World Bank notes lower construction fees

Despite falling three places on the World Bank’s (WB) annual Ease of Doing Business ranking, Cambodia’s overall score improved. The report noted that obtaining construction permits is now less expensive in the Kingdom.

Every year, the WB releases the report which ranks 190 nations by analysing regulations that either encourage or constrain business activity. Cambodia scored a 54.8 for the 2019 report, representing a gain of 0.41 over its score last year. 

The lion’s share of the growth was attributed to improvements in the process for dealing with construction permits. However, the report also noted that starting a business and getting electricity also became easier over the last year.

Though the Kingdom still fell below the regional average score for the East Asia and Pacific region, its rank for ease of getting credit was 22 out of 190. Malaysia was reported to be a regional leader with a score of 80.6 which put it in the 15 spot on the list.

The report included a case study that examined the cost and time required to establish a 1,300 square metre, two-storey warehouse in Cambodia. Twenty procedures associated with obtaining construction permits were allegedly required. These processes took a total of 652 days and cost 3.3% of the project’s total value of $64,457.

Interestingly, the category dealing with construction permits was one of the Kingdom’s worst-performing metrics just two years ago. While both the time and number of procedures have stayed the same the permit costs have gone down.

Last year, a similar WB case study showed that construction permits amounted to 5.3% of the warehouse’s value. The year before that, the same metric stood at 5.8%.

**Matt Rendall, Darwin or Hans quote

Despite being below the regional average score, Cambodia was able to come up ahead of nearby Laos, which came up in the 154 spot.

James Whitehead, CEO of yula.la, Laos’ leading general classifieds website and laorealestate.la, Laos’ first specialised real estate portal, noted that Cambodia’s northern neighbour was still a much more difficult place to start a business. 

“Lao citizens can hold ‘land use rights’ which is similar to ownership. Foreigners, on the other hand, can own buildings, but not the land they are built on,” he said, adding that foreign-owned business were often slow to get off the ground.