Project Information Document (Pid) s59

PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB4842 Project Name Higher Education Quality and Capacity Improvement Project Region EAST ASIA AND PACIFIC Sector Tertiary education (100%) Project ID P106605 Borrower(s) The Kingdom of Cambodia

Implementing Agency Ministry of Education, Youth, and Sports (MoEYS) Preah Norodom Blvd, Phnom Penh Cambodia Tel: (855-12) 217-253Fax: (855-23) 212-512 The Ministry of Education, Youth and Sports (MoEYS), Department of Higher Education (DHE) Cambodia

Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 4, 2009 Date of Appraisal January 6, 2010 Authorization Date of Board Approval May 27, 2010

1. Country and Sector Background

1. During the early part of this decade, Cambodia established remarkable economic growth with macroeconomic stability. Its growth rate has averaged 9.5 percent per annum, and per capita income has doubled over the past decade. GDP accounted for US$7.3 billion in 2006 compared with US$3.4 billion in 1997.

2. Cambodia has achieved this growth record as it has managed its historical transition from a command-and-control economy to a market-oriented economy. Its growth since the transition has been mainly derived from four sectors: garments, tourism, construction and agriculture. Overall progress has been also underpinned by an open trade regime, as exports have increased by 23 percent per annum since 1998, and a favorable investment regime for Foreign Direct Investment, which has been greater than 6 percent of the GDP in recent years. These developments, coupled with its accession to ASEAN in 1999 and the WTO in 2004, have integrated Cambodia further into the world economy.

3. The recent global economic downturn, however, has posed new challenges. Reflecting its exposure to the financial crisis, growth slowed to 5.5 percent in 2008. Moving forward, Cambodia’s economy is expected to contract by 1 percent in 2009, and household consumption is expected to decline as a result of lower real incomes, reduced wage employment, and tighter credit conditions.

4. The country’s current economic situation must be viewed in a larger historical context. The decade before the current economic crisis witnessed a profound economic transformation for Cambodia. Agriculture had dominated the economy until 1999, but the sector has recently fallen behind both the industrial and services sectors in terms of value-added. Labor has migrated from rural areas, where job opportunities have been insufficient, to cities where labor-intensive manufacturing and tourism-related services have been expanding rapidly. Industry has been the fastest growing sector and created almost 100,000 new jobs each year between 1998 and 2007.

5. The past decade’s economic growth and transformation have had a great influence on poverty reduction in Cambodia. According to the 1993/4 and 2004 Cambodia Socio- Economic Surveys (CSES), the poverty headcount decreased by 10 – 15 percent from 45 – 50 percent to 35 percent over the first decade following the Paris Peace Settlement. The 2007 CSES indicates that poverty had fallen further to 30.1 percent from 2004 to 2007. However, Cambodia is still one of the poorest countries in South-East Asia. Despite the rapid economic expansion and poverty reduction, more than 30 percent of its population earns less than US$1 per day, and daily life is characterized by vulnerability due to poverty, landmines, disability and a high incidence of mortality and morbidity aggravated by the lack of social safety nets.

6. Cambodian development has not been entirely inclusive. While per capita consumption has risen and poverty has fallen for all groups and throughout the country, they have improved faster for the richer quintiles and in urban centers than for the poorest quintiles or in rural areas. As a result, overall inequality in Cambodia has increased at a rapid rate. For example, over the three years between 2004 and 2007, the poverty rate of rural areas decreased by 11 percent from 39.1 percent to 34.7 percent while that of Phnom Penh decreased by 83 percent from 4.6 percent to 0.8 percent. The vast majority of the poor, over 90 percent, are located in rural areas.

Diagnostic of the Higher Education Sub-Sector

7. The Government of Cambodia, in its efforts to address the twin challenges of economic growth and poverty reduction, has recognized the key importance of education in general, and higher education and research in particular. For the last ten years, Cambodian higher education has made significant progress and expanded in both the public and private sectors. The Education Law, which provides directions for future development of the higher education sub-sector, is in place. Enrollment has grown rapidly over the past decade from about 10,000 students in 1992 to 116,108 in 2007. 60 percent of those enrolled are now enrolled in the private sector. Today there are about 28 public and 46 private higher education institutions (HEIs) spread over about 111 campuses (including branches, mostly in the provinces). Public HEIs have been granted partial autonomy, which has allowed them to establish admission criteria, design academic curricula, and charge tuition fees. The Accreditation Committee of Cambodia (ACC) was established in 2003 and has successfully completed the assessment of the Foundation Year in 41 HEIs.1

8. Over the last decade, several important initiatives have been introduced into Cambodia’s higher education subsector. The first was 1997’s formal authorization to establish private HEIs. These private HEIs have been encouraged by Cambodian authorities as a consequence of scarce public resources that were available to expand the public higher education sector. As such, private institutions have not received any public financial support and mainly rely on fees for recovering their expenses.

9. The second significant reform was the introduction of fee paying places in public HEIs. In 2000, a Prime Minister’s Circular was issued as a form of cost recovery to regulate the proportion of fee paying students in public HEIs. The Circular stated that one-third of students enrolled in public HEIs could be fee paying students, with the other two thirds being “scholarship” students. Scholarship students do not receive any money from the government per se, but do not pay fees.

10. More recently, the proportion of fee-paying students has rapidly expanded. Nine years after the introduction of fee paying places, the proportion of students paying fees in public HEIs is now between 70-80 percent, well beyond the 33 percent as stated in the Circular. The 2000 Circular has not been officially suppressed, but as long as the DHE admission office has been able to allocate a certain number of places every year to scholarship students, the 33 percent target has not been enforced. Fee paying places are not allocated at the expense of scholarships. Rather places are made available in existing and newly created institutions and branch campuses of institutions in response to growing student demand. These trends have resulted in increased institutional revenues generated by fees.

11. The third significant reform occurred in 2003 when a National Authority was established to accredit HEIs. This organization known as the Accreditation Committee of Cambodia (ACC) was established by a Royal Decree that laid out the criteria to be followed for accrediting public and private institutions. The ACC has started its program of work by accrediting the foundation year of most existing institutions and has established plans for accrediting bachelor’s degrees during the next two years. While the success of the ACC is yet to be determined, there is evidence of less than satisfactory quality in almost all HEIs.

12. A fourth significant change to the higher education subsector was November 2007’s passage of the new education law (Kram). The law codified two categories of establishments within the HE system - universities and institutes. A university was defined as a generalist HEI entitled to deliver all higher education diplomas (bachelor, master and doctorate). As outlined by the law, it should offer five major fields of study, three of which are compulsory: humanities (art, literature and languages), sciences (mathematics and natural sciences), and social sciences. The law defined an institute as a vocationally specialized HEI, ranging from those which offer higher degrees (such as the Institute of Technology of Cambodia) to those which concentrate on specialized courses, such as English and or Computer Science. Many

1 Data provided by Department of Higher Education (DHE) and Accreditation Committee of Cambodia (ACC). students in these institutes are enrolled in Associate Degree programs, having not passed the Grade 12 leaving examination.

13. These four changes have had profound implications for the types of institutions that comprise the HE system as well as the composition of students enrolled in HEIs in the country. Prior to the mid-1990s, higher education remained a small public sector, with 11,946 students enrolled in the 1995-96 academic year. There has been an almost ten-fold increase in enrollment since that time. Beginning in 1996, the first private university, Norton University was established in Phnom Penh, followed by a rapidly growing number of similar institutions, all of which contributed to significant enrolment increases in higher education. Up until 2005, only one new public institution had been created - Maharishi Vedic University (MVU). MVU was the first public HEI located in a province, outside the capital city Phnom Penh. Unfortunately, MVU has not been able to attract a significant number of students and has not met its expected role, to supply higher education services outside Phnom Penh. Instead, this role has been mostly achieved through private institutions, some of them as provincial city branches of mother universities established in Phnom Penh, and some other fully autonomous ones within provinces. Reforms to the subsector have significantly shaped the course of enrolments, the proportion and number of students who hold scholarships, the proportion of female students, and the socio-economic profile of those seeking higher education.

14. Enrollments: Since the 2004-05 Academic Year, the total number of enrolments has increased almost two-fold, from 56,810 to 110,090. The number of students in private institutions is greater than in public ones, 63,695 in private as compared to 46,395 in public institutions. The share of private institutions as a percentage of all institutions (Main Campuses only) has declined to 62 percent.

15. Scholarships: The number of students with a scholarship was 8,533 in 2004-05 and rose to 13,620 in 2007-2008. The share of scholarships, however, is modest and declining: 15.3 percent in 2004-05 and 12.3 percent of students in 2007-08 held scholarships. The proportion of students who hold scholarships is much lower in private institutions than in public ones, although the difference has been narrowing over time: 4.3 percent of private students held a scholarship in 2004, while 30 percent of students in public institutions held one during that time. In 2007-08, the proportion of scholarships students declined to 21.5 percent in public universities and increased to 5.7 percent in private universities.

16. Gender Discrimination: As tertiary education has expanded over the last decade, the share of female enrolments has been consistently lower than that of male enrolments. The lower level of participation of females appears not to be primarily caused by obstacles to access specific to higher education, however. The discrimination process takes place earlier throughout the education system in the primary and secondary subsectors. However, there have been recent positive trends regarding female participation in higher education. Recent reviews have noted that the proportion of females is increasing significantly, especially during the last four years. According to that study, female participation was 32.3 percent in 2004, 35.1 percent in 2005, 37.2 percent in 2006, and 38.3 percent in 2007, representing progress of 1.5 points on average per year. A similar evolution can be observed for the total proportion of females in the system.

17. Poverty Discrimination: A similar issue may also be noted with the poor. It is true that the poor have less access to higher education than the more affluent; however, recent studies have noted that the discrimination against the poor is likely to have taken place during lower levels of schooling, rather than in the higher education subsector where specific policies exist to encourage the poor to enter. However, the poor remain a significant minority among enrolled students. Certainly reform of lower levels of education is needed, but there is also a rationale for a positive discrimination policy to support the access of the poor into higher education.

18. Although significant progress has been made in the past several years, there remains much to be done in the sub-sector, as emphasized by the literature. There is a continuing need to:

a) Establish procedures and policies that support the establishment of a liberal foundation year in all HEIs as an important base on which to prepare graduates to deal with the diverse challenges in the job market; b) Make institutional management more systematic and transparent, e.g. by providing a framework for strategic planning, revenue generation, fund allocation, and reporting that supports the institution as a whole rather than individual departments; c) Establish procedures and policies for staff development that recognize that most higher education staff need not be fully trained as PhDs. These actions will draw from international experience which has shown that most courses at the university level can be effectively taught by people with Master’s degrees, although it was found that at the department level, supervision of these instructors is often best carried out by specialized university staff with PhDs; d) Bring the ACC to a level of good international practice, and further integrate it into the emerging global and regional community of practitioners in quality assurance; e) Establish basic procedures and policies that recognize the interrelationship of teaching and research and place an emphasis on the strengthening of teaching in order to improve research capacity -- i.e., basic skills of faculty, curriculum, syllabi, libraries and connectivity; and f) Establish a scholarship program that balances rewards for highest achieving students with (i) support for the poor and (ii) incentives to study in fields of strategic importance.

1. Objectives

20. The development objective of this higher education project is to improve: a) the quality of teaching, management, and research in project-supported entities; and b) the targeting of disadvantaged students for enhanced access and retention.

2. Rationale for IDA Involvement 21. This project is closely related to the objectives of the Country Assistance Strategy (CAS), which was last updated in May 2008. The CAS proposes to build strong foundations for sustainable development and poverty reduction by investing in good governance, physical infrastructure, human capital, and the private sector. With regard to education, the CAS places a high priority on the improvement of access to and the quality of education. In particular, the CAS explicitly enumerates as one of its major objectives the development of HE capacity to a level where it can effectively train professionals for public service and the private sector. To meet this objective, there is a need to strengthen HEIs through the development of quality standards, organizational improvements, staff training, and building the planning and support skills of Ministry staff. The CAS further anticipates that improving leadership skills would contribute substantially to improving governance and public sector performance.

22. Although much has been accomplished, both the Government and the World Bank understand that, during the past 10 years, higher education in Cambodia has experienced a number of significant changes. These changes have been accompanied by major challenges in the areas of access, quality, licensing and accreditation, and the legal framework with which HE must operate. Throughout these changes, the sub-sector continued to suffer from limited Government budgets and low levels of support from the donor community.

23. There is now, however, a strong sense that the sub-sector is supported by positive developments resulting from market dynamics and greater government commitment to quality improvement. A Vision for Higher Education in Cambodia has been drafted and is currently being finalized for discussion with Government through a process of consultations with HE stakeholders. A report detailing different dimensions of this vision has been prepared in close consultation with the MoEYS. In addition, under an on-going International Development Association (IDA) project, ACC has successfully completed the assessment of the Foundation Year in a number of HEIs, and the ACC and the Department of Higher Education (DHE) co-hosted a technical workshop to strengthen coordination processes between the two agencies on quality improvement measures.

24. In order to build on these positive efforts and to fill some of the remaining gaps in planning, the Government has requested that IDA provide continued support for Cambodia’s HE development agenda and has recognized the success of past collaboration in the education sector. IDA support for higher education in Cambodia will fill a gap traditionally left open by other donors and ensure that IDA is engaged in the country’s education sector at the primary, secondary, and tertiary levels. The project builds on the experience and lessons learned from the on-going Cambodia Education Sector Support Project (CESSP), that provides modest funding to the HE sub-sector, resulting in improvements in facilities, equipment, staff capacity, and the analysis of issues and challenges. In the process of the design, preparation, and implementation of this project, the World Bank will bring its international and regional experience to improve the quality and relevance of teaching and research in the sub-sector, as well as strengthen capacity building activities. 3. Description

24. Component 1 (Strengthening the Capacity of the Higher Education System) will improve the overall development, management, and governance of the higher education sub-sector by strengthening institutional capacity of DHE, DSR, and ACC and overall coordination of the HE system. Component 2 (Provision of Competitive Development and Innovation Grants) will introduce the use of competitive development and innovation grants to support improvements in teaching and management and practical, research-based solutions for existing development problems in the country. Component 3 (Provision of Scholarships to Disadvantaged Students) will provide scholarships, based on pro-poor targeting and educational criteria, and assess the effectiveness of this pilot pro-poor scholarship program through an impact evaluation. Component 4 (Project Management and Monitoring and Evaluation) will finance project management and monitoring and evaluation.

4. Financing Source: ($m.) BORROWER/RECIPIENT 0 International Development Association (IDA) 23.00 Total 23.00

5. Implementation

25. The project will be implemented at the national and institutional levels over a period of five years from the date of effectiveness. MoEYS will assume overall responsibility for coordination and implementation of the project, including procurement, disbursement and financial management (FM).

26. At the highest level, the project management arrangements will require strong support from MoEYS leadership. Under the current arrangement for on-going projects, the Minister has established a Program Management Committee (PMC) responsible for the oversight of the Education Strategic Plan. The PMC is led by Minister of Education and the Secretaries of State responsible for all sub-sectors in the ministry. This management structure has been designed to ensure that overall educational policy direction is analyzed from a variety of angles; and that policy decisions are followed into implementation through the overall coordination of the Directors General. Since the PMC also has the mandate to provide oversight responsibility for all donor-financed projects, and given the existing structure, the PMC will be responsible for: (a) approving the project’s annual activities, operational plan, and budget allocations; and (b) overseeing progress and compliance with agreed project guidelines.

27. The implementation arrangements will be based on the existing MoEYS structure with clear responsibilities. The PMT led by the Secretary of State responsible for Directorate General for HE will assume overall responsibility for management and for: (i) commissioning and approving required accounts and reports; (ii) ensuring project audit requirements are satisfied; (iii) approving quarterly progress reports, quarterly financial management reports, procurement plans; (iv) conducting quarterly progress monitoring of project targets; (v) reviewing the annual operation plan with recommendations of approval or disapproval to the PMC; and (vi) coordinating sub-sector development with other agencies. The Secretary of State in charge of the Directorate General of HE will be the Project Director and will have overall responsibility for management and act as liaison with IDA.

28. At the project coordination level, the Project Coordination Committee within DHE will assume responsibility for: (i) the daily management, administration, coordination; (ii) M&E of the project; and (iii) the development of the annual operation plan and approval of the annual component implementation work plan. The Deputy Director General for HE will be the Project Manager. ACC and DSR will be active members and benefit from the project.

29. Project implementation will be carried out by: (i) existing MoEYS departments, including DHE and DSR, which will oversee a technical team; and (ii) ACC. Four technical teams will be established under the Merit Based Performance Incentives (MBPI) to manage and implement the project component activities. Each technical team will be led by a Program Officer. Each team will assume responsibility for: (a) proposing annual component work plans and budgets; (b) submitting quarterly progress reports and FMRs to the project manager; (c) implementing planned activities; and (d) performing weekly component monitoring and supervision of project activities and progress. Each team member will have clear terms of reference. Financial management and procurement teams will be part of the technical team of Component 4 and located in DHE.

30. An MBPI scheme will be developed under the arrangement for the sector reached with the Ministry of Finance and the Council of Administrative Reform. The scheme will be in compliance with the sub-decree on MBPI and will require terms of reference for eligible posts, advertising and merit based selection, public listing of staff selected to receive benefits, as well as monitoring, evaluation and institutional arrangements.

31. A Research Grant Management Committee will be established to support the implementation of Component 2, and a Scholarship Committee will be established to support the implementation of Component 3. The Secretary of State for HE will have oversight responsibility on the functions of these committees. The Secretary of State responsible for DSR will chair and provide guidance and technical expertise to the RGMC.

6. Sustainability

25. The project outcomes are expected to be sustainable at both the institutional and financial levels.

26. Institutional Sustainability. The Government, through the MoEYS, has generally shown an increasing commitment to its higher education goals as demonstrated in its national development plan and its history of increasing support for HE over the past decade, though it must be noted that the last annual budget (2007) witnessed a marked decline (about 7 percent), over the previous year, due in part to national budget pressures resulting from international economic declines. The project has been designed to align with key objectives of the Government’s national development agenda, which seeks to reduce poverty and increase equity for all of its citizens. As such, the Government has placed a high priority on upgrading HE institutional management, thus making it more systematic and transparent, e.g., by providing a framework for strategic planning, revenue generation, fund allocation, and reporting that supports the whole institution rather than individual departments. The Government has provided assurances that it will provide appropriate recurrent financing throughout the duration of the project and afterwards as needed.

27. To help ensure the sustainability of the project, there will be a strong focus on capacity building within line departments of MOEYS. This focus on capacity building will, in turn, support the Ministry’s downstream efforts to implement policy reforms and enable HEIs to operate in a more autonomous environment. This effort should also strengthen the Ministry’s potential for continued, effective implementation of its reforms once the project is complete.

28. Capacity building for HEIs will develop more robust and effective institutional management structures and will serve to provide the institutional framework that is necessary to support ongoing efforts to improve the quality of instruction and research within project institutions.

29. Financial Sustainability. A financial analysis was carried out to determine whether resources would be available for the MoEYS and HEIs to manage the post-project recurrent costs of the project’s investments. The impact of recurrent costs on the MoEYS’s budget will be negligible, not exceeding 0.5 percent of projected budget revenue. These impacts will be offset, to some extent, by anticipated revenue that these universities will receive from research and development (R&D) activities.

7. Lessons Learned from Past Operations in the Country/Sector

30. The project is designed to support the key directions for reform outlined in the Government national planning documents, as well as previous Bank and other donor documents and input to the mission. Previous projects (Bank and others) offer a number of lessons learned which have been considered and reflected in the project design. These include:

 Project designs should be kept simple, with only a few well developed and understood PDOs;  Projects should be designed to encourage differentiation of HEIs, including the development of private institutions and of non-university institutions;  HE policies should explicitly give priority to quality and equity objectives;  Peer partnerships and networks (with international institutions, specialist professors, specialized consultants, and HEI administrators) are effective in improving the quality of professional performance;  Competitive research grants for faculty (i) encourage dialogue between Government and university leaders on national priorities and institutional goals, as demonstrated by recent IDA operations in Bangladesh; (ii) combine autonomy with added accountability for results, as Chile’s experiences indicate; (iii) stimulate institutional strategic planning and improvement processes; (iv) encourage quality research; and (v) work best when designed with a flexible funding mechanism with transparent procedures; and  International consultants are difficult to recruit for assignments requiring full-time residence outside the capital. Therefore, the project should seek to identify and utilize local and regional consultants to the extent possible for TA and training.

8. Safeguard Policies (including public consultation)

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [ ] [x] Natural Habitats (OP/BP 4.04) [ ] [x] Pest Management (OP 4.09) [ ] [x] Physical Cultural Resources (OP/BP 4.11) [ ] [x] Involuntary Resettlement (OP/BP 4.12) [ ] [x] Indigenous Peoples (OP/BP 4.10) [ ] [x] Forests (OP/BP 4.36) [ ] [x] Safety of Dams (OP/BP 4.37) [ ] [x] Projects in Disputed Areas (OP/BP 7.60)* [ ] [x] Projects on International Waterways (OP/BP 7.50) [ ] [x]

9. List of Factual Technical Documents

 “ ACC Budget Plan 2008” Dr. Mao Bun Nin (Director, General Affairs Department) and approved by Dr. Tech Samnang (ACC Secretary General), February in 2008  “Cambodia: Skills and Growth,” the World Bank, 2004.  “Cambodia: Human Development Report,” United Nations Development Program, 2007.  “ Compilation of Information to Assist Applicants in Applying for Foundation Year Scholarship in Higher Education Institutions Academic Year 2008-2009,” MoEYS, March 2008  “Country Assistance Strategy (CAS) for the Kingdom of Cambodia,” the World Bank, 2005  “Donor Performance Report,” UNICEF, 2007  “Education Sector Support Program 2006 – 2010” MoEYS, December 2005  “Education Strategic Plan 2006 – 2010” MoEYS, December 2005  “Financing of Higher Education in Cambodia.” Francois Orivel, Consultant to World Bank, March 2009  “Four Stage Higher Education Strategy Plan to 2020,” MoEYS October 2007  General Population Census of Cambodia 2008, National Institute of Statistics, Ministry of Planning  “Higher Education and Technical and Vocational Education and Training in Cambodia,” HR Inc, 2009.  “Higher Education in South-East Asia,” UNESCO, 2006.  “Higher Education Vision 2020,” MoEYS, October 2007

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas  Report of the Admissions Advisor to the Department of Higher Education for the 2007 Public Scholarship Allocation Process Peter Leth in October 2007.  “Statistics of National Lecturers and Foreigner Lecturers who teach at early 2006 – 2007” DHE  “ Statistics of Enrollment Bachelor Degree Students at the early year 2006 – 2007/2007 – 2008,” DHE  Sustaining Rapid Growth in a Challenging Environment: Cambodia Country Economic Memorandum the World Bank. 2008  “ Technical Assistance Contributed (for Higher Education),” the World Bank April – June 2004” Dr. David Sloper, July 2004  “ Trends in Higher Education Eligibility and Enrollments” – Attachment for Higher Education Vision 2020, Vin McNamara, August 2007  “Vision, Strategy and Human Resource Development Plan for MoEYS Higher Education.” CESSP Consultant’s Report, 2008  Updated HE Stats Summary  Updated list of HEI campuses

10. Contact point Contact: Omporn Regel Title: Senior Operations Officer Tel: (202) 473-3450 Fax: Email: [email protected]

11. For more information contact:

The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: [email protected] Web: http://www.worldbank.org/infoshop