Cambodia Issues Prakas No. 047, Replacing Prakas 089 on Real Estate Development

To implement Sub-Decree No. 50 dated 2 March 2023 on the Management of Real Estate Development Business, the Non-Bank Financial Services Authority (FSA) issued Prakas No. 047 on 26 September 2023. This new regulation sets out the procedures and requirements for obtaining real estate development business licenses or permits, effectively replacing Prakas No. 089 dated 20 January 2020.

Prakas No. 047 aims to improve the regulation and oversight of real estate development activities by introducing two distinct types of licenses or permits:

• Residential or Co-Owned Building Development Licenses/Permits
• Land Parcel Development Licenses/Permits

For residential or co-owned building development projects, those involving 3 to 30 houses, villas, or units must obtain a prior permit from the relevant Capital-Provincial Department of Economy and Finance (DEF). Projects with more than 30 houses, villas, or units require a license from the Real Estate Business and Pawnshop Regulator (RPR) under the FSA, which has replaced the Ministry of Economy and Finance as the competent authority under the previous Prakas.

In the case of land parcel developments, projects with a total area less than 10,000 square meters must obtain a permit from the DEF, while those exceeding 10,000 square meters require a license from the RPR.

Developers undertaking residential or co-owned building projects must comply with the conditions outlined in Article 9 of Prakas No. 047, including capital requirements. For Developer License 1, the developer must have capital equivalent to 100% of construction costs, while Developer License 2 requires a minimum of 20% of construction costs.

In addition, applicants for Developer License 2 must submit a letter of business security guarantee as part of the required documents. Under Article 20, developers must either deposit 2% of the total or phase-by-phase construction cost into the RPR’s account or provide a business security guarantee letter issued by a licensed Cambodian bank.

For land parcel development licenses, developers must meet the conditions set out in Article 17, including a minimum capital of 40% of total infrastructure costs. A business security guarantee letter is also required. As specified in Article 21, developers must deposit 5% of the total or phase-by-phase land investment cost into the RPR’s account or submit a guarantee letter from a licensed bank.

Failure by developers to fulfill their obligations under sale-purchase or lease agreements may result in the RPR or DEF freezing the submitted business security guarantees.

Detailed requirements and conditions for license or permit issuance are specified in Articles 10 and 18. Developers must also pay applicable public service and administrative fees, as well as additional charges for store or office space in co-owned buildings and the real estate and pawnshop development fund contribution.

The RPR or DEF must issue a decision on license or permit applications within 30 working days from the date of receiving complete documentation. These authorities also have the power to suspend or revoke licenses/permits for pending or closed businesses.

Furthermore, Prakas No. 047 introduces significant monetary penalties for violations, such as operating without a valid license or permit. Fines range from KHR 500,000 (approx. USD 125) to KHR 500,000,000 (approx. USD 125,000).

Licenses and permits issued prior to the enactment of Prakas No. 047 will remain valid until their respective expiration dates.

ប្រកាសលេខ០៨៩ សហវ.ប្រក ស្ដីពីការគ្រប់គ្រងអាជីវកម្មអភិវឌ្ឍអចលនវត្ថុ ចុះថ្ងៃទី២០ ខែមករា ឆ្នាំ២០២០។

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