Sear Rithy awaits bank support to move forward with affordable housing project
Sear Rithy awaits bank support to move forward with affordable housing project
Sear Rithy’s relentless pursuit to get public housing up and running in Cambodia looks set to be turning into a reality. The WorldBridge Land chairman recently announced the Kingdom’s first affordable housing initiative in the wake of government approval. Post Property sat down with Rithy to talk about where to go from here for the project.
The low-cost housing project is a first for the Kingdom. How thrilled were you to be able to announce this project to the public?
It’s taken at least seven years to see this through. I spent almost $200,000 on travelling to see some projects overseas, and seminars on public housing and research. I’ve spent a lot of time and a lot of my energy but I’m very, very happy that my dream for this project has come true.
The affordable project has backing from the government, despite it taking a significant amount of time to win them over. Which sectors of the government do you still need endorsement from?
I’ve got a great deal of support from Chea Sophara (MLMUPC Senior Minister). He strongly supports me with this project.
In terms of incentives though, it’s out of his control. The Ministry of Land Management, Urban Planning and Construction are not the Ministry of Economy and Finance. Sophara now has already written a letter to the finance ministry supporting me. He is working very closely with the ministry to request the different types of incentives they are supposed to give me. So, now we are waiting for the finance ministry to work with the government on this incentive proposal which means I no longer have to go directly to the ministry.
What incentives does the affordable housing require?
It’s very simple. I need the water in and I need the power in. I also need some kind of import construction material that has no tax. They tell me maximum two months [to secure the incentive approval]. It’s happening.
What about on the financing side of things?
I would like to announce to all the local banks and commercial banks in Cambodia that they should support me on this project. I don’t need the money but I want them to support for the end-consumer side, the buyers. Until now, we have approached a few banks but we have not got any confirmation from those banks yet. One bank has rejected us already. They said that they are afraid that later on they won’t be able to get the payment from the buyer. I would also suggest to the banks that they give me eight percent (interest rate). But all this is negotiable since this is a CSR project, and[the banks] should be supportive.
I want to be able to give the customer a long-term payment instalment option of 15-20 years then they will have lower interest rates. As a developer, I can give [the banks] a guarantee. But they are still concerned. I really want a local bank to support this because we are local and should support each other. If the bank doesn’t support [the project] then the monthly instalment is very high. If the loan term is 20 years then the instalments are only $100 [a month]. If the local bank doesn’t show support, I will go to a foreign bank. The loan isn’t much, only about $30 million. We are working with Acleda Bank now, so I hope that Acleda is one of the better choices for us.
The housing project will see government officials living in the complex. Do they get first priority?
To me, we give to both the civil servants and to the low income people also. We won’t simply sell to anyone. They need to meet the criteria so we give the housing to the right people. To me, the government officials are also low income [earners]. The officers earn below $500 [a month] also. We don’t sell to the high income people, only the low income.
Have you had a lot of interest from the public and when can people start purchasing the homes?
Yes, a lot of people already want to buy. Our sales office will be ready next week. Last week, I signed a memorandum of understanding with law firm Sok Siphana & Associates and Ly Hour’s Ly Hour Pay Pro in order to make the money transfers easier. If the buyers want to know anything about the project they can call the lawyer. I engage this law firm to make sure both the developer and the buyer are safe.
When will construction officially start at the site?
We have already started to do the soil filling. This soil filling will take three to four months. When the soil filling is done we’ll move on to infrastructure and start to build the house. It will take only two years to build this project. It will be a phased approach; when one row [of houses] is done the buyers can move in.
Do you think your public housing project will encourage other developers to come on board?
A few of the developers are already interested in doing it. So I warmly welcome them because I cannot build them all. Anyone that wants to build public housing let them come and work with the government.
