Cambodia’s Trusts: Harnessing Foreign Investment for the Future


As per the Constitution of Cambodia, the Investment Law, and the Land Law, foreigners (including foreign-owned entity) are restricted to own land in Cambodia. The land ownership rights are reserved only for Cambodian individuals or entities. Thus, prior to the implementation of the 2019 Trust Law in Cambodia, as the structural options to use land that were considered included the following:

  1. Land holding company (“LHC”): an LHC could be incorporate for land holding provided that the Cambodian shareholder must own 51% or more shares of the company. With the LHC structure, the land would be registered under the ownership of the LHC.
  2. Land holding right through concession: foreign investors could also obtain the land use right through concession awarded by the concession agreement with the Royal Government. Rights of foreign investors on the concession land shall be documented through the land concession certificate issued under the name of the foreign investor with a term no longer than 50 years.
  3. Land holding right through perpetual lease hold (long-term lease): As provided under the Civil Code of Cambodia, foreign investors could receive its right to use land in Cambodia through entering into long-term lease agreement for a term of up to 50 years with 50 years renewal option. Once the long-term lease is registered with the competent authorities, the foreign investors will receive a long-term lease registration certificate in its name.

Nevertheless, some of these structures may not always be available for specific project.  Other traditional structure that may have been used in practice are associated with a number of potential legal challenges and risks, and thus reduced overall bankability of the project.

To bridge the gap, the new Trust Law offers an alternative solution aimed, among things, to provide another option of obtaining rights to immovable property.


In simple terms, a trust is a legal arrangement by which allows one person to hold property for the benefit of another person. A trust imposes obligations upon a person (trustee) to deal with the property for the benefit of another person or class of persons (beneficiary(ies)) or for the advancement of certain purposes.

In order to catch up with the international market (especially within the ASEAN region) and to establish a well-regulated framework for trust transactions in Cambodia, the Royal Government of Cambodia introduced Law on Trust 2019. The implementation of Trust Law aims to regulate the currently available and future trust transactions including the arrangements to hold land for foreign investments.

In addition to a more comprehensive framework to govern the trust mechanism, the Law on Trust 2019 also  governs the rights, duties and responsibilities of the trustor, trustee and beneficiary, thus granting more protection to the parties and provides more venues for the trustors to enforce the trust in case of a breach by the trustee as well as more appealing to the lenders due to the transparency of the trust arrangement.


For the creation of a trust, the most important aspect the trustor (investor) is the selection of a qualified trustee who is properly registered with the trust regulator and currently holds a valid trustee certification.

Under the Law of Trust 2019, trustee could either be a legal entity or an independent individual trustee. However, it is to be noted that, the total value of the trust asset that an independent individual trustee can manage, dispose, and keep custody shall not exceed 10,000,000,000 KHR (approximately US$2.5M) unless otherwise approved by the Trust Regulator.

Another important aspect for the trust transaction is the preparation of trust deed that shall meet the minimum requirements set out by the Trust Regulator and registering the trust with the Trust Regulator within 3 months from the trust creation date.


The Trust Law in practical terms replaces the nominee-type arrangements that could be seen in the market previously.

The shift of the legal landscape imposes the compulsory registration obligation upon the trustors and trustees.  The Trust Law also recognizes only licensed trustee in holding land.

Having said that, the popular choice of the LHC structure does not fall within the purview of the Trust Law as there is no entrustment of property to the LHC. Hence such structure remains available, and continues to serve as an alternative option for the foreign investors depending their needs in the market. Therefore, to reconcile these two structures, the new Trust Law merely introduced a new option for the foreign investors to appoint a licensed trustee to manage the land.

Some salient factors in considering the appropriate structure for the investment:

  • Protection: Governing framework for the trust mechanism offers more certainty and predictability to the parties involved in the investment. It reduces the risk that often encountered in a nominee-type arrangement and increases enforceability against the defaulting party.
  • Control: While the foreign investor may “manage” its trustee via a well-crafted trust deed, such governance must be exercised within the limitation of the Trust Law.
  • Cost: In trust structure, the costs incurred would be the annual fee towards the appointed trustee and other official and managerial fees.
  • Tax: Tax implications between the previously used nominee-type arrangements and the trust structure are substantially distinct. A careful assessment of the tax implications between different structures is recommended to achieve the best tax optimization for the business.


Cambodia adopted a Trust Law in 2018 (promulgated in 2019) to allow investors to own or transfer landed property via a regulated trust mechanism. The trust market is still developing and subject to regulatory updates. As of early 2023, there are 564 cases amounting to over $1.1 billion over the past year. Trust Regulator (TR) director-general Sok Dara is optimistic the figure will reach $1.5 billion by the close of 2023.

The figures were shared at the signing ceremony of a memorandum of understanding (MoU) between TR and the Cambodia Chamber of Commerce (CCC). The MoU aims to raise public awareness and encourage participation in Cambodia’s trust sector.

As a legal mechanism, a trust allows a property owner, or trustee, to hand over their property to a skilled, experienced individual. This ‘trust’, licensed by the TR, controls, manages and maintains the property on behalf of the owner, or a third-party beneficiary.

The system offers major benefits such as fostering trust, ensuring legal compliance, promoting transparency and efficiency, providing high flexibility and reducing operational risk.

“The launch of the trust sector in Cambodia, as well as the trust regulator, is a meticulous and well-thought-out consideration of the government,” said Sok Dara.

“With the active participation of stakeholders, especially from the private sector and all stakeholders providing services in the field of trust, Cambodia has successfully established a trust market with full operations,” he said.

Regarding the MoU with the CCC, Dara expressed that it presents new strategic opportunities to respond to market trends and regional competition.

The objective is to establish a comprehensive financial ecosystem and a synergies system, as well as to create strategic activities that attract capital flows and liquidity.

CCC president Kith Meng emphasised the role of the MoU in raising awareness about the development process of the trust sector in Cambodia.

He said that it would allow all parties to better understand what a trust is, its mechanisms and operations, and the process for legally establishing and registering a trust.

“It can also bring benefits such as closer cooperation between the TR and the private sector and attract more foreign direct investment because they are confident,” he said.

“Recognition from the TR, a state institution that evaluates in the field of trust, certainly ensures that all the requirements of the relevant regulations are met,” he added.

According to the TR, there are currently eight trust companies, eight banks, 43 physical trusts, and 10 appraisal firms that have received a licence or permit or recognition from the TR.