International Valuation Conference Yangon, Myanmar Role and - - PowerPoint PPT Presentation

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International Valuation Conference Yangon, Myanmar Role and - - PowerPoint PPT Presentation

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International Valuation Conference Yangon, Myanmar Role and Importance of Valuation in Myanmar - Today, Tomorrow & the Future the Case of Cambodia By Sim Hoy Chhoung (Mr. Sim) Certified Valuer (Cambodia) Certified Public

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“Role and Importance of Valuation in Myanmar - Today, Tomorrow & the Future” the Case of Cambodia

By Sim Hoy Chhoung (Mr. Sim) Certified Valuer (Cambodia) Certified Public Accountant Managing Director, Japan Valuers (Cambodia) Co., Ltd June 18th , 2019 Rose Garden Hotel, Yangon, Myanmar

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Japan Valuers (Cambodia) Co., Ltd.

International Valuation Conference – Yangon, Myanmar

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Japan Valuers (Cambodia) Co., Ltd

I.

Introduction – Cambodia

  • II. Valuation in Practices
  • III. Importance of Professional Valuation
  • IV. Challenges
  • V. Conclusion

2

Table of Topics

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Japan Valuers (Cambodia) Co., Ltd

  • Population
  • Membership of ASEAN

3

  • I. Introduction - Cambodia
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Japan Valuers (Cambodia) Co., Ltd

  • Location: Southeast Asia
  • Membership of ASEAN in 1999
  • Area: 181,035 sq.m
  • Population (2018 est.): 16.5 mln
  • Age Structure (2018 est.):

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0-14 years: 30.76%

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15-24 years: 17.84%

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25-54 years: 41.09%

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55-64 years: 5.94%

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65 years and over: 4.37%

  • GDP Composition (2017 est.):

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Agriculture: 25.3%

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Industry: 32.8%

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Services: 41.9%

  • GDP per Capital (PPP): US$4,000 –

2017 est.

  • 4
  • I. Introduction - Cambodia
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Japan Valuers (Cambodia) Co., Ltd 5

  • I. Introduction - Cambodia

2012 2013 2019F 14.1 15.3 25.88 7.3 7.4 6.8 973 1,042 1,563 2.9 2.9 3.3 3.6 4.2 N/A

Compiled by JVCambodia, Source: National Bank of Cambodia, Ministry of Economy and Finance, Asian Development Bank, World Bank & IMF Complied by JVCambodia, Source: National Bank of Cambodia

15 Financial Leasing Companies 12 13 74 Rep Office - Foreign banks 7 7 5 MFIs 64 69 2018E GDP (Bn USD) 16.7 18.2 20.2 22.06 23.68 Economic Indicators 2014 2015 2016 2017 7.1 GDP Per Capita (USD) 1,135 1,171 1,265 1,372 1,451 GDP Growth (%) 7.1 7.0 6.9 7.0 3.2

  • No. of Foreign Tourist Arrivals

(Million) 4.5 4.8 5.0 5.6 6.2 Inflation (%) 3.9 1.7 3.5 3.1 43 Banking and Financial Sector 2016 2017 2018 Commercial Banks 37 39 7 Specialized Banks 15 15 14 Microfinance Deposit Taking 7 7 Payment Service Providers 8 10 16

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Japan Valuers (Cambodia) Co., Ltd

  • Non-profit organization
  • Founded and registered as Association in 2008
  • Formerly named “National Valuers Association of Cambodia (NVAC)”,

changed to CVEA in April 2011

  • Become the 8th full member of ASEAN Valuers Association (AVA) in April 2009
  • Type of membership – Corporate, associate , no individual member

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  • II. Valuation in Practices

Cambodia Valuers and Estate Agents Association - CVEA Number of Licensed Real Estate Company

  • End of 2016, total 139, 87 are

members of CVEA

  • There are about 260 valuers

certified by the MoEF, end of 2018 No. Services Number 1 Brokerage & Valuation 58 2 Only Valuation 3 3 Only Brokerage 78 Total 139

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Japan Valuers (Cambodia) Co., Ltd 7

  • II. Valuation in Practices

CVEA Partners

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Japan Valuers (Cambodia) Co., Ltd

  • License issuing & Certify valuers
  • Propose related laws, circulars or directives regarding fee scales, ..
  • Licensing Requirements for a company to legally operate:

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One valuation license holder – University degree – related field

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Two certified valuers

  • become certified – need at least 6 months experience in valuation and

university degree

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Professional Indemnity insurance – minimum loss coverage of US$200,000

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Currently, there is no minimum CPD training requirements for valuers

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Starting mid-2018, all real estate agents and valuers need to complete relevant training courses at the University of Economics and Finance ( an affiliate to MoEF) before getting certified.

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Monthly reporting to the MoEF department in charge

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  • II. Valuation in Practices

Regulator – Ministry of Economy and Finance (MoEF)

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Japan Valuers (Cambodia) Co., Ltd

  • Cambodian Valuation Standards – not fully developed and updated
  • Two legal frameworks by the MoEF regarding valuation practices:

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Laws on the management of valuation services and real estate agency (Draft) in preparation

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Circulars or Directives issued by MoEF such as fee scales and code of Professional Ethics, and so on.

  • Practically, valuers refer to different standards, directives

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RICS Standards, IVS

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ASEAN Valuation Standards – but rare

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  • II. Valuation in Practices

Valuation Standards and Professional Standards

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Japan Valuers (Cambodia) Co., Ltd 10

  • II. Valuation in Practices

Uses and Subject of Valuation Services

2 Main Applications of Valuation Valuation for Financial Reporting Valuation for Secured Lending M&A, Buying, Selling, Renting, Tax assessment, Insurance Subjects of Valuation Real property Personal property Business interest Intangible assets Plant & equipment Trade-related property etc.

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Japan Valuers (Cambodia) Co., Ltd

  • Mostly used for secured lending – 80%
  • for financial reporting – 10%
  • Other uses – M&A, tax assessment, insurance – 10%

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  • II. Valuation in Practices

Uses of Valuation Services Subject of Valuation

  • Real property – 80% (mostly residential)
  • Plant & Machinery – 10%
  • Others – 10%

Most frequently used valuation Approaches / Methods

  • Mix of Comparison & Cost Approach
  • Income Approach – Very rare
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Japan Valuers (Cambodia) Co., Ltd

There are growing concerns of financial regulators and stakeholders for better identification and communication of uncertainty in valuations

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2008: The financial Stability Forum (FSF) published an analysis of the causes and weaknesses that had produced the turmoil in financial markets asking for more transparency in valuations.

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2009: the G20 Declaration on Strengthening the financial System called for improved standards for valuation uncertainty in the context of fair value accounting.

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2009: The Basel Committee for banking supervision issued its paper Supervisory Guidance for Assessing Banks’ Financial Instrument Fair Value Practice

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2010: the Financial Services Authority (UK) published recommendations for the specific assessment of valuation uncertainty.

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  • III. Importance of Valuation

Global Importance - Call for Global Valuation Standards

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Japan Valuers (Cambodia) Co., Ltd

  • The financial crisis 2007-2008 highlighted the interdependency of the global

financial markets, and the increasingly prominent role that the valuation profession plays in these markets.

  • Having a substantive global valuation technical framework that is principles-

based will improve the consistency, better comparability across the financial markets and increased confidence in the valuations performed.

  • The importance of fair value and similar measurements in financial reporting

mandates corresponding high-quality valuations.

  • “Accurate and professional valuations are vital to a healthy property market

and a stable economy, forming the basis of performance analysis, financing decisions, transactional or development advice, dispute resolution and taxation,” Royal Institute of Chartered Surveyors (RICS)

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  • III. Importance of Valuation

Global Importance - Call for Global Valuation Standards

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Japan Valuers (Cambodia) Co., Ltd

  • Lubricate real estate activities – lending, investment, brokerage etc.
  • Real estate agents – to see if they can go for listing of the subject
  • Government - taxes collections
  • Investors and developer – decision making & development
  • Lenders : Collateral risk management tool, Secured/mortgage Lending
  • Dispute resolution, Arbitration /litigation support
  • Pre-IPO
  • Financial Reporting – fair value accounting
  • Transaction support (M&A, Liquidation, ..)
  • Insurance
  • Foreclosure & bankruptcy support

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  • III. Importance of Valuation

Useful for different purposes and different stakeholders:

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Japan Valuers (Cambodia) Co., Ltd 15

  • III. Importance of Valuation

Contribution to the Growth of the Economy

Real estate-related credit growth (%y-o-y) Real GDP Growth Contribution (%)

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Japan Valuers (Cambodia) Co., Ltd

  • The lack of published information or difficulty in obtaining information

regarding transactions as well as other data requisite for proper valuations – no national level central database

  • Outdated national valuation standards and no guidelines
  • Lack of adequately trained professional valuers and training centers or

universities

  • High volatility of property market and a lot of speculations

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  • IV. Challenges

Valuation Practices in Cambodia still faces some challenges:

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Japan Valuers (Cambodia) Co., Ltd

  • The implementation of sound valuation standards are essential to the

consolidation, sustainability, transparency, efficiency of property and financial markets and by extension the whole economy.

  • Policy makers may need an updated local standards, incorporating

internationally recognized ones such as The Red Book (RICS Standards) or The White Book (IVS)

  • More significant roles should be given to Valuation Professional Organization
  • r relevant association to help develop the profession
  • Other stakeholders such as banks and other financial institutions should

recognize the importance of valuations undertaken by professionally qualified valuers who comply with IVS and this white Paper

  • The valuation standards need to address questions about the quality,

consistency, and reliability of its valuations.

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  • V. Conclusion

The Need to Have Professional Valuations

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International Valuation Conference – Yangon, Myanmar

THANK YOU !

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Japan Valuers (Cambodia) Co., Ltd

Our Services

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Valuation Services:

  • Residential Property
  • Commercial property
  • Business Valuation
  • Plant & Machinery
  • Valuation Review

For the purpose of:

  • Secured/mortgage Lending
  • Pre-IPO
  • Financial Reporting
  • Taxation
  • Arbitration /litigation support
  • Transaction support (M&A,

Liquidation, ..)

  • Insurance
  • Foreclosure & bankruptcy support

Research & Advisory Services:

  • Commercial Real Estate Transactions
  • Real Estate Development Plan
  • Highest and Best Use Analysis of the Land
  • Market and Feasibility Study
  • Real Estate Due Diligence
  • Advisory on Property Research & Selection