Cambodia’s Trusts: Harnessing Foreign Investment for the Future

Introduction: A New Era for Foreign Land Investment in Cambodia

For decades, Cambodia’s Constitution and Land Law have restricted foreigners from owning land directly. While structures like landholding companies (LHCs), long-term leases, and nominee arrangements offered workarounds, they often came with legal ambiguity and risk.

To address these challenges and align with international standards, Cambodia introduced the Law on Trusts in 2019. This legal framework provides a transparent, enforceable, and regulated mechanism for foreigners to invest in immovable property—without violating land ownership restrictions.

What Is a Trust?

A trust is a legal arrangement where one party (the trustor) transfers property to another party (the trustee) to manage for the benefit of a third party (the beneficiary). In Cambodia, trusts can now be used to hold and manage land on behalf of foreign investors.

Key Roles in a Trust:

Trustor: The foreign investor or entity establishing the trust
Trustee: A licensed individual or company managing the trust assets
Beneficiary: The person or entity benefiting from the trust (often the trustor)

📘 Want to learn more? Read our guide on how foreigners can buy land in Cambodia

Legal Landscape Before the Trust Law

Before 2019, foreign investors relied on several structures to control land:

1. Landholding Company (LHC)

51% Cambodian ownership required
Land registered under the company
Foreigners could control operations via legal agreements

2. Long-Term Lease

Up to 50 years, renewable
Registered lease provides legal rights to use and develop land

3. Land Concessions

Government-issued rights to use land (e.g., for agriculture or industry)
Typically valid for 50 years

4. Nominee Structures

A Cambodian national holds the land title on behalf of the foreigner
Risky due to lack of legal enforceability

⚠️ These methods often lacked transparency and posed legal risks, especially for large-scale or long-term investments.

Why the Trust Law Was Enacted

The Trust Law of 2019 was introduced to:

Provide a secure and regulated alternative to nominee arrangements
Attract foreign capital by offering legal clarity
Align Cambodia’s investment framework with ASEAN standards
Enhance transparency, enforceability, and investor protection

According to the Trust Regulator (TR), the trust sector has already seen over $1.1 billion in assets under management as of early 2023, with projections to reach $1.5 billion by year-end.

How Trusts Work in Cambodia

Step 1: Choose a Licensed Trustee

Only individuals or companies licensed by the Trust Regulator can act as trustees. Independent trustees are limited to managing assets worth no more than 10 billion KHR (~$2.5M) unless otherwise approved.

Step 2: Draft a Trust Deed

The trust deed outlines:

The purpose of the trust
Roles and responsibilities
Asset management rules
Termination conditions

Step 3: Register the Trust

Trusts must be registered within 3 months of creation with the Trust Regulator. Once approved, the trustee can legally hold and manage land on behalf of the foreign investor.

Trusts vs. Traditional Structures

Structure	Ownership	Legal Risk	Control	Cost	Transparency
Trust	Trustee holds title	Low	Moderate (via deed)	Medium	High
LHC	Company owns land	Medium	High	High	Medium
Lease	Landlord owns land	Low	High (within lease)	Low	High
Nominee	Nominee owns land	High	High (if trusted)	Low	Low

✅ Trusts offer the best balance of legal protection, transparency, and enforceability for foreign investors.

Real-World Implementation

As of 2023:

564 trust cases have been registered
$1.1B+ in assets are under trust management
8 trust companies, 8 banks, and 43 physical trusts are licensed

The Trust Regulator has signed an MoU with the Cambodia Chamber of Commerce (CCC) to raise awareness and promote trust adoption across the private sector.

Why Use a Trust for Land Investment?

Legal Protection

Trusts are governed by a clear legal framework, reducing the risk of disputes and fraud.

Investment Flexibility

Trusts can hold agricultural, commercial, or residential land, and even be used for inheritance planning.

Tax Optimization

Trusts offer distinct tax treatment compared to nominee or LHC structures. A professional advisor can help you choose the most efficient setup.

Lender Confidence

Trusts are more appealing to banks and lenders due to their transparency and enforceability.

Is the Nominee Structure Still Legal?

While nominee arrangements are not explicitly banned, the Trust Law effectively replaces them by offering a regulated alternative. Trusts provide:

Legal enforceability
Licensed oversight
Reduced risk of title disputes

⚠️ Nominee structures may still be used, but they carry higher legal risk and are not recommended for high-value or long-term investments.

Choosing the Right Structure

When deciding between a trust, LHC, or lease, consider:

Project size and duration
Risk tolerance
Tax implications
Control preferences
Exit strategy

📞 Need help choosing the right structure? Contact Adaeng Land’s legal advisory team for a personalized consultation.

💚 Invest with Purpose: Support the Sao Sary Foundation

At Adaeng Land, we believe in ethical investment. That’s why we donate 10% of our profits to the Sao Sary Foundation, a Cambodian NGO supporting vulnerable children and families.

🙌 How You Can Help:

Invest through us – every land deal supports a child’s future
Make a donation – one-time or recurring at www.saosaryfoundation.org
Share the mission – inspire others to give back

❤️ Your investment can change lives.

Final Thoughts: Trusts Are the Future of Foreign Investment in Cambodia

Cambodia’s Trust Law is a game-changer for foreign investors. It offers a secure, transparent, and legally recognized way to participate in the country’s booming land and real estate market.

Whether you’re investing in farmland, commercial plots, or long-term development, a trust structure can help you do it legally and confidently.