CONSULTATIVE GROUP MEETING, MARCH 2 - 3, 2006

Cambodia: Government and Donors Agree Opportunity to Benefit From Deeper Reforms is Now -

Joint Meeting Concludes with New Agreement on Next Steps for Better Future Public Disclosure Authorized

hnom Penh, March 3, 2006 -- the 8th atmosphere for debate PConsultative Group (CG) Meeting on and dialogue and pro- Cambodia ended with Government and de- viding citizens, particu- velopment partners agreeing with Prime larly the poor, with the Minister Samdech Hun Sen’s statement that opportunities and tools Cambodia has chosen to be “firmly on the to raise concerns and path to progress and realization of its true ask for change, need to potential”, but that “every step shows us be continued, as they new challenges ahead.” For Cambodia to can significantly im- benefit from the vast opportunities of the prove the prospects of next decade, delegates agreed that the coun- successful reform, del- try needs to act now to consolidate the egates agreed. progress it has made to date and accelerate “To achieve the Public Disclosure Authorized its reform efforts in order to address remain- Cambodian Millennium ing challenges. Development Goals Delegates agreed that there was reason (CMDGs) Cambodia for optimism – given the past decade’s needs to intensify its ef- progress and the last year’s accomplish- forts to tackle emerging Prime Minister Hun Sen: “To achieve the Cambodian Mil- ments on growth and reform. However, to issues and daunting lennium Development Goals (CMDGs) Cambodia needs to sustain the progress over the last decade challenges,” declared intensify its efforts to tackle emerging issues and daunting made possible in large part by the transi- the Prime Minister. challenges”. tion from war to peace, the Government and The CG Meeting, held March 2-3 in the past decade on improving people’s development partners will need to redouble Phnom Penh, was attended by members living standards and opening up tremen- their efforts to implement reforms and im- of the donor community, including 12 dous opportunities. He commented, prove aid effectiveness. partner countries, 8 observer countries, “Cambodia is moving from war to peace; These include reforms to reduce cor- 5 international development organiza- from a culture of conflict to a culture of Public Disclosure Authorized ruption and make government more respon- tions, and the Government of Cambodia. compromise: and from a culture of con- sive, responsible, effective, transparent, ac- Civil society and private sector represen- frontation to a culture of dialogue and countable; continued commitment to mac- tatives attended as well. reconciliation. As we march further into the 21st century, the next ten years repre- sent a decade of opportunity to realize our development goals – defined through the CMDGs – and uplift the poor and vulnerable.” Referring to the important progress made by putting in place the Government’s new Five-year develop- ment plan – the National Strategic Devel- opment Plan (NSDP) and its correspond- ing work outlining priority government expenditures, the Public Investment Pro- gram (PIP), he said, “Setting down strate- Public Disclosure Authorized gies and targets on paper is the first step. Far more important is to plan and pur- sue practical actions to achieve them. … We need to work hard on further improve- The 8th Consultative Group (CG) Meeting was held in Phnom Penh on March 2 - 3, 2006 ments in governance if we are to make more than a dent in poverty.” roeconomic stability and promoting broad- Country Context: Delegates welcomed the NSDP and based and more equitable growth; invest- Cambodia’s Achievements PIP as a key sign of Government owner- ing in infrastructure and private sector led ship of the development agenda, and com- growth; and improving services for human mended the NSDP’s approach of provid- development and to improve the lives of The Prime Minister noted the posi- ing a road map, prioritization, and resource poor people. Efforts to create a more open tive impact of peace and stability over see NEXT page requirements to help the Government economy remains heavily dependent from 2004 to 2006 to the previous CG achieve the vision laid out in the Rectan- upon a few sectors, and the primary ben- period of 2002 to 2004, we note a clear gular Strategy. As detailed sectoral plans efits of this growth are highly concen- acceleration of reform in most areas. In for NSDP are developed and implemented, trated among the richer urban segments these areas a sense of momentum is being delegates agreed to work together to fo- of the population, which has resulted in built – which is heartening. And though cus on diversifying the sources of a rapid increase in inequality between the record is still clearly mixed, there is a growth, accelerating better land manage- the rich and the poor.” sense that Cambodia is going down the ment, developing rural infrastructure, and Senior Minister Mr. Keat Chhon, Min- right path,” said Mr. Porter during his investing in basic human development in ister of Economy and Finance and Co- Closing Remarks today. order to increase the impact and effec- Chair of the meeting commented, “Not- tiveness of the Five-year plan. Govern- withstanding this significant progress, Looking Forward: Serious ment and donors agreed to increasingly we still face many challenges to combat Challenges Remain align all public resources including aid poverty. Improving living standards and with the NSDP and PIP. the equitable distribution of growth Delegates stressed that key reforms in Delegates agreed that since the last among the population remains a high natural resource management, on the legal meeting of the Consultative Group in De- priority for the Royal Government. The and judicial framework, and on anti-cor- cember 2004, there has been important agriculture sector is the source of liveli- ruption need to be accelerated, and urged progress – with growth maintaining its hood of more than 70 percent of the la- immediate steps to move forward on these earlier average of 7 percent a year, in spite bor force – therefore speeding up the de- important action items which would have of higher oil prices and the ending of the velopment of this sector is the highest both immediate impacts in terms of solidly Multi Fiber Agreement (MFA) – and other and most important urgent priority. Sus- positioning the Government on the path economic and social indicators improv- tainable development, poverty reduction to reform and more long-term benefits in ing as well, including a reduction in ma- and the CMDGs cannot be achieved terms of growing confidence in the coun- ternal and child mortality rates, dramatic without further improvements in rice pro- try, increased growth, and ultimately, ac- decrease in infectious diseases, and im- ductivity and diversification of crops as celerated poverty reduction. proved supply of clean water in urban well as promoting agro-industry devel- Delegates called for accelerated efforts areas. The fight against poverty is also opment.” to address some shortcomings in natural showing some results, with a new Pov- Progress has also been made on some resource management, noting that while erty Assessment released last week show- key institutional and policy reforms – greater information availability on eco- nomic land concessions is welcome, more complete disclosure is needed to improve transparency and efficiency. Delegates welcomed the Prime Minister’s commitment that land not being appropriately utilized be converted from economic land conces- sions to social land concessions for the poor, and also urged increased attention to ensuring fair and equitable land dispute resolution, as tenure insecurity remains a core constraint to Cambodia’s economic and social development and a key factor in rising inequality. Delegates also agreed with the Prime Minister’s call for continua- tion of independent forest crime monitor- ing – which requires donor funding – and delegates noted that the institutional framework for independent monitoring of illegal logging and land grabbing needs to H.E. Kong Vibol, Secretary of State of Ministry of Economy and Finance; H.E. Sok be reviewed urgently. A comprehensive ag- Chenda, Secretary General of Council for the Development of Cambodia; and H.E. riculture development strategy is also Senior Minister Cham Prasidh, Senior Minister of Commerce, at the CG meeting needed, to guide reforms and development ing that pverty rate fell from about 47 per- which is measured through the Joint work in this key area which could greatly cent in 1993-4 to 35 percent in 2004. “These Monitoring Indicators or JMIs – with key benefit Cambodia’s rural poor. findings finally lay to rest the impression initiatives made in both formulating and On legal and judicial reform, partici- that had taken hold, that Cambodia had adopting a strategy and in carrying out pants urged the Government to move somehow experienced a decade of rapid specific actions in the areas of public fi- ahead decisively on passing of a series of growth with little or no poverty reduc- nancial management, private sector de- eight laws which are fundamental to es- tion,” said Mr. Ian Porter, World Bank velopment, human development and in- tablishing a sound framework for a more Country Director for Cambodia and Co- frastructure made over the last 15 months. effective legal and judicial system. On anti- chair of the CG Meeting. Reforms in public administration and on corruption, delegates noted that the cur- He continued, “But it’s important to better aid harmonization and alignment rent draft law, while representing a signifi- remember that while growth and stabil- have also deepened, donors noted. cant improvement, still falls short of inter- ity has helped to drive down poverty, the “When we compare the rate of progress national best practice and called for four From right: Nisha Agrawal, World Bank Country Manager, Ian Porter, World Bank Country Director, H.E Keat Chhon, Senior Minister of MoEF, Chhieng Yanara, Deputy General of CDC and H.E Aun Porn Moniroth, Secretary of State of MoEF, at the CG meeting specific actions to be taken to satisfy the delivery – as well as to advance human ship with the Government and other Government’s commitment from the last development efforts through JMIs on do- stakeholders in helping the country CG meeting: operational and budgetary in- mestic violence and women empowerment, achieve its development objectives – ul- dependence of the Anti-Corruption Body and actions to further tackle HIV/AIDs and timately, better lives for all Cambodians.” (ACB) to be established; operational con- drug abuse. On private sector develop- trol by the Secretary General over ACB ment, delegates agreed on the need to A detailed list of the JMIs was agreed investigators; access to asset declaration strengthen trade facilitation and market to and will be publicly released shortly: documents by the Secretary General; and development efforts and enhance trans- www.cdc-crdb.gov.kh and at harmonization of criminal offense with the parency and accountability. JMIs focus- www.worldbank.org/kh United Nations Convention Against Cor- ing on infrastructure, private sector-led ruption (UNCAC) and draft penal and growth, and increasing aid effectiveness Discussing aid effectiveness, del- criminal procedure codes. The Royal Gov- were also discussed and agreed upon. egates agreed that Cambodia has made ernment agreed to consider the points Mr. Porter commented, “These Joint significant progress in laying out prin- raised and stressed the need to have a Monitoring Indicators are a step in the ciples and an action plan for harmoniza- comprehensive approach and build capac- right direction towards strengthening part- tion and alignment following the March ity for implementation. nerships for reform and working toward 2005 Paris Declaration, but concrete ac- In discussing the JMIs for the next year, common goals of strengthened systems of tions must now be taken to implement delegates noted the close linkage between accountability in Cambodia. While the plan. Delegates agreed that the vari- the JMIs and the reform priorities laid out progress is not going to be perfect, these ous Technical Working Groups - the ba- in the NSDP. In addition to JMIs on the indicators are ambitious, and we need to sic building blocks for harmonization and issues listed above – natural resource understand that in such a complex devel- alignment – be reassessed and strength- management, legal and judicial reform, and opment environment, moving forward on ened, with increased opportunity for anti-corruption – some JMIs agreed to for this agenda will take time. Cambodia is policy dialogue and discussion between the next year, to continue the reform pro- at a critical juncture – it has embarked on different stakeholders created. Delegates cess already underway, include: continu- the path of reform but now needs to take also agreed with the Government’s re- ation of public administration reform fo- the necessary actions to move aggressively quest to aim for the development and cusing on the civil service; further work in key areas such as natural resource man- implementation of more sector-wide pro- on decentralization and deconcentration agement and anti-corruption, while con- grams, and to come to a broader agree- reform and more work on creating trans- tinuing to show momentum, commitment, ment on difficult issues such as the elimi- parent and effective management of pub- and political will in all reform areas. De- nation of salary supplements and the role lic money through public financial man- velopment partners, in return, must con- of technical assistance in genuinely agement reform; steps to improve service tinue to do their part to work in partner- see NEXT page Cambodia: Government and Donors Agree...

Representative of NGOs, Private Sector and donors joined the discussions at the 8 th CG meeting

continued from page 3 Donors pledged US$601 million in Keat Chhon, Minister of Economy and building Cambodia’s own capacity. support for Cambodia’s development ef- Finance, who led the Cambodian del- Actions to further embed the harmo- forts, as part of the country’s budget and egation, and Mr. Ian Porter, World Bank nization and alignment agenda need to be financial plan for 2006. In 2004, the pledge Country Director for Cambodia. Coun- undertaken – which means expanding the amount was US$504 million. In addition, tries and international organizations scope and improving the depth of coun- Cambodia benefited from US$82 million in present were: Australia, Canada, Den- try ownership of the development agenda debt relief provided by the International mark, Finland, France, Germany, Japan, – to include both state and non-state ac- Monetary Fund, given Cambodia’s meet- Republic of Korea, New Zealand, Swe- tors. Government welcomed the input of ing of three key conditions for relief – den, United Kingdom, United States; civil society and private sector into the macroeconomic stability, poverty reduc- Observer countries included India, Po- development dialogue in a mutual and tion program, and adopting a public finan- land, Russian Federation, Singapore, accountable manner. Delegates agreed cial management reform agenda. Thailand, and Vietnam; organizations that now is a good opportunity to build a Development partners agreed to meet included Asian Development Bank stronger consensus between the Royal with the Government again, in June 2007 (ADB), the European Commission (EC); Government, Cambodian civil society, the in Phnom Penh for the next annual meet- International Monetary Fund (IMF), the national and foreign private sector and ing between the Government and its de- United Nations Development System external development partners on the pri- velopment partners. (UNDS), and the World Bank. NGOs orities for Cambodian development. En- from MEDICAM, Silaka, and World Vi- gaging in constructive and informed dis- For more on the Consultative Group sion Cambodia attended the meeting, as cussion would help to better focus these on Cambodia, please see: www.cdc- did private sector representatives from priorities and improve the likelihood of crdb.gov.kh or www.worldbank.org/kh. the Law, Taxation, and Governance achieving results from development ef- The Consultative Group meeting, Working Group. forts, delegates said. The representative hosted by the Government of Cambodia from the NGO community welcomed the in Phnom Penh on March 2-3 2006 was For more information contact: production of the NSDP and the opportu- attended by delegations from 18 coun- Mr. Bou Saroeun ia. nity to engage with Government and do- tries and 5 international organizations. Communications Specialist nors on these issues of substance. It was co-chaired by Senior Minister Mr. Email: [email protected]

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