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RESTRICTED Report No RESTRICTED Report No. EAP- 1 3a Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report moy not be published nor may. it be quoted as representing their views. INTERNATIONAL B.ANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized REPORT OF ECONOMIC MISSION TO CAMBODIA - 1969 (in three volumes) Public Disclosure Authorized VOLUME II SECTORAL ANNEXES October 1Z, 1970 Public Disclosure Authorized East Asia and Pacific Department CURRENCY EZUIVALENTS Before August 18, 1969 (a) US$ 1.00 = Riels 35.00 Piel 1. 00 = US$ 0.1029 Piels 1 million = US$ 28,571 (b) F Fr. 1.00 = Riels 10 Riel 1.00 = F Fr. 0.10 (= US$ 0.020) Riels 1 million = F Fr. 100,000 After August 18, 1969 US$ 1.00 = Riels 55.5 Riel 1.00 = US$ 0.018 Piels 1 million = US$ 18,004 (F Fr. 1.00 = Riels 10 = US$ 0.18) lote: On August 18, 1969 the new parity for the Riel was defined as 16 milligrams of fine gold, which corresponds to the new parity of the French Franc (which was devalued on August 10, 1969) at the same rate of exchange:as before. However, the exchange rate for non-Franc currencies was brought in line with the Franc rate. Foreword This is the report of a World Bank economic mission which visited Camboclia in October-November 1969. The report considers the Cambodian economic situation only up to that time. The writing of the report was completed in February 1970 and there have been no changes since-then to take account of subsequent developments in Cambodia. Members of the mission were:- Rudolf Hablutzel Chief of Mission Miss H.J. Goris Economist George C. Maniatis Economist Yves Franchet National Accounts Maurice Gaide Agriculture (Consultant) Martin Karcher Transport Raymond H. Rollet Power Jeremny Bonnett Tourism Miss G. Gagnon Secretary CURRENT ECONOMIC POSITION AND PROSPECTS OF CAMBODIA VOLUME II Pagte No. Annex I: The Transport Sector 1 Annex II: Power 24 Annex III: Tourism 40 Annegc IV: Manufacturing Industry 58 Annex I: THE TRANSPORT SECTOR TABLE OF CONTENTS Page No. A. Introduction 2 B. The Highway Sector 4 The Highway Network 4 Highway Admainistration and Planning 5 Highway Coxxstruction and Maintenance 6 Highway Finance 7 Road Transport 7 C. The Royal Cambodian Railways 9 General 9 Traffic 10 Physical Plant and Operations 11 Operating Results -12 Financial Position 13 Outlook for the Future 14 D. The Ports 16 Phnom Penh Port 17 Sihanoukville Port 19 E. Inland Wate.r Transport 20 F. Civil Aviation 21 Airports and Traffic 21 Royal Air Cambodge 22 -2- Annex I: THE TRANSPORT SECTOR A. INTRODUCTION 1. Cambodia's population, economic activities and transport require- ments are concentrated in the Central Plain, which extends clear across from the Thai border in the northwest to the Vietnamese border in the south- east, along the Tonle-Sap, the lower Mekong and the Bassac. The plateau and mountainous regions in the north, northeast and southwest are sparsely populated, with densities as low as 5 inhabitants per square-kilometer, and generate little demand for transport, except along the borders, for strategic reasons. 2. Cambodia is favored with an extensive network of navigable rivers, and up to the opening of Sihanoukville Port on the Gulf of Siam in 1960, relied exclusively on river transport on the Mekong for its overseas traffic. In addition, Cambodia's Central Plain is served by a fairly well developed system of primary roads and by a railway, which links the rice producing Province of Battambang with Phnom Penh and, since the end of 1969, with Sihanoukville Port. The small size of the country has so far militated against the development of domestic civil air transport which, aside from mainly international tourist traffic between Phnom Penh and Siem Reap, remains virtually non-existent. 3. Since independence, investments in the transport sector, which have been absorbing a sizeable proportion of Cambodia's domestic and external resources, have led to the following major developments: (i) the creation and subsequent extension of a seaport at Sihanoukville; (ii) the construction of a 4-lane highway (224 km) and a railway line (262 km) from Phnom Penh to Sihanoukville; (iii) the construction of two international airports at Phnom Penh and Siem Reap; and (iv) the construction of a bridge over the Tonle Sap in Phnom Penh and of a road (not yet completed) joining with the northern and northeastern road network and avoiding a ferry crossing on the Tonle Sap. 4. Following these additions, the transport system will not require further major extensions in the near future, but instead it will need improvements in the standards and in the maintenance of the existing infra- structure. While less glamorous than the construction of new facilities, -3- the task of upgrading and maintaning the system is at least as rewarding economically, and the flow of investment funds (and recurrent expenditures) to the transport sector should not be allowed to drop drastically from its estimated level of CR 500-700 million in the past four years. 5. The task of providing the transport infrastructure and transport services is shared by the Ministry of Public Works, provincial and local authorities, various autonomous public and mixed enterprises (e.g. Rail- ways, Ports, Airline) and private operators of road and inland water trans- port services. The Ministry of Public Works is responsible inter alia for the development and maintenance of the highway network, of the airports and of the inland waterways; it also regulates road and inland water trans- port, and approves changes in tariffs 1/ jointly with the Ministry of Commerce. In addition, it reviews and approves investment projects of the state-owned public enterprises, that is, the Railways and the Phnom Penh and Sihanoukville Port Authorities. 6. It appears, therefore, that Government influence on the transport sector is fairly extensive. It manifests itself mainly through investment decisions, rather than by regulations affecting the operation of the trans- port industry. The Government tends to rely on competition on the basis of price and service for the proper allocation of traffic, and has refrained from restrictive licensing practices. Whether this attitude will also prevail in the case of the Phnom Penh-Sihanoukville rail versus road compe- tition is less clear, but chances are that it would. However, the Govern- ment has allowed the state-owned transport enterprises to follow pricing policies that do not permit these enterprises to recover their capital investments through adequate depreciation charges, much less to earn a return on their investments. The argument has been that transport services are needed to meet national, social and economic objectives and should not be used to further financial gains. 7. While there may, in fact, be some economic merit in promoting the utilization of existing facilities by charging less than would be required to recover the full cost of such facilities from users, the initial decision to invest in a facility should be based on firmly estab- lished economic grounds. Since the Government is primarily responsible for providing costly infrastructure for all modes of transport, and since the economic feasibility of new projects has so far never been thoroughly investigated, it is extremely important for the Government to encourage - and shortly to require - that all new projects proposed for implementation be supported by detailed and solid evidence of their economic justification. In particular, traffic forecasts should be made much more carefully than hitherto, so that facilities would not be over-designed or built prematurely and resources would be used more productively. As further stressed in the present report, careful economic analysis is required before deciding on the scope and timing of future investment projects in all modes of transport. 1/ For road and inland water transport, Government decrees set maximum tariffs only. - 4 - B. THE HIGHWAY SECTOR The Highway Network (See Map) 8. Cambodia's primary road network consists of some 4,200 kilometers of national highways and 1,700 km of provincial highways (Table 9.1). The major road arteries radiate from Phnom Penh and connect all the important centers of economic activity. The density of the road network is highest around the capital, particularly since most of the provincial roads are also to be found in the Provinces surrounding Phnom Penh. About 60% of the national highways and less than 10% of the provincial highways are paved with a bituminous surface. The remainder is about equally divided into gravel and earth roads. In addition, there are some 13,000 kilometers of earth tracks, which have been built by local authorities and by the Cambodian armed forces to serve rural or military traffic. They are usually poorly maintained and impassable for motorized traffic, especially during the rainy season. 9. Most of the primary network dates back 30 to 40 years and was built to standards, which were adequate to handle light traffic, but which could not cope with modern traffic. While roads have been progressively improved and some new roads constructed to modern standards, the greater proportion of the network remains unsuited to large traffic volumes. In particular, pavements.and shoulders are narrow; pavement widths typically range from 4 meters to 6 meters, and 7-meter pavements still constitute the exception. Moreover, low embankments, built with sand and clay materials and insufficiently compacted, are subject to annual flooding during the monsoon; this causes.iserious breakdowns in the pavements and gives rise to costly reconstruction expenditures following the monsoon. On provincial highways, most bridges are single-lane wooden or steel structures, with load restrictions as low as 6 tons; even on national highways, a number of bridges need urgent replacement or reinforcement.
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