Can the new construction law work out the kinks in the sector?

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A child plays with dirt as his parents work in the background, a sight that is common in construction sites as parents are unable to afford child minders. Khat Leakhena

For over a decade, billions of dollars have poured into the construction and real estate sectors, which until last year was not regulated. A year later, the law has yet to take effect, mired by jurisdiction overlaps, slow-to-enact supporting regulations, and apathy

A child, no more than three-years-old, sits playing in dirt oblivious to his parents who are working in the background of a triple-storey residential development construction site, off Samdach Hun Sen Boulevard – a stretch more popularly known as the 60-metre road.

Formerly Boeung Tumpun – a vast vegetative freshwater lake which has mostly been filled in, it is one of the newest development strips in south Phnom Penh, branded as a chic satellite city with million-dollar homes and shopping malls.

At night, most of the workers retire to the bowels of the unfinished houses or makeshift tents, having their baths with water supplied in pipes, squatting down while washing their clothes.

It is time to rest after nearly 10 hours of work, and for small conversations under the stars while children play as dusk falls before the breezy night lulls them to sleep.

The menial workers come from different parts of the country, often by uprooting their families who find assurance in daily or weekly wages versus the unpredictability of rice farming.

Despite the lack of safety and hard labour, scores of rural Cambodians have ditched traditional farming to serve in the booming construction sector which saw investments double to $11.4 billion in 2019 from $5.3 billion in 2018.

It is one of four economic pillars that has supported gross domestic product (GDP) growth for 10 years. Last year, it was the largest GDP growth driver at 35.7 per cent, employing a total workforce of 200,000.

Just before the coronavirus pandemic blighted the economy, the sector recorded a 47 per cent increase in total investments at $2 billion in the first two months of this year.

The sum represents 728 construction permits – up 28 per cent from a year ago – which cover 4.2 million sqm.

By June 30, 2020, $3.8 billion worth of construction projects were approved, climbing 13.3 per cent year-on-year, which in time should help the country get back on its feet.

In recent years, more than 50 per cent of foreign direct investment to the construction and real estate sector involved investors from the greater China region, including Hong Kong and Taiwan, said the World Bank in May.

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Of that, some 500 buildings are taller than five storeys, said Chiv Siv Pheng, director of the Construction Technical Research Department of the Ministry of Land Management, Urban Planning and Construction (MLMUPC).

“Ten years ago, there were no high-rise buildings. Now they are everywhere,” he said with pride.

Long-drawn and time consuming

But all this construction haste and pursuit of profit have resulted in the neglect of some issues that are to Cambodia’s own detriment.

Just over a year ago, the Kingdom was shaken by two building tragedies in coastal provinces Sihanoukville and Kep that killed nearly 70 people who worked on those construction sites.

In both instances, innumerable oversights in safety procedures, design, building material, and building quality or standards were laid bare.

Commissions were set up by the government to investigate the incidents but till today the results have never been made public.

Instead, what followed was the implementation of the long-drawn Law on Construction, on November 2, 2019.

The legislation delves into every aspect of construction such as permits for building, repair or demolition, technical regulations, use of material, equipment and products, dangerous building, insurance, the liability of construction stakeholder, and construction occupancy.

It has created building inspectors to monitor ongoing constructions, a firm to check building designs, and the compulsory need for buildings to have occupancy certificates.

In the midst, seminars are being conducted by the ministries of Interior, and Land Management to educate stakeholders, including construction firms, engineers, architects, provincial officers and project managers, on the law.

Everything that protocol dictates is happening. But the fact is, the legislation lacks bite, stemming from red tape because responsibilities stride across several ministries while decentralisation of power concerning provincial and district jurisdiction slows down and complicates the process.

On top of that, building sites are broken into three permission categories, heightening bureacracy.

Sites that are less than 500sqm and below four floors are under the purview of the district administration. If it is less than 3,000sqm, the provincial governor or Phnom Penh city hall oversees it, while anything beyond that is the jurisdiction of the MLMUPC.

To be sure, the spirit for a regulated sector is enshrined in the law but like most enactments in Cambodia, it has to be supported by ministerial Prakas or regulations, and sub-decrees to give effect.

According to Siv Pheng, who is also Cambodia Constructors Association general manager, only a few have been approved.

“There is a lot more to do. We have two to three meetings with related ministries on issues such as fire safety standards, service payments and for the establishment of a company that can inspect buildings and issue occupancy certificates,” he said.

This, here, is one of many examples why due process of the law remains protracted.

The law states that a company needs to be set up to inspect buildings and issue certificates, a novelty for Cambodia as buildings do not possess them currently.

The company will also be in charge of collecting service payments.Because it involves fees, the Ministry of Economy and Finance (MEF) and MLMPUC have to jointly draw up a Prakas.

Added to that is the issue of control. If the job takes place at the province or district level, the issue of jurisdiction comes into play. Therefore, this becomes a Ministry of Interior matter, even though it involves land.

In summary, the tangled jurisdiction of departments and ministries slow down the implementation of the law because the government needs to enact Prakas or regulations.All of which is time-consuming.

“[It should be noted that] the draft with MEF is ready. However, we are very busy now [because] we need to come up with many [other] Prakas,” Siv Pheng stressed.

Law only good in theory

Nevertheless, the law is necessary because the Cambodian landscape is changing fast, making construction accountability and compliance important factors, said Sujeet S. Karkala, a legal advisor with investment advisory firm Sciaroni & Associates.

“As more investments for real estate come in, Cambodia has to regulate the industry. The law is elaborate and speaks about liability and safety issues in the sector.

“Looking from the ASEAN perspective, this is important as good real estate development can attract people to move to the country and invest,” he told The Post.

For Theary, a project manager who only offered his family name, the law is good in theory but not in practice.

“It is just too difficult to comply, owing to the cost and time involved in seeking approval and waiting for the reply,” he said, in a coffee shop near his project site in Boeung Keng Kang 1.

“The whole process is farcical,” he opined, citing an example where the law requires building structures to be certified for five years (commercial) and 10 years (residential).

The present process for mechanical, electrical and plumbing is six to 12 months but the law has extended it.

“We can provide guarantee for five years or so but the cost [of units] will rise because of the quality of the product. The contractor would also have to deposit extra funds with the owner as a form of bank guarantee or performance guarantee for the work.

“It does not make financial sense as the cost of the project will increase. The law does not consider this. It is going to be difficult,” he said.

Theary said in keeping with the legal requirement, contractors would also have to use good building material.

“To be honest, imported building materials are not up to international standards. For good material, we must spend more.

“How can we insure the structure if the safety is compromised [due to lower quality material]?” he asked, alleging that the law is merely symbolic with no actual clout.

‘Buildings built before approval’

In the past, development projects were built on the whim of the owner and his funding capacity although there existed a loose building construction framework within the public works law.

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Plaster ceiling worker Out Chantea, 35, saves some money to send home by staying in one of the unfinished homes with his friends. Sangeetha Amarthalingam

“The local developer would employ the standards he felt is easiest to comply. For instance, if the civil engineer or architect is foreign-trained, he will use the building standard of the country where he studied. So the standard might be Japanese, French or British,” he said.

Many constructions were built without permits because approvals took too long. Seeing that construction delays incurred cost, incidents of bribery was allegedly common to speed up the approval process.

“Sometimes buildings are completed even before the permit is approved,” Theary said, laughing out loud.

Foreign-funded developments, on the other hand, were built based on their native country building standards and safety codes or that of a developed nation’s.

However, many projects involved cutbacks in costs by manipulating approved designs, building materials and wages.

This was the main problem in Sihanoukville, said Siv Pheng as many construction sites, owned by Chinese firms, failed to adhere to technical regulations and building permission.

The companies neither possessed certificates nor were they certified by the ministry.

Through ministry checks last year, some 23 buildings were found to be of poor quality and without building permits which prompted Deputy Prime Minister Chea Sophara to order their demolition.

“Some already had furniture fitted in. There was no choice. They were demolished. Back to zero and now it is [empty] land.

“We have lots of inspection in Sihanoukville now. We also have a secretary of state on standby there. The sites are controlled now – before, during and after,” Siv Pheng said.

In the meantime, Cambodia is developing its own building safety standards and structural design with Japanese and Australian expertise. It is expected to be completed in two years.

Acknowledging the delay in the standards and the law, Siv Pheng regretted that it was hampered by weak skills and knowledge all those years until Japan stepped in to help.

“Foreign investors keep asking if we had a building code [and law] but we didn’t. So they used their own. When Sophara became the deputy prime minister, he sped up the law. He was aware of the problem,” Siv Pheng said.

Although the law is still being fortified with Prakas and sub-decrees, it is wielding some power. For instance, the law has removed barriers to inspection.

“Previously, some of these places won’t even allow officials to go in. They hire security guards to keep us out. But not anymore because the law allows us to arrest, stop and penalise them or take them to court,” he said.

‘Not able to talk’

But the legacy of haphazard construction style and the quality of development continues to dot Cambodia’s landscape.

Till today, some sites glaringly fail to employ safety standards, including mid-size residential projects that are sandwiched between city streets.

Back at Samdach Hun Sen Boulevard where the Woodland Residence construction site is located, mother of two Phnok Chansa, 35, chats with her colleagues as her five-year-old daughter cycles her bicycle in the waning light.

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Phnok Chansa settles down for a chat afer 10 hours of tile laying while her daughter cycles the evening away. Sangeetha Amarthalingam

Chansa and her husband, who have been construction workers for 10 years, lay tiles for the 84 villas and terrace units.

When they are at work, their daughter plays around a safe corner of the construction site with other workers’ children.

“The children don’t go to school because we move around construction jobs. When we are at work, they mind their own business. We worry about their safety but it is a risk we take as there is no one to look after them back home,” said Chansa, who is from Battambang.

Unfortunately, accidents are common at construction sites. Soun Thary, 40, recalled the time her then 18-month-old son fell off the motorcycle when she was working in Koh Pich.

“Now my son is five and he is still not able to talk. I can’t afford to take him to a specialist,” said the part-time construction worker as she cradles another son.

“If we are injured, the manager ensures we get treatment but not when our children are hurt. It is fair but our children are also with us at the site because we have no choice. We cannot afford to rent a place or pay a child minder,” said Thary, whose husband is a tile layer.

Considered skilled workers, Chansa and Thary earn $10 to $15 a day but they barely make ends meet by salary day, which is twice a month.

“Most of our salary is cut from the debt we owe the supervisor, having borrowed for emergency reasons,” Thary said.

Construction workers are deemed informal workers which makes their wages an unregulated matter. However, the law stipulates some form of protection as contractors are required to sign site liability insurance.

“We heard about the law on social media but we don’t know what it means to us. The government should talk to us about it, so we know our rights,” Chansa said.

The law does not overtly specify the future of workers living on-site although Sophara has once said that they are not allowed to following the building disasters.

However, Siv Pheng assures that structural design and safety precautions as required by the law will protect them as they work.

He said construction controllers regularly go to the ground to explain to supervisors with illustrated guidebooks on site safety and protection for workers.

“Some supervisors have limited knowledge, so we explain to them with pictures but we have stopped temporarily since Covid-19.

“The controllers also check permissions, contractors and if they are adhering to technical specifications. The law is little strict but the buildings will have quality and are safe,” he said.

And that is the overarching wish. But until the law shows its full might, the industry will remain subservient to the norms cultivated over decades, and quite possibly averse to change.