Technical Assistance Consultant’s Report Project Number: 46443 August 2015 Regional: Second Greater Mekong Subregion Corridor Towns Development Project Cambodia - Final Report (Cofinanced by the People’s Republic of China Regional Cooperation and Poverty Reduction Fund) Prepared by Groupe Huit Developpement – SCE – CADTIS-Consultant – Lao Consulting Group - SCC For Asian Development Bank This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. SECOND GREATER MEKONG SUBREGION CORIDOR TOWNS DEVELOPMENT PROJECT – TA-8425 REG CAMBODIA – FINAL REPORT PART 1: Volume I: The Main Report . Introduction . Rationalized Urban Development Strategy . Strategic Local Economic Development Plans . The Subprojects . The Project Cost Estimates and Financing Plan . Project Implementation Arrangements . Financial Analysis . Economic Analysis . Social, Poverty and Gender Assessment . Land Acquisition and Resettlement . Environment Assessment . Project Benefits, Impacts And Risks Volume II: The Subproject Components (Conceptual Designs and Costs) . Kampot - Sihanoukville PART 2: Volume III: Social Development Plans and Strategies . Summary Poverty Reduction and Social Strategy (SPRSS) . Gender Action Plan (GAP) . The Project Participation Plan . Stakeholder Communications Strategy Volume IV: The Resettlement Plan . Resettlement Plans: Kampot . Due Diligence Report: Sihanoukville Volume V: The Environmental Examinations . Initial Environmental Examination – Cambodia . Environmental Management Plans: Kampot - Sihanoukville PART 3: Volume VI: Project Plans and Documents . The Project Administration Manual . The Capacity Building Program Volume VII: Project Assessments . The Financial Analysis . The Economic Analysis . The Proverty and Social Analysis . The Gender Assessment Report . The Stakeholder Analysis . The Procurement Capacity Assessment . SLEDPs- The Project Towns Assessments Final Report August 2015 EXECUTIVE SUMMARY A. FOCUS The Final Report (FR) is set within the context of a Greater Mekong Subregion (GMS) objective that towns in the economic corridors should have increased economic activity, social benefits and better environments. This specific ADB funded project is therefore expected to contribute to this objective through improved infrastructure in Kampot and Sihanoukville and also enhancing climate resilience and green growth capability. The FR therefore delivers recommendations regarding three key outputs specified in the “Outline Terms of Reference (ToR) for Consultants”, which are to prepare: (i) a Rationalized Urban Development Strategy for Cambodia; (ii) Strategic Local Economic Development Plans for both of the participating towns; and (iii) Subprojects in the form of feasibility studies and institutional arrangements to support an ADB project loan for infrastructure development in Kampot and Sihanoukville. B. THE PROJECT CONTEXT The selection of subprojects in each town has taken account of the following policy and project context: . Strategic Policy The project is in conformity with the Government of Cambodia‟s (GoC) policy context, including: (i) National Strategic Development Plan; (ii) Various national sector strategies, including the National Policy on Water Supply and Sanitation; and (iii) other relevant policies, including the Policy on Sub-National Decentralization and Deconcentration. The project enhances the policies and sector priorities contained in the ADB “Country Partnership Strategy” (2014-2018), acknowledging strategic pillars in rural-urban links, human and social development and public sector management and is aligned to other ADB priorities in terms of climate change, city greening, social inclusion and stakeholder participation. Rationalized Urban Development Strategy (RUDS) Based on a review of GoC urban sector policies and development plans and with specific reference to the GMS economic corridors the draft RUDS for Cambodia recommends priorities for increased investment in the urban sector and the urban planning system, and the implications for local economic development planning over the medium term. It also confirms some of the strategic investments still required to optimize economic growth and social development in the economic corridors, to the benefit of secondary towns. Strategic Local Economic Development Plans Updated draft SLEDPs are included in the FR, which emphasize the need for increased planning and investment in local economies to optimize economic competiveness within the GMS corridor context. These plans are built around an extensive process of stakeholder consultation and utilize an evidence base contained in supporting town assessments. Key outputs of the SLEDPs clarify locally identified investment priorities, through Medium-Term Investment Programs (MTIPs), which: (i) confirm the choice of subprojects for inclusion in the ADB project loan; and (ii) set out a series of sector-based projects which should be priorities for further investment by GoC, the donor agencies and the private sector. C. THE SUBPROJECTS The final selection and design of the subprojects responds to an extensive process of stakeholder consultation, which included a series of intensive subproject missions to each of 2nd GMS Corridor Towns Development Project 1 Groupe huit/SCE/CADTIS/LCG/SCC Final Report August 2015 the towns, and which proved invaluable in securing agreement between the consultant team and the provincial and municipal authorities. Throughout the period of preparing the project, stakeholders have stressed the need to address a range of existing problems and (i) secure a sustainable environment; (ii) provide better living conditions which are socially inclusive; and (iii) provide a secure investment platform for the private sector and the community. The choice of components included in each of the subprojects is therefore built around a common theme of priority investment in basic environmental infrastructure and urban enhancement as an essential baseline in achieving stakeholder priorities. They are concentrated on new provision for wastewater collection and treatment, urban drainage and flood protection and solid waste management. Each of the subproject components has been chosen to provide a match with the ADBs “Green City Agenda” and to be climate resilient, meeting at least GoC standards, with particular reference to flood protection. Further innovations incorporating provision for better environmental planning and technologies should be considered and incorporated in the detailed design of each subproject. The consultant team has prepared conceptual schemes in readiness for detailed design for each of the proposed subproject components as part of the project loan Technical feasibility is assessed and optimum design solutions are proposed, together with detailed costs and utilization of sustainable technologies carefully matched to the operation and maintenance (O&M) capacities at provincial and town level. Unfortunately two potential subproject components one in Kampot and the other in Sihanoukville, which were endorsed at the Interim Workshop and Tri-partite Meeting in Phnom Penh on 10/02/15 (and included in the Draft Final Report (DFR)) have subsequently been excluded from the project loan for policy and administrative reasons. They are the components for wastewater collection and treatment in Sihanoukville and for urban enhancement in the Kampot conservation area. The finally selected subproject components are listed in the “Summary of Subprojects and Costs” table below and explained in more detail in Chapter 4 (The Subprojects) of this Main Report. D. CAPACITY BUILDING The proposed Capacity Building Program (CBP) will be “kick started” by advance action to prepare the EA/IAs in understanding project implementation in accordance with ADB requirements (CBP-Subprogram 1). However, the core CBP activities will be geared to strengthening the capacity of the PMUs and the various stakeholders to facilitate subproject component implementation and subsequent O&M (CBP-Subprogram 2). This will be financed as part of ADB project loan amount. Other activities geared to promoting implementation of the SLEDPs, particularly the proposed MTIPs are specified in a separate module (Subprogram 3), where other sources of funding outside of the project loan will be sought. E. PROJECT FINANCING As a result of the loss of two potential subproject components from the project the total ADB loan amount is now USD 33.0million and with counterpart funding amounting to USD 4.9million, equivalent to almost 13% of the total project cost. Land acquisition and resettlement compensation costs will be allocated as part of the counterpart funding for both towns. The project offers the potential for partial cost recovery for the planned additional solid waste collection services in both towns and for the proposed wastewater collection services in Kampot. Both towns will apply and expand an incremental tariff system for all users. 2nd GMS Corridor Towns Development Project 2 Groupe huit/SCE/CADTIS/LCG/SCC Final Report August 2015 F. PROJECT IMPLEMENTATION It is confirmed that the Ministry of Public Works and Transport (MPWT) will be the Executing Agency (EA) for the project in Cambodia and its General Department of Public Works (GDPW) will be its Implementing Agency (IA). A Project