits to a Thai man accused of spying.

The Cambodian foreign ministry said a Thai embassy official was allowed on Monday to visit Siwarak Chothipong, 31, who was arrested on Thursday on charges of supplying details of Thaksin's flight schedule to his country's embassy.

But Bangkok, already furious over Phnom Penh's refusal to extradite Thaksin when he visited Cambodia last week, denied that its diplomats had been granted access to the man, an employee at the Cambodia Air Traffic Service.

'Today, we agreed to allow (a Thai diplomat) to visit the man at 2pm (0700 GMT, 3pm Singapore time) in the prison where he is being temporarily detained,' Cambodian foreign ministry spokesman Koy Kuong told AFP.

The spy allegations prompted Phnom Penh to expel the Thai embassy's first secretary on Thursday and Thailand reciprocated hours later.

Thaksin, who visited under his new role as economic adviser to Cambodia, left the country on Saturday, ending a contentious four-day visit that deepened a diplomatic storm between already bickering Bangkok and Phnom Penh. -- AFP

Embassy on alert but life goes on

senior Thai security officer in Bangkok said yesterday that intelligence and security agencies were drafting contingency plans that included the downsizing of staff at the Thai Embassy in Phnom Penh, as well as an evacuation in case the diplomatic tensions translate into another anti-Thai riot.

Thai businessmen in Cambodia have been briefed about the situation and will continue to remain engaged with embassy staff for regular updates, the officer said on condition of anonymity.

But while the diplomatic fallout has forced officials there to look over their shoulders, no one thinks diplomatic tension will translate into another anti-Thai riot as was seen in January 2003 when the Thai Embassy in Phnom Penh was torched along with Thai-owned businesses and other establishments.

According to the officer - who is observing the situation very closely - the embassy in Phnom Penh has been instructed to continue with standard operating procedures for the time being.

About 50 armed police and soldiers are posted in front of the embassy, said the officer, who added that there were no signs of any sort of protest in the making.

"Unlike the anti-Thai riot [in 2003], the Cambodia government appears to be taking adequate preventive measures to prevent a similar incident," said the officer.

"But then again, public protests are often orchestrated by political figures. If someone wants to see the embassy attacked again, they can set things in motion," said the officer.

Changes to standard operating prodcedures will depend on the situation on the ground. But as of yesterday there had been no restrictions on the movements of officers assigned to the embassy, according to another intelligence officer.

Thailand's 2nd Army Region commander, Lt-General Weewalit Jorasamrit, said the situation along the border near the Preah Vihear Temple remained normal.

"Contrary to some news reports, Cambodia has not at all called for reinforcements. We have not increased the number of our troops either," he said.

Crossing along the Thai-Cambodia common border also continued as usual yesterday as local residents and small traders carried on with their daily activities.

More than 5,000 Cambodian vendors and workers travelled past the Ban Khlong Leuk checkpoint yesterday to earn their livings in Na Klua market.

At their stalls, the Cambodian traders were seen glued to TV to check news updates about Thai-Cambodian relations.

Thai gamblers, however, were clearly reluctant to travel to casinos in Cambodia's Poi Pet.

Not many Thais went past Aranyaprathet to the casinos yesterday.

The tension has also taken its toll on the air-travel industry, as some foreign visitors heading to Cambodia via Thailand decided to remain in Thailand for the duration of their holidays.

Cambodia appoints Thaksin as govt adviser

PHNOM PENH (AFP) – Cambodia has appointed former Thai prime minister Thaksin Shinawatra as economic adviser to premier Hun Sen and his administration, a Cambodian government statement said on Wednesday.

The statement, read out on state television, said Thaksin would serve "as personal adviser to Cambodian Prime Minister Hun Sen and the adviser to the Cambodian government in charge of economy".

The appointment, by royal decree, came almost two weeks after Hun Sen riled Thailand by offering safe haven to Thaksin, who was ousted in a coup in 2006 and is living abroad to avoid corruption charges.

Vietnam set to reinforce practical ties with Cambodia

Vietnam expects to join efforts with Cambodia to develop bilateral relations in a bid to bring practical benefits to both sides, said Prime Minister Nguyen Tan Dung.

PM Dung made this statement while receiving Cambodian Permanent Deputy PM Men Sam An, who doubles as President of the Cambodia-Vietnam Friendship Association (CVFA), in Hanoi on November 3.

The government leader noted with pleasure that Vietnam-Cambodia ties have grown fruitfully, especially in the fields of politics, diplomacy, economics and trade, despite the impact of the global economic crisis.

The two nations have also co-operated smoothly in maintaining security, border demarcation and marker planting, mitigating damage caused by natural disasters and facilitating co-operative relations between border provinces, he said.

PM Dung appreciated the efforts of both the CVFA and Men Sam An in beefing up their bilateral relationship, saying that the Vietnamese government will create favourable conditions for the two sides to co-operate effectively, not only at the central level, but also among local chapters.

The PM asked the two associations to increase the dissemination of information about the time-honoured friendship amongst younger generations, and step up co-ordination at international forums, particularly in ASEAN and APEC.

Regarding acts and statements made by Sam Rainsy - President of the Sam Rainsy Party (SRP), who recently uprooted six temporary poles for Marker 185 between Vietnam’s southern province of Long An and Cambodia’s Svay Rieng province - he proposed that the Cambodian government take due measures to deal with Rainsy’s acts of sabotage and not permit similar cases to occur, as they negatively affect the fine relations between the two nations.

Having expressed delight at effective co-operation in economics, trade and investment, An said the two nations need to expand co-operation into the areas of aviation, post and telecommunications and banking.

The deputy PM stated that Sam Rainsy’s recent acts destroyed a national asset and violated the laws of Cambodia , undermining its fine relationship with Vietnam .

Empowered by the President, PM Dung bestowed a Friendship Order on the Cambodian official.

The same day, Politburo member and permanent member of the Secretariat of the Party Central Committee, Truong Tan Sang, received the Cambodian guests.

Mr Sang applauded the CVFA’s collaboration with its Vietnamese counterpart and other partners from both countries to organise practical activities which have helped to beef up friendship and co-operation between their two peoples.

The Party official said he hoped that the two associations would work together to hold more such activities in future for the sake of Vietnam-Cambodia relations.

Also on November 3, the Cambodian delegates worked with the Vietnam Union of Friendship Organisations (VUFO) and the Vietnam Women’s Union .

VUFO President Vu Xuan Hong took this occasion to present the union’s noblest award--the insignia ‘For peace and friendship between nations’ - to Men Sam An and four other members of the Cambodian delegation. (VNA)

Cambodia balances East and West

PHNOM PENH - At a ceremony last month marking the construction of the US$128 million Cambodia-China Prek Kdam Friendship Bridge in Kandal province, Cambodian Prime Minister Hun Sen said the growth in aid and investment from China was boosting economic development and strengthening his country's "political independence".

"China respects the political decisions of Cambodia," he told his audience. "They are quiet, but at the same time they build bridges and roads and there are no complicated conditions." It was a thinly veiled reference to the strings attached to Western aid, including calls for progress on anti-corruption reforms, and underscored China's growing role in Cambodia's developing economy.

With a still booming economy amid the global economic downturn, China has maintained the momentum behind its strong Cambodia balances East and West
By Sebastian Strangio

PHNOM PENH - At a ceremony last month marking the construction of the US$128 million Cambodia-China Prek Kdam Friendship Bridge in Kandal province, Cambodian Prime Minister Hun Sen said the growth in aid and investment from China was boosting economic development and strengthening his country's "political independence".

"China respects the political decisions of Cambodia," he told his audience. "They are quiet, but at the same time they build bridges and roads and there are no complicated conditions." It was a thinly veiled reference to the strings attached to Western aid, including calls for progress on anti-corruption reforms, and underscored China's growing role in Cambodia's developing economy.

With a still booming economy amid the global economic downturn, China has maintained the momentum behind its strong commercial diplomacy towards Southeast Asia. Cambodia - a small but important corner of Beijing's emerging regional economic sphere of influence - has been one of the key beneficiaries of the loans, aid and investment largesse.

Official "friendship" delegations between the Chinese Communist Party and Hun Sen's ruling Cambodian People's Party have proceeded apace throughout the crisis. During a three-day visit to China's Sichuan province that concluded over the weekend, Hun Sen and Chinese officials announced $853 million worth of new Chinese loans and grants for various infrastructure projects in Cambodia.

The funds will be dedicated to hydropower projects, two bridges and the rehabilitation of the highway linking the country's Kratie and Mondulkiri provinces. The announcement comes on top of the $880 million in loans and grants Cambodia has received from Beijing since 2006, including finance for the $280 million Kamchay hydropower dam in Kampot province and the recently completed $30 million Council of Ministers building in the capital Phnom Penh - presented as a gift from the government in Beijing.

Chinese Embassy spokesman Qian Hai said Chinese investments in Cambodia as of 2009 totalled $4.5 billion, a commercial success he credits in part to a policy of respecting Cambodia's sovereignty. "We do not interfere in the internal affairs of Cambodia," he said. Phnom Penh has traditionally reciprocated by recognizing Beijing's One-China policy, advocating "peaceful reunification" between Taiwan and the Chinese mainland, Qian Hai added.

China's global sales pitch to developing countries, essentially aid and investment decoupled from prickly issues of human rights or democratic reforms, has in recent years scored diplomatic points in Phnom Penh. But like most Southeast Asian countries, Cambodia has had a complicated and sometimes stormy historical relationship with Beijing.

The 1950s and 1960s were marked by close relations, cemented by the close personal friendship between Cambodia's mercurial Prince Norodom Sihanouk and Chinese leaders Mao Zedong and Zhou Enlai, who offered the beleaguered Sihanouk asylum - including a residence and official stipend - after he was overthrown by the US-backed General Lon Nol in 1970.

China's support from 1975-79 for the radical Khmer Rouge regime - as a counterweight to the assertiveness of the recently reunited socialist Vietnam - led Hun Sen to refer to China as "the root of everything that was evil" in Cambodia in a 1988 essay. As memories of Cambodia's long civil war have faded and Hun Sen has consolidated his power, historical grievances have yielded to more practical concerns. (After Hun Sen ousted then-first prime minister Prince Norodom Ranariddh in a bloody factional coup in 1997, it is notable that China was the first country to recognize his rule.)

China's commercial growing economic ties to Cambodia are only one aspect of its re-engagement with Southeast Asia. Joshua Kurlantzick, a fellow at the Council on Foreign Relations in Washington and the author of Charm Offensive: How China's Soft Power is Transforming the World, said that around the time of the 1997-98 Asian financial crisis, China began to assert itself in the region through greater aid disbursements, new trade arrangements, cultural diplomacy and military ties.

"China ... saw broader China-ASEAN [Association of Southeast Asian Nations] relations as a way of reassuring countries in the region that China would be a peaceful and non-interfering type of power - that China could work well with ASEAN and thus demonstrate it could play the game of soft, multilateral diplomacy," he told Asia Times Online.

Countervailing aid
Chinese aid is in some measure weaning Cambodia off its dependence on the West, which still contributes nearly half of the country's annual budget.

On October 16, the National Assembly debated a new trade treaty with China with lawmakers from the opposition Sam Rainsy Party (SRP) arguing that Chinese-funded projects have had adverse effects on the environment and local people. SRP parliamentarian Mu Sochua singled out a 199,000-hectare agricultural concession granted to Chinese firm Wuzhishan in the country's northeast Mondulkiri province, which she said has illegally stripped large tracts of land from ethnic minority Phnong villagers.

Carlyle Thayer, a professor of political science based at the Australian Defense Force Academy in Sydney, said China's strategy of "non-interference", enshrined also in the ASEAN Charter, has been a major selling point for Beijing in Southeast Asia, where in some countries it is viewed as a shield against pressure from the United States and other Western countries. "Chinese aid offers an escape hatch for countries under pressure from the West [that] promote human rights and democratic reform," Thayer said.

Kurlantzick said that Chinese aid was likely to have a "corrosive" effect on good governance and human rights in Asia. "Hun Sen knows how to play China off of the Western donor groups and China's aid - even if not necessarily linked to any downgrading of human rights - could have the effect of a kind of race to the bottom on human rights," he said.

Sophie Richardson, Asia advocacy director at the US-based Human Rights Watch, agreed that unconditional Chinese aid to Cambodia could act as a "financial lifeline" that might otherwise be cut by Western donors. She said, however, that since Western nations often failed to work together effectively to set and enforce aid conditions in Cambodia, China's growing presence may end up having little distinct impact on human rights.

"The most important point - and key problem - is that the government in Phnom Penh ... seems determined to be extraordinarily abusive, regardless of whoever's money is on offer," she said.

Despite the recent influx of Chinese capital, there is no indication Hun Sen's government is ready to abandon ties to the West. Chea Vannath, an independent political analyst based in Phnom Penh, said that growing Chinese influence would likely be used to counterbalance the influence of Western countries - a vital strategy for a country of Cambodia's small size and redolent of Prince Sihanouk's balancing act during the periods of the Cold War that he ruled the country as prime minister, from 1955 to 1970.

"I think that what the government is trying to do is to diversify its aid ... It is eager to strike a balance," she said. "As a sovereign government, Cambodia needs aid from both sources."

Thayer agreed that rumors of a drop in Western - particularly American - influence were exaggerated. In 2007 US-Cambodia relations warmed when Washington lifted restrictions on the provision of aid to the central government, imposed following the coup of 1997. The US was already the top destination for Cambodia-made garments and textiles, one of the country's top exports.

In June, US President Barack Obama signalled his intention to boost trade further by removing Cambodia and Laos from a Cold War-era US trade blacklist, opening the way for American businesses to access US government-backed loans and credit guarantees for trade and investment between the two countries.

"All the countries of Southeast Asia, to varying extent, have long adjusted to China's rise and political influence," said Thayer. "They do not want to be put in a position of having to choose between China and the United States."