At least 492 trusts have at some point been properly registered in Cambodia under the current regime, administered by six licensed trust companies, with assets having an estimated value of $734 million as of end-2022, up from 17 trusts with assets worth around $156 million a year earlier, according to Trust Regulator (TR) director-general Sok Dara.
A trust is a legal arrangement whereby a “trustor” – also called a “trustmaker” or “settlor” – grants another legal entity, the “trustee”, the right to collect, hold, manage and retain assets for the benefit of third parties, the “beneficiaries”.
The Law on Trust was promulgated on January 2, 2019 by Royal Decree No NS/RKM/0119/002, and supporting legal instruments have been issued thereafter, such as the January 26, 2022 Prakas No 003 FSA PrK on Rules for the Management, Establishment, and Functioning of Trusts.
But even prior to the introduction of the current legal framework, the trust business had been fairly active, Dara confirmed. “Actually, before getting this license, these companies had already registered a lot of their clients, all of which are major jobs, most of which are investments in the banking, securities, real estate and related sectors,” he said.
Nonetheless, the growing trust market faces numerous hurdles stemming from the public’s limited understanding of registration in accordance with the law, or the benefits of doing so, Dara acknowledged.
“But we’ve made a major work plan centred on mainstreaming … [and] last year we penned memorandums of understanding [MoU] with a number of institutions and companies to raise public awareness and promote participation in the proper trust mechanisms and adherence to the law,” he said.
According to Dara, the TR is planning a campaign this year to promote the trust market, its benefits and proper registration, with emphasis on priority provinces.
“During site visits, we’ll bring the whole package – the regulators along with the trust companies and banks that have been licensed to carry out the business of trust administration with us,” he said.
“We also plan to visit business associations and universities to provide additional training.”
In a previous interview with The Post on December 19, Dara offered an example of a property or real estate trust: A man looking to get into the real estate market transfers $1 million to a trustee to manage investments on his behalf, and the latter gives the former back the profits made.
Trustors may choose to establish a trust to protect themselves from certain legal liabilities and tax obligations.
The TR had been expecting the total underlying value of properly registered trusts to reach $500 million by December 31 on the back of a year-end boom, according to Dara, who put the figure at $426 million as of December 16. But that goal was surpassed by nearly 47 per cent.
