Asian Development Bank in Cambodia: From Rehabilitation to Inclusive Growth (20-Year Anniversary)

7/30/2019 Asian Development Bank in Cambodia: From Rehabilitation to Inclusive Growth (20-Year Anniversary)

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20 Year annivsy

1992 - 2012

Year annivsy

the AsiAn Development BAnk in cAmBoDiA:

Fr Raba

iu Grw



1992 - 201220 Year annivsy

the AsiAn Development BAnk in cAmBoDiA:

Fr Raba

iu Grw



© 2012 Asian Development Bank

All rights reserved. Published in 2012.Printed in Phnom Penh, Cambodia

Publication Stock No. ARM125163-3 The views expressed in this publication are thoseo the authors and do not necessarily reect the viewsand policies o the Asian Development Bank (ADB)

or its Board o Governors or the governments theyrepresent.

Note:In this publication, “$” reers to US dollars.

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For orders, please contact:Department o External RelationsFax +63 2 636 [email protected]



Tbl of Contnts

Foreword rom the Prime Minister o Cambodia - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - i

Foreword rom the President o the Asian Development Bank - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ii

Acknowledgements- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - iii

The AsiAn DevelopmenT BAnk: 20 yeArs in CAmBoDiA - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1

infrAsTruCTure AnD regionAl CooperATion

Transport - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2

Energy- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6

Urban Development - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9

Tourism- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11

Regional Cooperation and Integration through the Greater Mekong Subregion- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14

rurAl DevelopmenT

Agriculture and Natural Resources - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 17

Rural Water Supply and Sanitation - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 21

Climate Change - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 24

Flood Rehabilitation (2000 and 2011)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 25

soCiAl DevelopmenT

Education and Vocational Training - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 26

Health Care- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30

Gender Equity - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 32

puBliC seCTor mAnAgemenT

Governance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 34

Public Financial Management - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 36

Decentralization and Deconcentration- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 37

Civil Society Organizations- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 38

privATe seCTor DevelopmenT

Finance Sector - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 40

Private Sector Development - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42

Public-Private Partnerships - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 44

knowleDge pArTnerships

Knowledge Building - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 47

Communications - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 48

Working with Development Partners - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 49

Managing or Development Results - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 50

ADB Then AnD now

ADB in Cambodia in the 1990s- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 51

ADB Milestones in Cambodia 1991-2012 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 55

Cambodia Resident Mission Country Directors- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 56

The Country Partnership Strategy 2011-2013 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 58

Cambodia Resident Mission Team - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 60

Cambodia at a Glance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 61



i

On behal o the people and the Royal Government o Cambodia, I would like

to thank the Asian Development Bank or 20 years o unwavering support.You have been one o our most generous partners—providing us with a totalo more than $1.8 billion or loans, grants, and technical assistance projects.

In 1991, even beore elections had been held and when it was still challengingto travel in Cambodia, ADB was one o the rst development partners to sendmissions to assess our needs.

From 1992 to 1997, a loan and grant worth more than $70 million helpedCambodia to repair essential roads, rail lines, the deep sea port inSihanoukville, Phnom Penh’s electricity supply, irrigation and food controlsystems, as well as high schools, technical schools, teacher training colleges,and the Royal University o Phnom Penh.

Since the early 1990s, ADB has continued to support Cambodia, not only withloans and technical assistance, but through extensive consultation, you have always made sure that ADB undingmatched our needs and our priorities, that it was well coordinated with other development partners, and that itdeveloped the capacity o government sta.

With ADB assistance, we have rehabilitated or built more than 4,000 kilometers o national highways, provincialand rural roads, and in recent years, ADB has enabled us to pave rural roads which greatly improve villagers’access to markets, schools and health acilities.

ADB nance has also helped connect more than 60,000 households to reliable electricity supply. In the educationsector, ADB has helped build 350 primary schools in remote areas and build and equip more than 355 secondaryschools. ADB has also helped supply over hal a million people with sae water and nearly a quarter o a million

people with improved sanitation.

Across Cambodia, ADB has built and equipped almost 700 Commune Council buildings and trained more than20,000 Commune Councilors and sta. To help the private sector to grow, ADB experts advised Cambodiaonthe laws and regulations required or World Trade Organization accession and helped us to streamline regulationsthat make business registration easier and less expensive. In the nance sector, ADB has helped to strengthenbanks and micronance institutions with better regulations and enabled more than 36,000 Cambodians to openmicronance accounts and take out loans.

Through support or Cambodia’s participation in the ADB Greater Mekong Subregion Program, Cambodia hasdeveloped valuable links with neighboring countries in areas such as power supply, inectious disease control,and tourism, and helped us to speed up cross border transport and trade.

ADB sta and consultants have also developed strong relationships with leaders and sta at all levels in a numbero government ministries, and we highly appreciate your fexible approach which allows new needs to be met asthey arise, and provides approvals with a minimum o bureaucracy and delays.

Lastly, we very much appreciate the willingness o ADB to align uture activities in Cambodia with the country’splanning cycle, and we look orward to another 20 years o close collaboration.

Prime Minister

Samdech Akka Moha Sena Padei Techo

HUN SEN

FOREWORD FROM THE PRIME MINISTER

OF CAMBODIA



ii

FOreWOrD FrOM THe PreSIDeNTOF THe aSIaN DeVeLOPMeNT BaNK

I would like to congratulate the Royal Government o Cambodia and the

people o Cambodia on the momentous achievements o the past 20 years.Cambodia is orging a place or itsel as one o the region’s most successulpost-conict economies. Few countries have made such remarkable economicand social progress ater so much devastation.

Among the many statistics that demonstrate how ar Cambodia has come inonly 20 years, the most powerul is the decline in poverty. In 1992, more thanhal o the population was living below the poverty line. Today that proportionhas allen to less than one-quarter. Cambodia’s GDP has grown rom $3 billionin 1993 to $12.8 billion in 2011. During the same period, per capita incomehas risen rom $229 to $911.

The net primary school enrolment ratio has risen rom around 60 percent inthe mid-1990s to over 96 percent in 2011. And the maternal mortality ratiohas allen rom 437 per 100,000 live births in the mid-1990s to 206 in 2010.

Cambodia joined ADB in 1966. Since that time, ADB has provided the country with almost $2 billion indevelopment assistance or, among others, transport, energy, rural development, urban development, educationand vocational training, health care, the fnance sector, and private sector development. A major share o thisassistance has been delivered ater ADB’s post-conict re-engagement in 1992. Cambodia has also beneftedrom being actively involved in the Greater Mekong Subregion Program, which brings together six countriesbordering the Mekong River to promote economic integration and the health and wellbeing o all the people inthe subregion.

ADB’s ambitious country partnership strategy or Cambodia is ully aligned with Cambodia’s development plan.The current strategy, covering the period 2011-2013, prioritizes ADB’s investments in transport, water andsanitation, urban development, agriculture and natural resources, education, and fnance. It also identifespublic sector management as a acilitating sector, and responds to critical challenges such as climate change,decentralization, rural–urban linkages, and regional cooperation. The strategy, which was approved by ADB’sBoard o Directors in July 2011, continues and deepens ADB’s engagement in Cambodia.

We are particularly pleased to have assisted Cambodia in this anniversary year with rapid response to thedevastating oods o 2011 in the orm o an inrastructure reconstruction project. This was ADB’s second majorood response project in Cambodia, the frst being in 2000. It will restore critical public and social inrastructureassets to their original standards or better and, most importantly, restore the livelihoods o people in the aectedprovinces.

ADB is strongly committed to the people o Cambodia, to pressing ahead with our programs to reduce poverty,and to helping the country achieve inclusive economic growth with social development and equity. We lookorward to building on our ruitul partnership or many years to come.

President, Asian Development Bank

Haruhiko Kuroda



iii

acknowldgmnts

This publication was prepared by the entire Cambodia country team, both in Phnom Penh and in Manila, and their

support in providing guidance, text and photographic inputs is greatly appreciated. The production team was led

and coordinated by Peter Brimble, senior country economist, Cambodia Resident Mission (CARM), Chantha Kim,

programs ofcer, CARM, and Sothea Ros, external relations coordinator, CARM. Mao Ouk, associate operationscoordinator, CARM, supported preparation o the Khmer version. Michael Wild and Ann Bishop provided

writing, editing, photography, and design. Khieu Chanthara and Ieat Sila o Graphic Roots, produced the fnal

layout. Guidance and support was provided by Kunio Senga, director general, Southeast Asia Department,

Putu Kamayana, ormer country director, CARM, and Eric Sidgwick, present country director, CARM. Someth Suos

ormer country director, CARM, deserves special thanks or providing his ascinating memories and photos o

ADB’s experiences in Cambodia in the early 1990s. The team wishes to thank the Department o External

Relations or their support in publishing the book. Lastly, special appreciation to all the Cambodia government

ofcials and other stakeholders in Cambodia, without whom all the projects and activities presented in the

publication could not have come to pass.



1

AsiAn DevelopmenT BAnk :20 yeArs in CAmBoDiA

Cambodia was a ounding member o ADB in 1966, but almost all lending and technical assistance to Cambodiahas been since the 1990s when ADB re-engaged ater an extended absence. This publication aims to capturethe essence o the last 20 years o partnership between Cambodia and ADB.

ADB’s core product is fnance, and as o October 2012, Cambodia had received $1.39 billion or 64 loans,$256 million or 21 grants, and $138 million or 179 technical assistance projects.

This commemorative publication reviews activities and achievements in the main sectors o ADB engagement inCambodia, including inrastructure, regional cooperation, urban development, tourism, rural development, oodrehabilitation, social development, public sector management, fnance, and private sector development.

It also covers progress on key drivers o change—governance, gender equity, climate change, knowledgepartnerships, and engagement with civil society organizations, development partners, and the businesscommunity. The steps orward in these areas in Cambodia reect the new broader ‘fnance ++’ strategy o ADB—fnance plus leverage plus knowledge.

This publication concludes with a section on ADB ‘then and now’, detailing the return o ADB to Cambodia 20years ago, a list o ADB milestones since 1991, reections rom all the ADB country directors since the 1990s,and concluding with the essence o the country partnership strategy 2011–2013, and the names o the Cambodiacountry team that are leading the Cambodia-ADB partnership into the uture.

For more inormation on the ADB program and activities in Cambodia, please see http://www.adb.org/countries/ cambodia/main.

Agriculture & NaturalResources

$284.31 (17%)

Education$204.60 (12%)

Energy$112.8 (7%)

Finance$110.3 (7%)

Health, Nutrition & SocialProtection

$59.0 (4%)

Industry & Trade$46.6 (3%)

Public SectorManagement$162.07 (10%)

Multisector$202.8 (12%)

Transport &Communications

$373.3 (23%)

Water Supply, Sanitation &Waste Management

$85.3 (5%)

aDB Lons nd Gnts to Cmbodi

(s of 31 Octob 2012, in million $)



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Tnspot...connecting people

and products...

Cambodia’s transport inrastructure was nearly destroyed over 30 years o war, civil strie and damaging oods. Nearly 8,000 kilometers o primary roads, and more than 600 kilometers o railway lines and bridges built in the 1950s were badly damaged by war or lack o maintenance, and by the 1990s, many still needed repairs.Road, rail, water, and air transport all play a crucial role in the development o Cambodia’s economy.For example, tourism uses roads and airports; theconstruction sector needs water ports and roadsto access raw materials; the agriculture sector depends on roads as well as water ports to get products to market; and industry (mostly garment actories) relies on roads as well as water ports and airports. Expansion o theeconomy depends on ast, efcient transport—i access is insufcient, slow and expensive, economicdevelopment lags and so does the rate o poverty reduction.

Improving transport connectivity is a key goal or Cambodia, its neighbors, and the Association o Southeast Asian Nations (ASEAN). Being able to move goods and people aster and more efciently helps countries tocreate jobs, increase trade volumes, reduce poverty, and improve the quality o people’s lives. For these reasons,Cambodia’s transport sector has been a major ocus or ADB since the bank resumed its operations in 1992.Over the past two decades 23% o all ADB loans and grants have been allocated to the transport sector.

During the emergency restoration phase in the early 1990s, the government and ADB prioritized reopeningCambodian roads to trafc, enabling access to strategic economic locations, and improving economicactivity in rural areas. The most degraded sections o the primary road network, and especially the nationalroads to Viet Nam and Thailand, were the top priority or repairs so that essentials such as ood, medicine,equipment, and building materials could be imported. These interventions to improve transport inrastructurealso helped the peace-keeping operations o the United Nations, and the repatriation and resettlement o over360,000 reugees rom Thai border camps.

Through ADB support in rehabilitating the primary and secondary road networks, as well as the Siem Reap airport,connectivity and competition have greatly improved, and helped increase tourism revenues and peoples’ incomes.Regional transport-related activities have increased trade among Mekong countries, and with the rest o the world.

infrAsTruCTure

AnD regionAl CooperATion



3

With ADB assistance, transport sectorpolicy and institutional capacity hasimproved, which has increased privatesector involvement in road and railway

construction, launched systematicmaintenance, and established saetystandards or roads and saetyregulations or civil aviation.

Today, road transport accounts or 65%o all passenger trafc and 70% o allcargo trafc in Cambodia. With ADBassistance, over 4,000 kilometers onational, provincial, and rural roads have beenrehabilitated or upgraded, and along these roads,schools, hand-pump wells, and rural markets have

been repaired or newly built. With these roadimprovements, the rural poor can access marketsand basic social and fnancial services more easily,including health care, schools, skills training, credit,and agricultural extension services.

Over 4 million workdays o employment have beengenerated in Cambodia through ADB-fnanced roadrehabilitation and routine/periodic maintenance,providing incomes or about 300,000 local workers.Road projects have also increased the mobility andemployability o the rural poor in both arming and non-arming activities.



4

With aster and cheaper access to markets,arming households are spending more time onnon-agricultural income-generating activitiesand their incomes have increased by an averageo 30%. Road travel rom Phnom Penh toBattambang now takes about 5 hours, comparedto 14 hours in the 1990s.

Th GMS rilwyrhbilittion Pojct

The costs o rehabilitating Cambodia’s railway aresubstantial, but so are the benefts. The railwayproject will support Cambodia’s economicdevelopment and make possible cost-efcient,railway transport within Cambodia and betweenCambodia and Thailand, Malaysia, and Singapore. In addition to saving on time and transportation costs, railtransport uses less uel, produces lower levels o environmentally-damaging CO

2, reduces road congestion,

improves transportation saety, and creates employment.

Rail transport is highly efcient, especially over long distances. Reconnecting the railway with Thailand, or

example, will reduce container transit times between Bangkok and Phnom Penh rom about 11 days by seaand road, to about 20 hours by rail. The cost o moving a container between the two cities will drop by over 65%.The railway will give domestic transport users a choice between ast but expensive road transport and slowerbut cheaper and more regular rail transport. Due to railway benefts, an estimated 40% to 50% o container trafcis likely to shit rom road to rail. This should signifcantly reduce road maintenance requirements and delay theneed or expensive widening o roads. One ully loaded heavy truck causes as much wear and tear on a roadas 7,000 passenger cars, and i the truck is overloaded, the impact on roads is even greater.

The GMS Railway Rehabilitation Project is a large and complex project involving the rehabilitation or reconstructiono 385 kilometers on the northern line between Phnom Penh and Poipet on the Thai border; 256 kilometers onthe southern line between Phnom Penh and the sea port in Sihanoukville; rehabilitation o spur lines betweenPhnom Penh and Sihanoukville port; the construction o a railway container yard inside Sihanoukville port; and

a new railway reight and maintenance yard near Phnom Penh. The railway lines are opening to trafc in stages.The frst section opened in October 2010, three more sections are expected to open in 2012 and 2013, and thelast sections should open in 2014–2015. The reight and maintenance acilities are expected to open in 2014.



5

The project also aces thechallenge o resettling thehouseholds that had beenliving along the abandoned

tracks. Prior to resettlement,many aected people werelandless, lacked tenure, andlacked water and sanitationacilities. The resettlementproject is providing aectedpeople with new plots o landand with the replacement costo their previous dwelling,including labor costs. Aected households are provided with toilets, access to electricity and clean water, andthey receive land titles to their new plots 5 years ater relocation.

In addition, an income restoration program has been set up to help people whose livelihoods have been impactedby relocation. This includes vocational training, support to fnd new employment, and microfnance or livelihoodactivities, small businesses, and amily emergencies. The microfnance unds are managed by the relocatedpeople themselves through a number o sel help groups.



6

engy

... lowering energy costs and

increasing productivity...

From an electrifcation rate o only 10%o the population in 2000, to about 25% in late 2012, Cambodia continues to haveone o the lowest electrifcation rates inSoutheast Asia. About 80% o the rural population use electricity supplied rom charged automobile batteries, and they light their houses with polluting and unsae kerosene and candles.Most provincial and district towns still have privately-owned, isolated electricity

systems that generate power by burningexpensive imported and polluting diesel and heavy uel oil.

Costly and unreliable electricity alsodiscourages investors. In surveysconducted by ADB and the World Bank, investors continue to identiy the highcost o electricity and unexpected power cuts as major constraints to doing business in Cambodia. Increasingelectricity coverage and reliability, and lowering the cost o electricity are imperative so that Cambodia can diversiy rom garments and tourism to other sourceso growth such as light manuacturing and agro-processing.

Over the last two decades, ADB has beenamong the most active unding agencies inCambodia’s energy sector. ADB has helpedprovide reliable and aordable electricityto more than 60,000 households.The $113 million already invested inthe energy sector amounts to 7% o

total assistance provided by ADB.In improving access to electricity inCambodia, ADB has fnanced theconstruction o high-voltage transmissionlines and the development o a nationalelectricity grid that connects togetherthe small, isolated private systems thatsupply most provincial towns. With ADBfnancial assistance, by 2010 over 500kilometers o transmission lines had beenconstructed.



7

Energy sector work by ADB has alsohad a strong regional and subregionalimpact. The Greater Mekong SubregionTransmission project rom Viet Namto Cambodia, and the Cambodia PowerTransmission Lines Project rom Thailandto Cambodia have both helped to boostpower supplies and integrate Cambodiainto the Greater Mekong Subregionpower network.

The Provincial Power Supply Project has extendedthe availability o reliable electricity to nine provinces.

The 2009 completion o a transmission line rom the Viet Nam border to Takeo, Kandal and Phnom Penh,as well as several major towns and villages along thetransmission route, provides 130 MW o reliableelectricity at aordable prices. Also, the 2007completion o the transmission line rom the Thaiborder provides 50 MW o power to Battambang,Banteay Meanchey and Siem Reap. In addition tothese bulk imports, there are more electricity importsrom Thailand and Viet Nam through connections atvarious border locations.

More recently, under the Second Power Transmissionand Distribution Project (2006–2013), the nationalpower grid is being expanded in the southernprovinces. Along the transmission corridor toSihanoukville, three new substations are beingconstructed, together with associated mediumand low-voltage distribution lines.



8

From 2011 to 2013, the ADB energy sectorstrategy emphasizes 1) ostering private sectorparticipation in the power subsector; 2) increasingthe use o renewable energy resources, andespecially biouels; 3) supporting rural electrifcationto increase rural peoples’ access to energy; and4) assisting the oil and gas subsector throughanalytical and policy work. ADB has also provided

technical assistance to government in developingthe electricity law, tari reorm, the petroleum law,and building capacity in power sector agencies.

Another Medium-Voltage SubtransmissionExpansion Sector Project willincrease access to gridelectricity in fve provinces:Banteay Meanchey, KampongCham, Kampong Thom, Kandal,and Siem Reap. This projectwill construct over 2,000kilometers o medium-voltage

subtransmission lines, as wellas provide technical assistanceover a 5-year period.

In addition, a Rural EnergyProject will expand the supplyo reliable grid-electricity toover 13,000 households inSvay Rieng Province, promotean energy efcient cookstove byincreasing the number o producersin Kampong Cham Province, andtrain sta in the Electricity Authorityo Cambodia.



9

Ubn Dvlopmnt

... planning or uture growth...

Three major transitions are taking place in

Cambodia, as well as in the countries o theGreater Mekong Subregion: a shit romcentrally-planned to market-oriented economies;decentralization; and the opening o borders.These developments run in parallel with the much larger transormation rom rural-based tourban-based economies. In 2012, about 20%o Cambodians live in urban areas, and this isexpected to rise to 30% by 2020. The urban share o the economy is now about 50%o GDP, and this share is projected to increase to 70% by 2020. However,

due to open borders and private sector driven development, over hal o urban growth is taking place in the capital,Phnom Penh. To avoid even greater congestion in Phnom Penh, policies and projects are needed to acilitate sustainable growth in provincial cities and towns.

ADB urban development strategies orCambodia are ocused on achieving abalanced distribution o developmentbetween Phnom Penh and small and

medium-sized provincial cities and townsacross Cambodia. While the Phnom Penhcapital region will continue to attract a largershare o population and economic growth,growth in provincial cities and towns shouldtake the pressure o Phnom Penh, as well ascontribute to poverty reduction in the provinces.

To achieve more balanced urban developmentacross Cambodia, as soon as possible, the weakinstitutional ramework, especially away rommajor urban centers, needs to be strengthened. Also, the capacity o government at the municipallevel needs to be improved. The urban developmentagenda should closely link too with the development oagriculture and natural resources, transport, and waterand sanitation. Thus, while urban sector growth isinevitable, making it more evenly-distributed acrossthe country can be inuenced by good policies.



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To promote principles o integrated and sustainable urban development, ADB is implementing an urban programbased on the ollowing key principles:

• Converting transport corridors into economic corridors. Urban authorities will play an increasinglyimportant role in implementing Greater Mekong Subregion cooperation and integration programs. As subregion transport corridors thrive and develop into ull-edged economic corridors, cities and townsalong the most active corridors should receive priority attention. ADB support is being considered or theSouthern Economic Corridor that links Thailand, Phnom Penh and Viet Nam, and also links the Lao People’sDemocratic Republic with Sihanoukville.

• Sustainable urban development. This closely relates to ADB’s geographical ocus on the Tonle Sap region,including the towns o Battambang, Kampong Chhnang, Pailin, Poipet, Pursat, Samroang, Serei Saophoan,Siem Reap, and Stung Sen. To achieve sustainable urban development, priority subsectors are water(treatment and distribution), sanitation, solid waste management, ood control, roads, and public markets.

• Capacity development for urban development. This will address institutional capacity gaps that havebecome apparent in the context o decentralization and deconcentration reorms. With ADB support,capacity-building programs will be provided not only at the national level but also in the newly-establishedmunicipalities that are becoming increasingly important.

Together with the World Bank, ADB has been supporting development o the urban water supply sector since1993. From 1996 to 2003, the Phnom Penh Water Supply and Drainage Project installed 15.6 kilometers o watersupply transmission mains, 86 kilometers o water distribution pipes, and upgraded drainage canals and apumping station. The project increased water supply capacity in Phnom Penh by 155,000 cubic meters per dayand reduced water losses rom 57% to 17%. These improvements enabled about 1.5 million more urbandwellers to access sae drinking water. Rehabilitation o the system also reduced water production cost by 8%,and the drainage component o the project reduced ooding in about 40% o inner city Phnom Penh, enablingeconomic development around rehabilitated canals. The institutional strengthening component helped transormthe Phnom Penh Water Supply Authority rom an ineective water supply utility into one o the most successulin the developing world. In 2012, the Authority became a private company and it is now listed on Cambodia’snew stock exchange.

Additional ADB water and sanitation projects include the Provincial Towns Improvement Project whichconstructed and rehabilitated water supply works in six provinces around the Tonle Sap and is building a

centralized wastewater treatment plant in Preah Sihanouk; plus the Greater Mekong Subregion Tourism Projectwhich fnanced a wastewater treatment plant in Siem Reap. Other ADB support includes technical assistance orwater supply and sanitation along the economic corridors o the Greater Mekong Subregion, and acilitatingwater operator partnerships within the region. A new urban water project was under preparation in 2012 thatwill continue improvements in water supply inrastructure and management in a number o secondary towns.



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Touism

…regional cooperation increases tourism…

From 118,000 arrivals in 1993 to nearly 3 million in 2011, the tourism sector is now the ourth largest contributor to Cambodia’s GDP ater the garment industry, agriculture and construction/real estate.Over the years, and despite the global economic slowdowns since 2008, Cambodia’s tourism industry has continued to ourish.

Tourism plays a signifcant role in generatingemployment opportunities in rural as well as urban areas, and in expanding the national economic base throughthe industry’s need or agricultural products, buildings, urniture, and many other locally-produced goods and services. Tourism also plays an important role not only in reducing poverty by creating jobs, but also in developing human resources through on-the-job training. Tourism provides an important source o oreign exchange too,

and by supporting Cambodia’s traditional artisans and perormers, tourism has helped recover and preserveCambodia’s rich cultural heritage. In rural areas, women are gaining fnancial independence and equality throughcommunity-based tourism and producing handicrats to sell to tourists.

Many more than hal o all visitors to Cambodia are now rom Asian countries, with the largest share (20%) rom Viet Nam—a testament to the ADB-supported Greater Mekong Subregion tourism sector development projectthat has fnanced inrastructure development and provided technical assistance to expand tourism.

GMS Mkong Touism Dvlopmnt Pojct

In 1999, the Tourism Working Group o the GMS Economic Cooperation Program requested and received ADBtechnical assistance to launch the GMS Mekong Tourism Development Project.

The GMS Mekong Tourism Development Project aims to develop and promote the region as a single destination,and over the years, through inrastructure improvements, it has contributed to reducing poverty, acceleratingeconomic growth, increasing employment. The project has also promoted subregional cooperation, communityand private sector participation, and sustainable tourism, including the conservation o natural as well as culturalheritage.



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Project outputs have included:

1) Improved access roads andenvironmental conditions at tourist sites;

2) Sustainable, pro-poor, community-basedtourism;

3) Greater public and private sector tourismcooperation in the region; and

4) Greater capacity to achieve sustainabletourism development.

In Siem Reap, a wastewater treatment systemhas provided improved sanitation to nearly 20,000households, and the drainage system in the towncenter has reclaimed valuable land that previously

ooded on a regular basis. A thriving night markethas also been established on the reclaimed land andcreated more than 200 employment opportunities.

An upgrade o the access road to the GenocideMemorial near Phnom Penh has had positive socialas well as environmental impacts. These include sixkilometers o rehabilitated road and bridges thatreduce travel times and congestion, and drainage thatreduces annual ooding. Villagers living in the areabeneft rom improved electricity, water, and drainage,and the new road has enabled transormation o

low-ertility grazing land into housing and lightindustry.

A revised strategy and road map or 2011–2015 wasendorsed by the Third GMS Tourism Ministers’Meeting in 2011. This ocuses on the developmento multi-country tours along the GMS economiccorridors and the Mekong River tourism corridor.Priority programs include tourism-related humanresources training, subregional marketing and productdevelopment, and pro-poor tourism. A new projectcalled GMS Tourism Inrastructure or InclusiveGrowth, which was under preparation in 2012,will also contribute to these objectives.



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Smbo Pi Kuk

With fnancing rom the Government o Japan, ADB is helping rural entrepreneurs in Kampong Thomto develop micro and small enterprises. While many rural amilies produce traditional crats and locally-processed ood that could generate substantial income and employment, they are unable to exploit thesecommercial opportunities because o their physical isolation, inefcient production methods, poorunderstanding o consumer preerences, and lack o aordable credit.

This multi-aceted project includes complementary investments in inrastructure, training, business

services, and community organization that will enable local entrepreneurs in 11 villages to establishcommunity-based enterprises, and enter lucrative value chains in Cambodia’s multi-million dollar cratindustry. The project will also enable communities living near the ancient pre-Angkor Chenla templecomplex, Sambor Prei Kuk, to beneft rom the greater numbers o visitors that are expected once a28-kilometer paved road is fnished to link the site to National Road 6.



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rgionl Cooption nd Intgtionthough th Gt Mkong Subgion

...connectivity, competitiveness,

and community...The Greater Mekong Subregion (GMS) is madeup o Cambodia, the People’s Republic o China (Yunnan Province and Guangxi Zhuang Autonomous Region), the Lao People’sDemocratic Republic, Myanmar, Thailand, and Viet Nam. The Subregion is a natural economic area linked by the Mekong River, with an areao 2.6 million square kilometers, a combined population o about 326 million, and an average per capita income in 2011 o $1,477.

In 1992, with assistance rom ADB, and buildingon their shared histories and cultures, the countrieso the Greater Mekong Subregion launchedthe GMS program to enhance their economicrelations in nine priority sectors: agriculture, energy, environment, human resources development, investment,telecommunications, tourism, transport inrastructure, and transport and trade acilitation. With support rom ADBand other development partners, the GMS program is helping participating countries to achieve their MillenniumDevelopment Goals by increasing connectivity, improving competitiveness, and achieving a greater sense ocommunity. Outcomes also include greater:

• Connectivity through the development o subregional interconnecting inrastructure, including transportcorridors, power systems, and telecommunications networks.

• Competitiveness through increased connectivity, transport and trade acilitation, including the developmento logistics systems, the regional power trade, harnessing o inormation and communication technology,expansion o cross-border agricultural trade, and the promotion o the GMS as a single tourism destination.The GMS countries have also ratifed a landmark agreement to acilitate the cross-border movement o goodsand people.

• Community through GMS countries jointly addressing their social and environmental problems, includingpreventing and controlling the transmission o communicable diseases, and protecting the subregion’s richbiodiversity and ecosystems.



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Projects and activitiesunder the GMS Plan o Action include completingkey sections o the GMS

road corridors; acceleratingimplementation o theBiodiversity ConservationCorridors Initiative throughthe Core EnvironmentProgram; strengtheningagricultural cooperationthrough the Core AgricultureSupport Program; marketing,promoting, and developing tourism; and ocusing onstrategic directions and priorities or human resourcesdevelopment, including capacity building or GMSofcials under the Phnom Penh Plan or DevelopmentManagement.

By the end o 2011, ADB had extended loans andgrants o over $5 billion or 56 GMS investmentprojects, with a total value o $15 billion. The projectsinclude subregional roads, airport and railwayimprovements, hydropower or cross-border powersupply, tourism inrastructure, urban development,and communicable disease control. In addition, ADBhas supported 177 technical assistance projectsworth $286 million or project preparation, capacitydevelopment, economic and sector work, GMS

coordination, and secretariat assistance.Through its analytical work, ABD continues to lookor potential benefts o regional cooperation andintegration in order to align more closely GMSactivities with Cambodia’s national developmentstrategy. A seminal knowledge product produced inCambodia, the Blue Book on Transport and Trade

Facilitation along the Southern Economic Corridor ,takes a close look at ways to improve logistics andreduce transport costs along this critical GMS corridor,and its approach is being applied elsewhere in the GMS.

Ongoing GMS initiatives in Cambodia ocus ontransport (roads and railway), consistent with thegradual transormation o existing domestic andsubregional cross-border transport corridors intoull-edged economic corridors. Initiatives also includeoperationalizing cross-border transport agreements.



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Recent progress on cross-border transport includes implementing a bilateral agreement with Viet Nam; signinga bilateral agreement with Thailand on the exchange o trafc rights; and restructuring transport and bordermanagement acilitation under a Deputy Prime Minister.

Since 2003, to increase agricultural competitiveness and agribusiness investment in the economic corridors,the GMS Core Agriculture Support Program has been supporting Cambodia’s regional cooperation in agriculture.The program ocuses on three core areas: 1) building global competitiveness in ood saety and modernizingagricultural trade; 2) climate-riendly agriculture and natural resources management; and 3) leveraging agricultureto support rural renewable energy technology and eco-riendly supply chains. The Core Agriculture Support

Program II is piloting the efcient utilization o biomass or bioenergy and ood security, and plans are beingdeveloped to ocus on developing regional ‘green’, inclusive value chains that link smallholders who practiceenvironmentally-riendly arming into modern value chains.

Upcoming initiatives include promoting urban inrastructure along developing economic corridors; developingurther links between existing corridors; supporting sanitary and phytosanitary requirements to acilitate GMStrade; ensuring that water resources serve irrigation as well as natural resource management needs; developingtourism inrastructure; and addressing climate change issues.

GReAteR mekonG sUBReGion economic coRRiDoRs



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rurAl DevelopmenT

agicultund Ntulrsoucs...ood security and

conservation...

Agriculture and natural resources are critically important in Cambodia because 80% o the population is rural and most households depend on agriculture, fsheries and orest resources or subsistence as well as income. About 90% o cultivated land is devoted to rice and the rest to other ood crops, as well as industrial crops (primarily rubber). Due

to limited irrigation, most armers grow only a single, rain-ed rice crop per year, and this keeps their incomes low.

The Tonle Sap Great Lake, which is the largest resh water lake in Southeast Asia, and o great importance to millions o poor rural people, has a unique hydrological cycle, and rich resources, biodiversity and habitat range.Rainall distribution and river discharges are highly seasonal, variable and unpredictable, with wet and dry seasons,typhoons, oods and droughts. Coupled with this, the annual rise and all o the Mekong River has both positive and negative eects. Floods sustain the critical water cycles o the Tonle Sap Lake and the Lower Mekong Deltathat are necessary or agriculture and fsheries production, but can cause major ooding, deaths, loss o crops, and damage to property and public inrastructure.

Climate change is likely to increase the challenges o water management. Less rain is anticipated during the dry season, more rain during the wet season, more requent extreme weather events, and worse seasonal water shortages and oods.

Since ADB re-started operations in Cambodia in 1992, the agriculture and natural resources sectors have been anongoing ocus in ADB country strategies, accounting or 17% o ADB spending. To mobilize additional unds, ADBhas also partnered with donors such as Agence Française de Développement, Australia, Finland, the InternationalFund or Agricultural Development, the Japan Fund or Poverty Reduction, and trust unds such as the Global Agriculture and Food Security Program, and the Pilot Program or Climate Resilience.

Food Scuity nd agicultuThe frst 4-year ADB loan in 1992 fnanced the repair o irrigation systems and ADB provided 18,000 tonnes oertilizer to the agriculture ministry or sale to armers. The government implemented its frst Agriculture SectorProgram rom 1996 to 2000 and over this period ADB advised the government on developing the Land Lawwhich legalized private ownership o land; privatizing state agricultural enterprises; decentralizing authority romthe ministry down to provincial departments o agriculture; and improving armers’ access to fnance andagricultural inputs.

To support the government’s eorts to boost economic growth and reduce poverty in the early 2000s, ADBprovided support through the Agriculture Sector Development Program and Project 2003–2009, which improvedaccess to productive land, water, seeds and other inputs, and promoted market-based agriculture and higherproductivity.



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When Cambodia experienced soaringood and uel prices in 2008, ADBresponded quickly to the government byinitiating the Emergency Food Assistance

Project. Through supporting expansiono the government saety-net programs, ADB helped improve the ood securityo about 500,000 poor and vulnerablepeople. In addition to improving accessto ood and quality seeds, the projectprovided poor people with cash-or-workopportunities on rural road and irrigationprojects and also supported establishingthe Cambodia Food Reserve System.

To build on gains made under previous agricultureand irrigation investment programs, ADB will supportthe government’s 2010 Rice Production and ExportPolicy through the ADB Climate Resilient RiceCommercialization Sector Development Programplanned or approval in 2013. The program willenhance the legal and regulatory environment orrice commercialization, initiate land-use zoning, buildclimate resilient rural inrastructure, and improve ricequality through enhanced value chain services.

Iigtion nd Wt rsoucMngmntRecognizing that water plays a critical role inmanagement o agriculture and disaster risk

management, ADB has ocused on policy andinstitutional reorms to improve water resourcemanagement and irrigation service delivery, as wellas sustainable small and medium-scale irrigationschemes. As climate change increases the requencyand intensity o oods and droughts, ADB is pioneeringthe introduction o integrated water resourcesmanagement to manage competing demands or water.

Ntul rsoucs nd LivlihoodsThe ocus o ADB support to natural resources and rural livelihoods’ development has been the Tonle Sap Initiativethat began in 2002. In 2005, this was ormalized as the Tonle Sap Basin Strategy, which orms the basis or setting

priorities or 5 to 7 years. The strategy is based on three principles: 1) sustainable livelihoods, 2) participatorydecision making and implementation, and 3) basin-wide planning or management and development o the TonleSap basin. Within the initiative, ADB targets improvements in environmental management, sustainable livelihoods,and lowland rural development. The Tonle Sap Initiative is also strengthening communities’ capacity so they canmanage the natural resources in the Biosphere Reserve, plan and implement social inrastructure and incomegenerating activities, and with good agricultural practices, diversiy and increase production.



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GMS Co envionmnt PogmIn addition, subregional programs are complementing country operations to maximize both conservation andagricultural development impacts. Since 2006, the Core Environment Program and the Biodiversity CorridorsInitiative (CEP-BCI) have supported conservation and sustainable livelihoods in Cambodia’s eastern plains dryorest and the Cardamom Mountains in the southwest. Both areas contain ragile ecosystems with importantauna and ora, including tigers and Asian elephants. The Cardamom Mountains also contribute water andsediment to the Tonle Sap through the streams and rivers that ow through upland orests into the wetlandssurrounding the Tonle Sap.

To ensure that environmental concerns are adequately addressed in economic corridor development, the ADBBiodiversity Corridors Initiative supports sustainable management o land corridors that enable wild animals tomove between protected orest areas. In working with poor, local communities that depend on natural resources,the biodiversity initiative has taken an integrated approach to conservation and development, and works throughnon-governmental organizations such as Conservation International, Fauna and Flora International, and Wildlie Alliance, as well as government agencies.

The biodiversity initiative has helped local communities to fnd alternatives to hunting and trapping. These includerice terrace restoration, using better agriculture techniques, ecotourism (boating and trekking), and improvingimportant small-scale inrastructure such as wells and schools. All help to boost local incomes. A tree nurseryhas reorested 1,500 hectares, and fve conservation agreements or community-based management havereduced land clearing and hunting. In addition, the biodiversity initiative has expanded its work to both Koh Kongand Mondulkiri Provinces.



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Nutuing Ntu und th Tonl Sp Inititiv A midwie who brings both babies and fsh in to the world

In the fshing village o Phneat, on theshores o the Tonle Sap Great Lake,people disagree about how much theircatch has declined in recent years, butthey all agree that fsh stocks are alling. As part o eorts to shore up stocks beore thesituation becomes critical, with ADB support,Fisheries Administration o the Ministry o Agriculture,Forestry and Fisheries, has been working with GreatLake communities to help them establish andmanage fsh breeding sanctuaries.

Tan Kim Ouy knows all about bringing new lie saelyinto the world. As the community midwie in Phneat,she not only delivers babies saely, but she is also incharge o making sure that aquatic lie thrives withoutthe threat o overzealous fshing.

When community members agreed to set up anaquatic sanctuary—an area o the river wherefshing would be banned and fsh could breedundisturbed—widely-trusted and nurturing KimOuy was the obvious choice to oversee the project.She says her riends and neighbors have been veryreceptive to creating a fsh sanctuary. Through thecommunity fsheries group, which includes the wholecommunity, Kim Ouy has explained when and wherefshing is allowed, and why, when, and where fshingis restricted. Kim Ouy believes that taking a longer-term view o fsheries and conservation is crucial orensuring the Tonle Sap Great Lake’s long-term uture.“People have started to understand the importanceo conserving fsh. Now, the numbers have increased

and people can catch fsh around here again.Previously, they had to travel a long way. I would liketo preserve the fsh so that the next generation cancatch them,” she said.



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rul Wt Supply ndSnittion

... or gender equity and livelihood improvements...

Around hal o rural Cambodians lack access to sae drinking water and, as a consequence, many women and children spend hours o their day hauling household water rom distant sources. The time wasted carrying water could be spent on more productive activities such as income generation or studying, and the illnesses caused by contaminated water are dangerous and costly to treat. Every day an estimated 20 Cambodian children die rom diarrhea, a condition directly related to contaminated water and poor sanitation. Fewer than 24% o Cambodians have sanitation acilities (latrines),

and in 2008, poor sanitation caused an estimated $450 million o economic losses. Improving rural water supply and sanitation is one o the key steps towards achieving Cambodia’s Millennium Development Goals.

ADB has taken an integrated approach to improving rural water supply and sanitation through grants, loans, andtechnical assistance. ADB support or rural water supply and sanitation includes the Tonle Sap Rural Water Supplyand Sanitation Sector Project (2006–2010) and the Second Rural Water Supply and Sanitation Sector Project(2009–2015). These ocus on expanding access to rural water supply and sanitation in the six provinces aroundthe Tonle Sap Basin where most o Cambodia’s poorest people live, and on gender equity and improvinglivelihoods.



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The Tonle Sap Rural Water Supplyand Sanitation Sector Projectprovided sae water to around500,000 villagers, and built 45,000latrines that are used by an estimated200,000 people. Stressing valueor money, the project ocused onimproving existing sources o water,and where this was not possible, newlow cost and easy-to-maintain watersources were created. In total, ADBfnance has upgraded or created over5,600 water sources, including wellswith hand pumps, community pondswith fltration systems, rainwatertanks, and household bio-sand flters.

ADB fnance has also developed fvesmall-piped water supply systems.



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To encourage healthy habits, ADB water and sanitation projects include village education campaigns on hygiene.These behavior change campaigns, which are led by village leaders, stress the need or all households to adoptclean sanitation habits since inections spread easily rom those with poor habits to everyone else. ADB encouragescommunity involvement through the ormation o water and sanitation user groups that operate and manage theacilities created under the project and support the education campaigns. Nearly 5,500 user groups have beenormed in over 800 villages, and women comprise 43% o their board members.

esing th Budn of Wt in rul Cmbodi

A community pond in rural Cambodia has made clean water accessible, and reduced illnesses, healthcosts, and the time women and children spend hauling household water.

Hong Yoeun’s hands are covered with calluses—the unorgiving plastic handles o water buckets have

caused these. For 35 years, until 2010, she never lived in a place with running water. But now gettingclean water is much easier or Hong Yoeun and her amily. A large, rectangular pond that flls withrainwater has been dug in the middle o Tek La-ak, her leay village in Kampong Chhnang Province.Beore the community pond was created, Hong Yoeun, with two o her our children trailing behind her,had to hike to the nearest water source, and then lug the dripping pails back home. Hong Yoeun otenhad to make this trip three times a day and her water supply problem was not unusual. Around hal o thepeople living in rural Cambodia have little access to clean water, and it is rarely close to home. Tek La-ak’snew community pond may look muddy, but it is sae water and has transormed the lives o everyone inher village. For Hong Yoeun, it is hard to overstate the benefts that the new water supply has brought heramily. “In the past, I had to go a long way to get water three times a day. Oten, it would be dark whenI made the last trip, but I would still have to make rice or the children. Now that we have the pond nearby,I can relax more and I have time to do other things.”



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Climt Chng

...building adaptive inrastructure and community resilience...

Cambodia is highly vulnerable to the impacts o climate change. This high vulnerability is due tothe country’s low capacity to adapt and its high reliance on the climate-sensitive sectors o rain-ed agriculture, fsheries, and natural resources. Inrastructure-related losses rom natural disasters intensifed by climate change are also predicted to be high. The 2011 oods,or example, caused direct damage to assets and economic losses o more than $600 million.

To address Cambodia’s high vulnerabilityto climate change, ADB is implementingthe $86 million Pilot Program or ClimateResilience, fnanced by the ClimateInvestment Fund. The frst phase,which began in 2010, is strengtheninginstitutional capacity to integrate climateresilience into planning at the nationaland subnational levels, mainstreamgender considerations, engage civilsociety and the private sector indeveloping adaptation initiatives,and identiy opportunities or science-

based adaptation planning.

The second phase, rom 2011 to 2018, involvesimplementing an innovative strategic program orclimate resilience, designed to mainstream climateresilient dimensions into a range o developmentprojects. In addition to technical assistanceprojects, which include a acility to build thecapacity o civil society organizations in theclimate change area, and resources to monitorand evaluate all investment projects, the programincludes: 1) two investment projects in waterresources (climate risk management andrehabilitation o small and medium-scale irrigationschemes in the Tonle Sap basin and ood anddrought management in Pursat and Kratie Provinces); 2) two investment projects in agriculture (promotingclimate-resilient agriculture, orestry, water supply, and coastal resources in Koh Kong and Mondulkiri Provinces;and climate proofng o agricultural inrastructure and business-ocused adaptation); and 3) three investmentprojects in inrastructure (climate proofng o roads in Kampong Chhnang, Kampong Speu, Prey Veng, andSvay Rieng Provinces; climate proofng o urban inrastructure in the Southern Economic Corridor; and ood-resilient inrastructure development in the provinces o Battambang, Kampong Cham, Kampong Thom,Pursat and Siem Reap).



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Flood rhbilittion (2000 nd 2011)

... emergency response, rehabilitation, and preparedness...

In 2000, Cambodia experienced its worst ooding in decades, with estimated damage o $150 million. This ood aected more than 3 million people in 22 o the 24 provinces, killing182 people and displacing 85,000 amilies.The devastating ood in 2011 inundated 1,360 schools, 491 pagodas, 115 health clinics, and nearly 300,000 hectares o paddy. In the 19 provinces aected, the ood also displaced 52,000 amilies, drowned 1,675 cows and pigs, and killed 250 people. As a result o the 2011 ood, 350,000 villagers aced ood

shortages and over 900 kilometers o national and provincial roads and 4,500 kilometers o rural roads were damaged, along with many bridges and check dams. A damage and loss assessment carried out by ADB estimated direct damage to assets and economic losses at over $600 million.

In 2000, ADB responded in just three monthswith the ambitious Emergency FloodRehabilitation Project. This project allocated ADB loan unds o $55.8 million torehabilitate the ood-damaged national road network, including bridges and culverts that had been damagedor washed away. The project also repaired railway embankments and railway bridges, a major ood control dikeprotecting residential and agricultural areas o Phnom Penh, and small- to medium-scale irrigation acilities,including embankments, water control structures, and delivery and drainage canals. In rural areas, ADB undsrepaired ood-damaged inrastructure, including rural roads, bridges, and culverts; education acilities(classroom oors, roofng and walls and replacement o urniture and equipment); and health centers as well asreerral hospitals. Overall, the project evaluation concluded that: “ADB prepared a highly relevant project thatwas implemented in an expedient manner.”

For the 2011 oods, ADB, in close collaboration with government and other donor partners, initiated immediatehumanitarian assistance, including a grant or $3 million rom the Asia Pacifc Disaster Response Fund. This grantprovided: 1) rice seeds to enable aected households to rapidly replant destroyed rice felds; 2) temporaryrepairs to irrigation canal embankments through the provision o uel and sand bags; and 3) ood and cash-or-

work schemes to support ood-aected amilies so they could undertake emergency road repairs to re-establishconnections with their ood-aected communities. The latter enabled rapid access so emergency assistancecould be distributed while also giving work to ood-aected people.

In response to a high-level request rom the government, ADB quickly approved the Flood Damage EmergencyReconstruction Project. O the total project cost o $67 million, ADB contributed $55 million and the Australian Agency or International Development contributed $5.25 million. The project covers: 1) restoration o nationaland provincial roads (including bridges and culverts); 2) restoration o rural roads (including bridges and culverts);3) restoration o irrigation acilities; and 4) project and ood management. The Cambodia Resident Missionset records with project processing—with over $24 million o contracts awarded by the end o June 2012.By September 2012, a number o urgent subprojects were virtually completed. These include the bypass road/ dyke that protects 30,000 amilies in Prey Veng town rom oods, and repairs to a large number o rural roadsand bridges that connect thousands o rural households with the rest o Cambodia.

To achieve longer-term solutions to oods, which may recur more requently due to climate change, ADB isconsidering support or strengthening the government’s capacity to prevent, prepare or, and mitigate utureoods. The activities will also include community-based disaster risk management programs that target at-riskcommunities at district, commune, and village levels.



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soCiAl DevelopmenT

eduction nd VoctionlTining... or long-term inclusive

development and economic growth...

Education is intimately linked to social and economic development, and poverty reduction.Over the last 20 years, Cambodia has made signifcant improvements in school enrollment and completion rates

in primary education, as well as in reducing gender disparities. Despite these achievements, the overall quality and efciency o education remains a critical issue. Expansion o enrollments in primary schools has led to high student-teacher ratios. Drop out and repetition rates also remain high across the school system. O the childrenwho successully completed Grade 6 o primary school in 2011 (283,920 children, o whom 138,598 were girls),the number o children reaching Grade 9 was much lower (146,106 children, o whom 69,139 were girls).This means that only around 50% o Cambodian children enter the fnal year o basic education.

Increasing access to, and enhancing the quality o secondary education and skills development is extremely important to prepare or lielong employment, the 300,000 young people who reach working age every year.Cambodia also needs to build a skilled workorce or inclusive social development, higher economic growththrough diversifcation, and ASEAN economic integration.

Over the past decade, the ADB strategy or improving Cambodia’s education sector has been to promote andacilitate comprehensive, government-led improvements o education and vocational training. Since 1996, ADBhas spent over $200 million on education and vocational training, representing 12% o total ADB total assistance. ADB has played a lead role in ar-reaching education and skills development reorms, and has made substantialachievements in addressing key issues o equity, efciency, quality, and access.



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From 1996 to 2001, the ADBBasic Skills Project assisted thegovernment in 1) establishing theNational Training Board and theNational Training Fund; 2) improvingthe quality and relevance o skillstraining programs through therehabilitation o selected skillstraining institutions, developinga training curriculum or nationaltechnical and vocational education,and establishing vocational stadevelopment centers; and3) expanding vocational outreachprograms.

The Education Sector Development Program,2001–2005, assisted the government in developinga comprehensive sector-wide approach and theEducation Strategic Plan (2001–2005). The program’smajor achievements include 1) increasing the share othe government budget allocated to the Ministry oEducation, Youth and Sport rom 15.7% in 2001 to19.5% in 2004; 2) reducing inormal payments byprimary and secondary school students, which greatlyincreased primary school enrollment; and 3) increasingthe proportion o the education budget going to schooloperating budgets rom 5.5% in 2000–2001 to 27.9%in 2004–2005.

In the Second Education Sector DevelopmentProgram, 2005 to 2008, ADB enhanced opportunitiesor the poor at the primary, secondary and postsecondary levels through targeted investmentprograms. These covered acilities development;decentralized vocational training through lie-longcommunity learning centers; targeted and expandededucation incentives or the poor, with an emphasison girls and minorities; and, capacity-building supportor decentralized education.



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This program increased the Ministry o Education,Youth and Sport’s recurrent budget disbursementrate rom 94.27% in 2005 to 97% in 2006;expanded lower secondary education (grade 7 tograde 9) through constructing 329 lower secondaryschools; expanded upper secondary education(grade 10 to grade 12) through reurbishing 16upper secondary schools and building 25 more;enhanced upper secondary education throughbuilding 18 upper secondary resource schoolsand equipping them with science and computerlabs, libraries, meeting rooms, and ofces;and via the Voucher Skills Training Program,introduced demand-driven and community-basedskills training or the poorest communes in sevenprovinces.

Despite rapid expansion in the provision oeducation at all levels, the overall quality and efciency o education remains a serious concern. ADB thereorelaunched the Enhancing Education Quality Project (2008–2014). This is strengthening the quality o schooleducation through careully targeted support or education system management and development, proessional

development o teachers, and improvements to secondary curriculum.

Beginning in 2010, the third ADB Education Sector Development Program builds on and extends the achievementso frst two ADB education sector development programs. In close alignment with the government’s EducationStrategic Plan 2009–2013, ADB is enhancing the quality o, and access to lower secondary education throughreducing lower secondary dropout rates, especially o poor children and girls in remote areas; strengtheningfnancing and institutional governance or lower secondary schools; and improving teacher training and curriculum.

To respond to the growing skills needs o Cambodia’s private sector, in 2010 ADB launched the StrengtheningTechnical Vocational Education and Training Project (2010–2015). In alignment with the government’s policyobjectives, the project is expanding the public vocational education system in areas o demand by industry, andaligning the skills development network with market demands. The project ocuses on strengthening technicaland vocational education and training acilities in mechanics, construction, business services, and inormation

and communication technology.

To prioritize and guide uture initiatives in 2012, ADB, together with other development partners led by the UnitedNations Development Program, participated in the production o a Cambodia Human Capital Roadmap.



29

This Roadmap seeks to raise qualityand increase access and participationrates in basic and postsecondary

education, as well as higher education.The Roadmap also stresses thatinvestments in education and trainingare crucial because well-educatedand trained citizens are a key resourceor economic growth.

Building th Futu ofCmbodi’s Humn

Cpitl Access to quality secondary education remains achallenge in Cambodia. To remedy this, with ADBsupport, the Ministry o Education, Youth and Sporthas established 26 resource centers across thecountry. Each well-equipped center has two computerrooms with 16 computers each, two science labswith microscopes and other science equipment,a library, and other acilities.

Seng Sokha, a Grade 11 student in Kandal Province,

is typical o the enthusiastic students who use thesecondary school resource centers. “We love to comehere and check out the microscopes in the sciencelab and practice on the computers in the computerlab. It is a place where we can explore.”

Lay Raksmey, a science teacher in Seng Sokha’sschool says the resource centers allow students tolearn by doing, and reinorces what they are learningthrough their classes and reading. “We’re going tosee a substantial impact on academic achievement.The center plays a very important role in theteaching-learning process o science subjects.”



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Hlth C

...access and aordability...

Ill health remains the main reason Cambodian

households become poor. Villagers are otenorced to sell livestock and even their land to pay or health care costs. Although considerable progress has been made in the last 20 years,urther support and consolidation in the health sector are required to improve access and utilization o health services, especially by the poor and disadvantaged.

ADB began its health sector support in the late1990s through a series o surveys to assess thestate o health care provision in the country. At thetime, one major concern was improving the

eectiveness o government response to the HIV/ AIDS epidemic in Cambodia. Accordingly, the frst ADB health project aimed to 1) achieve an eectivemulti-sectoral response to HIV/AIDS through building capacity in the National AIDS Authority and related lineministries; 2) support local responses to HIV/AIDS through building capacity at provincial levels; and 3) improvethe existing HIV/AIDS response through more rigorous and critical analysis o data drawn rom surveillancesurveys and other sources.

In 2002, ollowing an ADB technical assistance project that analyzed health system data to support inormeddecisions, ADB launched the frst in a series o health sector support projects to 1) increase institutional capacityto plan, fnance and manage the health sector in line with the government’s Health Sector Strategic Plan;2) develop aordable, good-quality, basic curative and preventive health services, especially or women, the poor,and the disadvantaged; 3) increase the utilization o health services, especially by women and the poor; and4) control and mitigate the eects o inectious disease epidemics and o malnutrition, again with emphasis onthe poor.

A related technical assistance project determined how to best reach the rural poor with primary health care.This emphasized improving poor peoples’ access to health services and reducing their out-o-pocket costs.In particular, the project evaluated the success o contracting out the provision o health services to non-governmental organizations.

The 2004 ADB Health Care Financing or the Poor Project established an equity und to protect poor andvulnerable populations rom catastrophic health care expenses, and ADB partnered with non-governmentalorganizations in specifc geographic areas to identiy these benefciaries. In 2008, ADB helped the Ministry oHealth to continue implementing its 2003–2007 Strategic Plan that articulated goals, desired health outcomes,priority areas or intervention, and intervention strategies.



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The 2002–2003 SARS epidemic, which inected8,098 people around the world, and killed 774 othem, and the recurring threat o Avian Inuenza,

prompted the countries o the Greater MekongSubregion to develop the 2005 RegionalCommunicable Diseases Control Project.The objective was to contain the spreado epidemic diseases by acilitatingregional coordination and comprehensivenational preparedness, surveillance,and response systems. The project alsoestablished laboratory services andprovided training to selected health caresta.

Since 2011, ADB has been implementingthe Second Regional CommunicableDiseases Control Project, which targetstimely control o communicable diseasesand improving the health o poor andindigenous people living in Cambodia’sborder areas. Major outputs includeregional cooperation in communicabledisease control, surveillance andresponse; targeting neglected diseases(such as dengue ever); controlling communicablediseases along borders and economic corridors;and achieving sustainability by improving project

and fnancial management as well as procurement.



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Gnd equity

... awareness, participation,equity, and empowerment...

Nearly one quarter o Cambodian households are

headed by women, and at 71%, women’s labor orce participation is higher than in all other Asiancountries except the People’s Republic o China and Viet Nam. However, despite the high visibility o Cambodia’s women garment workers, 83% o women are sel-employed, with the great majority in small-scale subsistence agriculture. Traditionally,Cambodian women have been assigned lower status than men, which has prevented themrom ully participating in economic, social, and especially political lie. Two-thirds o rural womenover the age o 25 have not completed primary

school.

ADB gender work ocuses on building women’s livelihood capacities and creating opportunities or them beyondlow-productivity agriculture. Fostering equal benefts or women through specifc gender action plans in all sectoroperations contributes to the government’s objective o gender equality and women’s empowerment.

ADB has supported gender equality and women’s empowerment in Cambodia since 1994. Through a series otechnical assistance grants, ADB helped the new women’s ministry prepare country gender assessments andnational policies or women’s empowerment, and establish mechanisms to include gender targets in socialand macroeconomic policy and planning.

Subsequent ADB technical assistance, and Asian Development Fund and Japan Fund or Poverty Reductiongrants have promoted skills development and improved access to credit or poor rural women’s incomegeneration activities. This unding has also supported the Ministry o Women’s Aairs’ network o women’s

development centers and is developing gender mainstreaming plans in line ministries, provinces, communes.

Through project gender action plans, ADB assistance has ostered gender equality with targeted interventions inagriculture, education and skills development, natural resource management, rural water supply and sanitation,rural road construction and maintenance, and small and medium enterprise development.

As a result o these eorts, gender gaps in education have closed and more Cambodian girls are staying in schooland making the transition to the secondary level. Also thousands o women are participating on the boards o theirlocal water and sanitation user groups, and tens o thousands o poor rural women have participated in trainingprograms to develop their arming and natural resource management skills.

ADB-supported rural road rehabilitation is improving all-weather access to provincial towns and Phnom Penhitsel, substantially cutting travel time and giving rural women better access to education, health services,markets, and business opportunities. Also, more rural women are fnding jobs on road rehabilitation andmaintenance projects through a targeted eort involving the Ministry o Rural Development and roadconstruction companies.



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When the Commune Councils were established in2002, ADB supported training and networkingprograms to help newly-elected women Councilorsdo their jobs. To improve women’s access to essentialservices, ADB has also supported nationwide civilregistration. In the fnance sector, ADB has contributedto developing microfnance institutions that providerural women with fnancial services and in the educationsector, ADB has had particularly strong results orgender equity at all levels o general education, as wellas in technical and vocational education and training.With open borders across the Greater MekongSubregion, ADB is working with the government toachieve gender targets related tomitigation o problems such astrafcking, HIV/AIDS and othercommunicable diseases.

Womn Ln to en

As a widow, Thav Heat has tobring in enough money to makesure nobody in the amily goeshungry, as well as to put herchildren through school. “It can bevery hard to eed my our children,especially in the rainy season. Ater the harvest season, we haveonly enough rice and other ood to keep us going orfve months. But ater that, we have to earn moneyto buy ood.”

Across Cambodia, women ace similar challenges.Because o death, divorce, or migration or workto other provinces or another country, women areraising their children without a husband. To addressthe lack o opportunities or rural women, theMinistry o Women’s Aairs, with support rompartners such as ADB, the International LabourOrganization and German Technical Cooperation(GIZ), has established a number o women’sdevelopment centers across the country. Thesetrain women in lie skills and income generationskills, as well as oering women access to micro-

credit.

Un Kean is 60 years old and has been weaving reedmats since she was 13. The women’s developmentcenter, a hal-hour boat ride away, has shown herhow to adapt her skills to suit the contemporarymarket. “Since the center taught me how, I havebeen able to use more colors and make dierentdesigns. In the past, we sold mats cheaply, butwith better design and color, we can get a betterprice, and that extra money really makes adierence to daily lie. It means I can help mychildren and grandchildren with their schoolcosts, and other things they need.”



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puBliC seCTor mAnAgemenT

Govnnc... promoting accountability

and improving public servicedelivery...

Ater the 1993 election, the new government had to operate with public institutions, including the judiciary and legal systems, which were almost entirely destroyed over three decades o war and political turmoil. Governance continues to pose signifcant challenges to development eectiveness in Cambodia. On-going ADB support in strengthening country systems through programson public fnancial management and decentralization are working to undamentally improve the accountability ramework and governance environment.

Improving governance and preventing corruption are core priorities or ADB as good governance is a necessarycondition or development eectiveness. Since the resumption o ADB operations in the early 1990s, the ADBCambodia program has ocused on promoting good governance through support or legal and institutionaldevelopment as well as or public fnancial management, including procurement, decentralization, economicpolicy, and project management.

Since 2007, ADB has ocused governance reorm on programs and projects in rural development, waterresources, and ormal and vocational education. Given the ocus o ADB on inrastructure fnancing, ADB

stresses governance risk assessments related to inrastructure.



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The second ADB Governance and Anticorruption Action Plan, approved in 2006 and revised in 2011,provides a ramework or conducting governance riskassessments and developing risk management plansat the country, sector, and project levels. This rameworkcovers three core governance areas: public fnancialmanagement; procurement; and combating corruption.To achieve satisactory development outcomes, theassessment is risk-based and looks both at risk inrelation to fduciary matters, as well as at broadergovernance risks.

In the country partnership strategy 2011–2013,governance is identifed as a critical driver o change,with priority given to governance activities that improve efciency in public service delivery. In addition to these

interventions, ADB is strengthening the capacity o the Anti-Corruption Unit to carry out its legal mandate. ADB will also contribute to improving sector governance by strengthening public fnancial management capacity,aligning with emerging decentralization and deconcentration systems, and supporting institutionaldevelopment.



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Public FinncilMngmnt

... improved resource

mobilization and publicexpenditure accountability...

While urban incomes have risen substantially since1992, the rural poverty rate has not declined as much as expected. It is estimated that 80% o the population live in rural areas, and out o Cambodia’s total population o 14 million, about 4 million people have incomes below the national poverty line. Poverty reduction is severely hampered by limited resources, lack o eectiveness and accountability or

public spending, and weak links between policy and the budget. These have resulted in limited public service delivery and ew economic opportunities or the rural poor.

The Cambodian government launchedthe Public Financial ManagementReorm Program (PFMRP) in 2004, withthe overall objective o strengtheningresource mobilization, and eectivenessand accountability or publicexpenditures. ADB has supported

implementation o the PFMRP in theministries engaged in rural development.Specifcally, support has improvedbudget preparation and execution,fnancial management and accounting, procurement,internal control, public debt management, andmonitoring and evaluation systems or rural ministries.In addition, ADB has supported the National Audit Authority in strengthening a chain o accountability orpublic expenditures.

A strong public fnancial management system has

helped the government to improve resourcemobilization in implementing its National StrategicDevelopment Plan, which aims to reduce poverty,particularly through increasing resources or theagriculture and rural development sector.



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Dcntliztionnd Dconcnttion

... strengthening local democratic

development, accountability, and local economicdevelopment...

Historically, Cambodia has been a highly centralized state. However, since the early 2000s, the government has been engaged in a comprehensivedecentralization and deconcentration process.This aims to restructure and transer national roles and responsibilities to sub-national administrations,with appropriate fscal arrangementsto promote transparent and accountable local development. Through improved service delivery, these measures areexpected to contribute to more eective poverty reduction.

Important milestones in the ambitiousdecentralization and deconcentration(D&D) reorm process are:

• AdoptionoftheLawonthe Administration and Management oCommunes/Sangkats (2001), andsubsequent elections or Commune/

Sangkat Councils in 2002, 2007,and 2012;

• AdoptionoftheLawonAdministra-tive Management o the Capital, Provinces, Municipalities, Districts, and Khans (2008), which led to electionsor the frst mandate o district/khan and provincial councils in 2009;

• FormulationoftheStrategicFrameworkforD&DReforms(2005),whichsetsoutthevision,principles,policy,

and strategy or implementing decentralization and deconcentration reorms;

• AdoptionoftheNationalProgramforSub-NationalDemocraticDevelopment2009–2019,andits3-year

implementation plan 2011–2013 (IP3); and

• AdoptionoftheLawonSub-NationalFinance(2011).

Following the frst Commune Council elections in 2002, most Commune Councilors did not have ofces or basicequipment with which to work. Also very ew Councilors had any experience with their roles and responsibilitiesunder D&D or with development work, in general. To remedy this situation, at the government’s request, ADBlaunched the Commune Council Development Project (2002–2006), and extended this rom 2006 to 2010.

Together, the two ADB Commune Council Development Projects fnanced the construction o 697 Communeofces across Cambodia. These attractive ‘Khmer-style’ buildings symbolize the emerging spirit o the communes,and provide an attractive location where elected representatives rom dierent parties debate and discuss localissues. The Commune buildings are also used by government agencies, development partners, and civil societyorganizations to disseminate inormation, hold meetings, and conduct training.



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ADB Commune Council Development Projects have trained over 20,000 councilors, clerks, and other localofcials on local democracy, roles and responsibilities o Councilors, citizen’s participation in local development,conict resolution, gender equity, civil registration, fnancial management, and the D&D laws and regulations.

With ADB support, the government also developed a comprehensive national civil registration system to replacedocuments destroyed or lost over years o war. By 2006, about 90% o the total population o 12.5 million,had been provided birth certifcates, an 85% increase since 2003, when only 5% o the population had birthcertifcates. With ADB support, these birth registration records were then digitized to prevent them rom beingdestroyed by oods, fre, or termites. The civil registration certifcate provides people with a legal document thatenhances their citizenship and enables access to social benefts and legal protection. For land use planning,the project also produced digital photomaps showing commune boundaries.

Since 2009, ADB has supported implementation o the National Program or Sub-National Democratic Development2009–2019, and its 3-year implementation plan 2011–2013. In 2012, ADB approved the decentralized publicservice and fnancial management program, a major decentralization project involving ambitious policy reormsconcerned with unctional assignments and fscal decentralization, construction o a number o district ofces inpoorer districts, and public fnancial management capacity building or subnational authorities.

ADB presently co-chairs a Development Partner-Working Group on Decentralization and Deconcentration todiscuss progress, resolve challenges, and hold related policy dialogue with the government.



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Civil Socity enggmnt

... enhancing participatory development...

International and local non-governmental organizations (NGOs) play a major role in providingor supporting basic social services, oten in remote areas and communities, and are present in every province and major sector in Cambodia. Programs implemented and managed by NGOs account or about 20% o overseas development assistance.NGOs also bring alternative models and approaches to development—emphasizing participation, equity, gender sensitivity, and environmental sustainability. Over the last 20 years,NGOs have advocated national reorms to improve health, education, governance, human rights, legal

rights, social services, the natural environment, and women and children’s welare. ADB recognizes that civil society organizations (CSOs), including NGOs, are signifcant players in the developmentprocess and cooperates with them to improve the impact, sustainability, and quality o services. CSOs add valuein promoting sustainable development through innovation—identiying new approaches and models or specifcdevelopment activities; providing their strong knowledge o local communities; and helping to ensure that ADBproject components are implemented as envisaged and planned. CSOs also aid continuity in project work,especially when implementing agencies lack capacity or during stafng changes.

ADB maintains regular dialogue with CSOs at several levels: through a semiannual NGO Roundtable Meeting;

consultation in the programming cycle (or example, during the preparation o the country partnership strategy);and during project preparation, implementation, monitoring, and review.

ADB is committed to engaging with civil society and civil society organizations in Cambodia in a range oways. Reecting this commitment, the ADB Cambodia Resident Mission has developed a plan or enhancingits work with civil society, respecting that ADB should respond to the needs o civil society in Cambodia.The plan, which is the frst among all ADB resident missions, has six components:

• Consulting on ADB and resident mission policies and strategies

• Hosting regular thematic civil society roundtables

• Enhancing project-specifc CSO engagement

• Building internal sta capacity

• Strengthening the enabling environment, and

• Fosteringprivatesector-civilsocietyengagement.



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privATe seCTor DevelopmenT

Finnc... improving access to fnance

and fnancial services...

Everyone needs trustworthy, efcient, and aordable commercial fnancial services. Both individuals as well as businesses need to be ableto save and transer money easily and conveniently, as well as to borrow money and buy insurance at reasonable rates. Businesses also need specialized fnance or international trade, to be able to leaseacilities, vehicles, and equipment, and to raise money through selling shares. The government needs access to commercial fnancial services too in order to fnance large-scale inrastructure through the saleo bonds, public-private partnerships and other means.

Twenty years ago Cambodia had virtually no commercial fnancial services. Although over the 1990s, thecommercial fnance industry began to develop rapidly with the opening o a number o banks, in 1997 and 1998,the banking sector nearly collapsed due to the Asian fnancial crisis and political turmoil in Cambodia. In 1997, thedomestic savings rate in Cambodia was only 6.4% o GDP, the lowest in Southeast Asia. Lack o access to banking services, fnance, and the poor environment or doing business severely constrained private sector development.

During the 1990s, to stimulate agricultural development, ADB ocused on providing the population with betteraccess to rural credit. In early 1999, under the Agriculture Sector Program, the government continued its liberalinterest rate policy and adopted an overall rural credit policy and strategy. This included support or the expansiono rural credit and savings services based on private initiatives; provision o unds or rural fnance through theRural Development Bank; and establishment o the necessary legal and regulatory ramework or microfnance

institution (MFI) activities.

In 2000, ADB broadened its assistance to the government by collaborating on Cambodia’s frst in-depth fnancesector study. This led to the development o the 2001–2010 rolling ‘blueprint’ or Cambodia’s fnance sector thatprovided a vision, objectives and ramework or government reorms.



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In 2006, ADB helped the government update the2001–2010 ‘blue print’ as the Financial SectorDevelopment Strategy (FSDS) 2006–2015, and in2011, ADB helped the government update the sectorstrategy again as the FSDS 2011–2020. This latestfnancial strategy takes stock o the accomplishmentsachieved over the previous 5 years, and identifesgaps, issues and constraints to be addressed overthe coming 10 years.

According to an independent evaluation, ADB hasmade strong contributions towards Cambodianfnance industry development. ADB-supportedfnance sector reorms include morestringent requirements or commercialbank licenses, as well as increasing thereserve requirement or oreigncurrency holdings against depositsrom 8% to 12.5%. Both thesemeasures helped increase publicconfdence in the fnance industry.

Some other important reorms that ADB has contributed to directly orindirectly include: modernizing thenational payment, clearance, andsettlement system; improving accessto domestic deposits and credit orMFIs; strengthening bank and MFIregulations and supervision; introducinghigher standards o accounting,auditing and fnancial reporting thatare now used by a number o large enterprises, banks, MFIs, and insurance companies; setting up a registry thatrecords the assets that banks take as security or loans; drating and passing o the securities law in 2007;

setting up a fnancial intelligence unit in the National Bank o Cambodia to counter money laundering and preventthe fnancing o terrorism; setting up the Securities Exchange Commission in 2009, and the stock exchange inmid 2011; and launching a credit bureau in March 2012.

Since 2005, the fnance industry has grown signifcantly. In 2005, there were 15 commercial banks, 4 specializedbanks (including one state-owned bank), 2 representative ofces o oreign-based banks, 16 licensed and 24registered MFIs, and 3 insurance frms. By June 2012, there were 32 commercial banks, 2 representative ofceso oreign-based banks, 32 licensed MFIs, 7 MFIs that met the higher standards required to take deposits,29 registered MFIs, 7 insurance companies, a stock exchange, and nearly 20 stock exchange-related businesses(underwriters, dealers, brokers, investment advisers, and cash settlement agents).

With strong banking sector growth, transactions have grown substantially too. For example, between 2002 andJune 2012, total depositors increased rom only 84,000 to nearly 1.4 million, and bank loans increased by 279%

to 329,000. Bank branches increased rom only 35 in 2004 to 399 by June 2012, and bank employee numbersgrew rom only 3,000 in 2005 to 12,750 by June 2012. With more banks competing with each other, averageannual interest rates on loans ell substantially rom 15.3% in 2004 to 8.2% by June 2012.

Microfnance institution growth has also been very impressive over the last decade. Between 2002 and June 2012,MFI branches grew rom 79 to 1,878, lending rom $51.3 million to $729.7 million, deposits rom $7.1 million to$178.5 million, and active MFI borrowers rom 328,000 to 1.19 million, which is about 8.2% o the total population.

The number o insurance companies increased rom 2 in 2002 to 9 in June 2012, including 2 lie insurancecompanies, 6 private non-lie insurance companies and a reinsurance company that is 80% state owned.Total gross insurance premiums went up rom $5.5 million in 2002 to over $29 million in 2011.

With ADB assistance, the legal oundation to support fnancial and commercial transactions has been improvedand a commercial dispute resolution mechanism, the National Arbitration Center, has been set up, in addition to

the related legal ramework enhancement, including the commercial law and the trust law.



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Pivt Scto Dvlopmnt

... improving the business and investment climate...

Cambodia’s private sector continues to bedominated by very small, inormal enterprises and small arms, with only a ew large and modern operations. About 90% o enterprises have ewer than our employees, while only 1.5%o enterprises have more than 20 employees.Only a small number o frms operate betweenthese two extremes. In both urban and rural areas,the lack o medium-sized enterprises is a weakness in the private sector structure that constrainseconomic diversifcation.

Since launching private sector development

programs in the early 2000s, ADB has supportedimprovements in the investment climate and activities o small and medium-sized enterprises (SMEs). Businessregistration costs have been reduced, procedures simplifed, and the registration process made more transparent,including ensuring public access to an online business registry. From 2009 to 2012, the ADB Promoting EconomicDiversifcation Program has helped the government to urther develop SMEs, strengthened the government’scapacity to supervise and monitor sanitary and phytosanitary standards, established a pilot regulatory impactassessment program, and strengthened legal rameworks in areas o competition law and ood saety.

ADB support or two Financial Sector Development Program clusters (2001–2007 and 2007–2010) helped restoreand improve public confdence. These program clusters also helped to improve fnancial intermediation in thebanking sector, maintain fnance sector stability, boost competition in fnancial markets, strengthen corporategovernance, and support development o the legal ramework or commercial enterprises such as the adoption

o laws on commercial enterprises, corporate accounts, secured transactions, and negotiable instruments.

Other ADB projects have ocused on improving the enabling environment or the private sector, including:1) the Agriculture Sector Development Program that sought to improve the ability o smallholders to raiseproductivity and diversiy into higher value-added products, improve the market environment or private agro-based enterprise growth, and strengthen institutional capacity or competitive agricultural commercialization;2) the Greater Mekong Subregion (GMS) Tourism Development Project that has acilitated private sectorparticipation in tourism marketing and promotion; 3) technical assistance or trade acilitation that sought tostrengthen economic and trade cooperation both within and outside the region to acilitate the ree movemento goods and people; and 4) technical assistance that developed vocational training that links to the skillsrequired in the private sector.



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ADB has also provided support throughprojects that either acilitated public-privatepartnerships or enlarged the scope or privateinitiatives, such as the Power TransmissionProject, the GMS Transmission Project,the Road Asset Management Project, theCambodia Road Improvement Project, andthe GMS Rehabilitation o the Railways inCambodia Project.

On the non-sovereign operation side, ADB’sfrst private sector operation was througha loan o $7 million approved in 2007 toCambodia Power Transmission Lines Co. Ltd.or the transmission line tonorthwest Cambodia that noworms part o Cambodia’s nationalgrid. This northwest grid connectsto Thailand’s line at the Thai borderand enables the import o reliablepower rom Thailand at competitive

rates. This is the frst privatelyowned high-voltage transmissionline in the GMS and it has set avaluable public-private partnershipfnancing benchmark or Cambodia.In 2008 the ADB Trade FinanceProgram (TFP) approved $7 millioncredit lines to two participatingissuing banks to support tradetransactions.

ADB Strategy 2020 calls or the bank to:“scale up private sector development andprivate sector operations in all operationalareas, reaching 50% o annual operations by2020”. Accordingly, under the present CPS2011–2013, the Cambodia team has beenproactively exploring ways to expand privatesector initiatives through three activities:private sector development; private sectorengagement; and private sector operations.

ADB eorts are intensiying toidentiy the private sectordimensions o all projects being

prepared, including public-privatepartnerships. The CambodiaResident Mission engagesrequently with business leadersand young entrepreneurs inroundtable meetings anddiscussions. ADB also co-chairs thePrivate Sector Technical WorkingGroup to enhance ADB coordinationwith the private sector supportactivities o other developmentpartners.



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Public-Pivt Ptnships

...acilitating project development...

The low coverage o inrastructure in Cambodia, including electricity, highways and railways, has a negative impact on investment, economic growth, and social development. However, the government aces substantial challenges in providing new and improved inrastructure. In addition to lack o experience in developing large-scale inrastructure projects, the government is challenged by lack o fnance. Not only is the government’s borrowingo large sums constrained by Cambodia’s small tax base, but local fnancial institutions cannot lend large amounts or long periods because they lack such unds themselves. Since government, local fnancial institutions and donors cannot provide adequate large-scale, long-term fnancing, public-private partnerships appear to be a strong solution or meeting Cambodia’s high-priority inrastructure needs.

Public-private partnership opportunities are actively promoted by ADB because they enable governmentto build inrastructure without taking unds away rom other crucial sectors such as education and health.Where appropriate, ADB provides technical assistance to acilitate public-private partnership development,including addressing entry barriers, improving governance, and developing government capacity. ADB bringsa wealth o experience to share in strengthening the legal and regulatory environment or partnerships,mobilizing private sector fnance, and enhancing governance and transparency.

In the power sector, through the Greater Mekong Subregion Transmission Project, ADB has encouraged smallprivate operators to invest in and operate power acilities that serve rural consumers. Through the ProvincialPower Supply Project, ADB has strengthened the capacity o the Electricity Authority o Cambodia to preparecontracts or private sector participation in power supply development as well as manage the income.



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In the road sector, under the Road Asset Management Project, ADB initiated the privatization o some units o theMinistry o Public Works and Transport, and under the Cambodia Road Improvement Project, ADB strengthenedthe domestic contracting industry by opening up opportunities in road construction as well as maintenance.

As a critical element o the Cambodia private sector development strategy, the ADB country partnership strategy(CPS) 2011–2013, calls or public-private partnerships (PPPs) to be “actively sought in all areas o operations.”

A comprehensive PPP assessment was completed in October 2011, and a ull range o PPP developmentinitiatives put in place. These include: 1) small-scale technical assistance over 2012 that has provided supportor the government in taking a more proactive role in implementing PPP policies and programs and managingassociated risks; 2) measures to improve the legal, regulatory and institutional environment or PPPs andidentiy and screen possible projects or a pipeline o bankable PPP investments; 3) ocused technical assistanceto strengthen the capacity o senior and mid-career government ofcials to develop and enhance PPP initiatives;and 4) a proposed project rom March 2014 to March 2020 to implement a number o PPP projects—includingurther project development and viability-gap unding as required. These activities have been careully sequencedto progress at a suitable pace through the our pillars o ADB’s Public-Private Partnership Operational Frameworktowards successul PPP implementation (see Diagram below).

Fou Pills of th aDB Public-Pivt PtnshipOptionl Fmwok

Pillar 1 Pillar 2 Pillar 3 Pillar 4

Aday ad aay

d

eabg

r

prj

d

prj

fag

• Createawareness

• Invokeleadership

• IdentifyPPPpotential

in sector planning andthe private sectordevelopment agenda

• Developcapacityof the government and ADB sta

• Developpolicy,legal regulatory andinstitutional rameworkto acilitate, guideand manage thedevelopment o PPPs(country and sectorspecifc)

• AlignADBproject cycle to the PPPdevelopment process

• Assistinthe development opathfnder projects

• Providesupport (including advisorysupport) throughoutthe process up tocontract award/ fnancial close whichcan come as expertsupport, toolkits,unding costs otransaction advisors,and procurementsupport

• Providecredit enhancementproducts, or example,equity, long-term debt,refnancing subordinatedebt, cofnancing, andguarantees

• Establishcredit guarantee acility

• Providepublicsector fnancial supportthrough schemessuch as viability gapfnancing

Regional Department (RD) Responsibility Private Sector

Operations/RD



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a Public-Pivt Ptnship Bightns Livs A private power company is bringing cheap, reliable electricity to rural villages—increasing productivity,

incomes, and comfort for local people.

Neang Sokha says she is able to live a “civilized lie” now that the electricity supply has improved in hervillage o Ek Phnom, in Battambang Province. “We use about 20 kilowatt-hours a month now and payonly fve dollars. Beore, because it was so expensive, we used only 10 kilowatts but paid about $12.”

Under a project supported by an ADB loan to a private company, electricity rom Thailand is now providingreliable power or over 30,000 people, including Ek Phnom villagers.

Chhy Kimyean and her husband Soeum Chhay require electricity to run the hairdressing business they have

been operating in Ek Phnom since 2003. “We use electric cutters rather than scissors to cut men’s hair,and electric blow dryers or styling hair because it’s easier and aster. Also, the salon needs lighting duringbusiness hours. Electricity is now much cheaper than the village generators o the past.”

Down the road rom the hair salon, Sin Bunkhoeun cuts steel rods used in construction. Since his businessrequires electricity throughout the day, he bought his own generator some years ago and spent about $2per day on diesel to run it. “Now I spend about $12 per month, and don’t bother to use my generator.”



47

Knowledge PartnershiPs

Knowledge

Building

... knowledge frst,fnance ollows...

ADB recognizes that knowledge is a key driver o change in the Asia and Pacifc region and knowledge building and management are integral to the successul delivery o ADB Strategy 2020,which provides guiding principles or ADBoperations across the region as well as inCambodia. The eorts o ADB to enhance knowledge building under Strategy 2020 include supporting knowledge development through ADB operations, strengthening knowledge sharing through communities o

practice, strengthening knowledge partnerships, and enhancing sta learning and skills development.

To promote knowledge building in the ADB Southeast Asia Department, which includes Cambodia, a KnowledgeManagement Framework was developed in 2010 to guide the department’s knowledge-related activities.The strategy recognizes that knowledge and fnance are inseparable components o operations and theoperations cycle. Thus knowledge building and sharing are integral to ADB’s core business—both or lendingand non-lending products and the services that underpin ADB development support in the region.

ADB experience shows that systematic mainstreaming o knowledge work and support, including learning romexperience, is paying o in terms o more relevant and easible investments, as well as relevant policy support.This operating principle is epitomized in the slogan ‘knowledge frst, fnance ollows’.

The ADB Cambodia Resident Mission has played a primary or supporting role in preparing a large number osector assessments, strategies and roadmaps in sectors such as agriculture and natural resources, education,technical and vocational education and training, water supply and sanitation, urban development, the fnanceindustry, transport, public sector management, energy, industry, and trade. ADB has also prepared thematicpapers in Cambodia on economic issues, governance, poverty, gender, the private sector, environment, andregional cooperation/integration. These extensive knowledge products played an important role in supportingthe country partnership strategy 2011–2013, and many o them have been published and distributed widely.

A particularly important knowledge product was the 2011 national Governance Risk Assessment and RiskManagement Plan, designed to guide the preparation o risk mitigation strategies or the sectors and projectscovered by the country partnership strategy. To better operationalize sector results rameworks and associatedmonitoring matrices, ADB has carried out several rounds o consultations with government line ministries toimprove results indicators and increase government attention to results monitoring rameworks.

The ADB Cambodia ofce is developing a knowledge strategy—one o the frst in ADB or a resident mission.

ADB Cambodia is also planning a comprehensive joint knowledge portolio assessment exercise with the WorldBank and the government’s Supreme National Economic Council. These activities will include an inventory o allmajor knowledge activities being undertaken in Cambodia, identifcation o knowledge weaknesses, gaps andprojects to address them, and the development o a knowledge platorm at the Supreme National EconomicCouncil. The end result will be improved knowledge products and greater knowledge sharing between allstakeholders working on development in Cambodia.

A number o critical collaborative research exercises started in 2011: the joint ADB-World Bank 2012 InvestmentClimate Assessment and the Farm Investment Climate Assessment; and the ADB-led Country DiagnosticStudy being carried out jointly with the International Labour Organization and the United Nations DevelopmentProgramme to examine the constraints to inclusive growth. These activities will underpin the preparation o thenext country partnership strategy 2014–2018, and eed into the government’s own planning documents—the nextphase o the Rectangular Strategy, the National Strategic Development Plan, and the Cambodia Vision 2030.

The ADB Cambodia Resident Mission annually prepares the Cambodia chapter o the Asian Development Outlookin April; the inputs rom Cambodia or the Asian Development Outlook Update in October; and the annual CountryPerormance Assessment or Cambodia that supports the perormance-based allocation o concessionary undsrom the Asian Development Fund. ADB also regularly provides inputs into the Joint International MonetaryFund/World Bank Debt Sustainability Analysis.



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Communictions...understanding

development issues...

Communications is more than inorming audiences about development activities and results. A communications strategy must also ensure that relevant inormation and knowledge is shared with all stakeholders, including the public, and that problems and proposed solutions arewell understood. This approach improves stakeholder perceptions, osters social awareness and acilitatestwo-way dialogue. It also enhances the visibility o anorganization and adds value to its work.

ADB ocuses its external communications on six primarystakeholders: the government, development partners,the private sector, non-governmental and civil society organizations, people aected by ADB projects, andthe mass media.

• ADBencouragesownershipofitsprogramsbythegovernment,andtheperceptionofADBasasource o knowledge and expertise, rather than only a source o unds.

• ADBwouldlikedevelopmentpartnerstoseeitsworkashavingsignicantimpactsoneconomicandsocialdevelopment, and to cofnance initiatives.

• ADBaimstoidentifyanddevelopopportunitiesforcooperationandpartnershipswiththeprivatesector.

• ADBworkswithnon-governmentalandcivilsocietyorganizationstoinvolvetheminprojectimplementation,to promote better relations and to assist them to be more responsive in assisting the people benefting romor aected by ADB projects.

• ADBworkswithaffectedpeopletoensurethatprojectsandprogramsbringbenetstotheirlives.

• Withthemassmedia,ADBhasanopendoorpolicyandmaintainsstrategicpartnershipswithleadingprint

and broadcast news agencies that help to raise ADB visibility and improve credibility.

Public Infomtion CntsPublic Inormation Centers—jointly fnanced by ADB and the World Bank—disseminate publications producedby ADB, the World Bank, and other development partners, on important economic and social developmentissues. As such, these centers serve as dedicated resource hubs or sharing knowledge with sta romgovernment, the private sector and non-governmental and civil society organizations, as well as students,aculty and independent researchers. In addition to Public Inormation Centers in Phnom Penh in the ofceso ADB and the World Bank, in 2010 ADB opened three centers in Kampong Cham, Siem Reap, and PreahSihanouk Provinces. In 2012, another center was opened in Battambang. Each o these centers is located inthe compound o a provincial university, stocked with thousands o books in English and Khmer on variousdevelopment issues in Cambodia and around the world, and equipped with computers, printers, and Internetconnections.



49

Woking with Dvlopmnt Ptns

... coordination or aid eectiveness...

Cambodia has a well-established mechanism

or coordination among development partners.The government is frmly committed to aid eectiveness and harmonization, and actively participates in aid-related international conerences.

The Council or the Development o Cambodiais responsible or coordinating developmentassistance, including policy dialog withdevelopment partners. The Councilcoordinates 19 technical working groups,each promoting coordination in one importantsector, and co-chaired by a lead governmentagency and a development partner.

ADB co-chairs working groups ondecentralization and private sectordevelopment, and participates in othertechnical working groups in sectors relevantto ADB activities, including one on generalaid partnership and harmonization thatestablishes consensus on priorities.

The working groups report to theGovernment-Development PartnerCoordination Committee. This Committeemeets regularly, and is co-chaired by theDeputy Prime Minister and Minister o Economy and Finance, and an elected development partner.

The Cambodia Development Cooperation Forum is the highest-level aid coordination and policy dialog orum orgovernment and development partners. Meeting about every 18 months, Forum participants review past resultsand pledge new assistance. Among development partners, there is also an inormal monthly meeting o theheads o development agencies.

There are well-established institutional arrangements or eective development partner assistance to, andengagement with, the private sector, and especially small and medium enterprises. This assistance is coordinatedthrough the Private Sector Development Steering Committee—a joint government-private sector orum that meetsbiannually. The Steering Committee has several sub-steering committees chaired by relevant sector ministries,and these provide the opportunity or ongoing dialog involving government, the private sector, international

development partners, civil society, and the academic community. This structure encourages alignment withthe priorities o the National Strategic Development Plan and also the monitoring o progress. ADB activelysupports the Steering Committee though co-chairing the technical working group on private sector development.

Serving as a key acilitator o development partner coordination, ADB Cambodia has conducted the annualcountry portolio perormance review exercise jointly with the World Bank since 2007 and, beginning in 2011,with the Japanese International Cooperation Agency. Export-Import Bank o Korea participated as an observer in2010 and the International Fund or Agricultural Development has also joined in the past. ADB Cambodia activelyconsults with development partners on country programming, program/project design, and policy initiativessupported by ADB. In particular, ADB Cambodia consulted extensively with development partners in preparingthe country partnership strategy 2011-2013. This consultation led to positive eedback and cofnancing with otherdevelopment partners in sectors o common interest.

In 2012, an ADB technical assistance project is investigating how to improve systems, coordination mechanisms,and aid eectiveness, as well as increase the productivity o the technical working groups. The project willpromote adoption o Managing or Development Results principles by both the government and developmentpartners. To achieve this objective, the project will acilitate meetings, workshops, and ocus group discussionswith government ofcials, and all relevant stakeholders.



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Mnging fo Dvlopmnt rsults

...monitoring and evaluating...

Providing the right development aid is not only

about the size o the loan or the number o roadsor schools built—it is about knowing that the loan is improving people’s lives in a sustainable way.For example, does a school educate children with skills that will support their country’s economicuture, as well as their own intellectual development? When a new highway is built,does it only spur growth and oster trade, or does it also bring tangible benefts to surroundingcommunities?

ADB is committed to ensuring that its resourcesare used to help countries achieve sustainable

development and reduce poverty. It does this byocusing on results management in its operations,improving the capacities o its developing membercountries, and contributing to the global agendaon aid eectiveness.

Managing or Development Results (MDR)promotes inormed decision making by integratinga results ocus across the ollowing our core management unctions:

1. Planning – defning outcomes and outputs with measurable indicators and time-bound targets, and agreeingon associated activities

2. Budgeting – allocating resources to agreed activities3. Implementing and monitoring – implementing agreed activities, and monitoring progress against targets

4. Evaluating – assessing perormance against agreed targets, and identiying actions or improvement

Critical to managing or eective development results is regular reporting to stakeholders to increaseaccountability and promote learning.

In 2008, to put MDR at the heart o what it does, ADB introduced a corporate results ramework—a managementtool that helps monitor and improve aid delivery. The ramework orms the basis o the ADB DevelopmentEectiveness Review, an annual report card that shows where ADB has been successul, where challengesremain, and where remedial action is required.

In Cambodia, during the preparation o the country partnership strategy 2011-2013, the country team madesignifcant strides to improve the results rameworks at the national and sector levels in line with MDR principles.In particular, improvements were made in the development o indicators to strengthen the monitoring andevaluation o development programs, and the alignment o ADB country and sector results rameworks withthose o the government. Joint workshops were held with key government partners to improve the understandingo MDR applications. ADB technical assistance in the near uture will contribute urther to strengthening theapplication o MDR at all levels o government, as well as in the monitoring and evaluation rameworks in placeor measuring and tracking the joint monitoring indicators o the aid coordination mechanism.



51

ADB Then AnD now

aDB in Cmbodi in th ely 1990sIn the early 1990s, when the Asian Development Bank re-engaged with Cambodia to conduct assessmentmissions or a major loan and related technical assistance, the country had already made a remarkable recoveryrom years o war and isolation, but there was still much rebuilding to do.

In 1979, almost all o Cambodia’s roads, bridges, irrigation systems, schools, hospitals, housing, and ofces werein bad repair or unusable. There was no unctioning administration, no currency, no electricity, no police orce,and there were no transport services. To get rom one part o the country to another, people had to walk.Rice production was also only a raction o pre-war levels, and across the country people were starving.

Total exports were only $1 million, compared to $87 million a decade earlier.Over the 1980s, schools and hospitals re-opened, roads and buildings were repaired, and government wasre-established, but Cambodia had little fnancial support or the enormous task o rebuilding inrastructure.Until 1991, limited assistance came only rom the Soviet Union and some other socialist countries, plus a ewinternational humanitarian organizations.



52

In 1991, however, the Soviet Union collapsed andcould no longer assist Cambodia. Also, in 1991, heavyooding caused more damage to key inrastructure,and Cambodia aced the enormous challenge oresettling about 180,000 internally displaced people,and another 360,000 people who would soon returnrom border camps in Thailand. Some 200,000 soldiersneeded to be demobilized as well.

In 1991 and 1992, despite high security concerns dueto ongoing civil war and banditry, and the challengeso bad roads, ADB sent several missions to Cambodia.These missions, some o which the World Bank and

the International Monetary Fund joined, assessedthe economy and sector requirements, and alsodetermined the legal and operational ramework or ADB lending.



53

In November 1992, barely a year ater the ParisPeace Agreement was signed, and even beoreelections had been held and a new governmentormed, ADB provided Cambodia with a loano $67.7 million or the period 1992–1996. Thiswas intended to rehabilitate critically neededinrastructure in our economically and sociallyimportant sectors—transport, power, agriculture,and education.

ADB also provided another $4.2 million intechnical assistance to support the governmentagencies responsible or implementing projects. Along with project oversight, ADBconsultants developed the capacityo government sta to identiy andprepare bids or subprojects;design projects; procure materialsand services; supervise thecontractors hired to carry out civilworks; and monitor suppliers

o equipment and materials.With no government elected yet, in1992, ADB needed three signatureson the loan: one rom the head othe Supreme National Council oCambodia, one rom the head o theUnited Nations Transitional Authorityin Cambodia, and one rom the heado the existing administration.

To get the signature o King Sihanouk, who was the head o Supreme National Council, Someth Suos, who led ADB Cambodia operations in the early 1990s, and became the frst Country Director in 1997, had to y to Beijing. An ADB employee since 1970, Someth Suos, who was born and educated in Cambodia beore taking degreesoverseas, spoke, read and wrote Khmer, as well as English and French. In the late 1960s he had worked or theNational Bank o Cambodia and his good contacts enabled him to both advance the work o ADB and helpother development agencies in their negotiations with government.

“When I arrived at King Sihanouk’s residence in China to bring him the ADB loan documents to sign, I expectedHis Majesty would stage a ormal ceremony or this. But he just took the documents rom me, walked over toa nearby sideboard and signed them. Although he read the loan documents later, he just glanced at them beoresigning because he said that he had known me or a long time, and he trusted me.”

In 1996, ADB was the frst international fnance organization to re-establish an ofce in Cambodia. In addition toSometh Suos, employees were a project ofcer, an administrative assistant, a secretary, and a couple o cleaners.“The ADB ofce was initially only a ew rooms, and as the only English speaker on the ADB sta, I had to typeout English letters mysel and also answer the phone whenever someone called who could not speak Khmer.With over $70 million in fnance and technical assistance to acilitate, I oten worked seven days a week.”

In the early 1990s, working in Cambodia was very challenging. Travel to the provinces was very slow, and in therainy season, a ood could block a road or days. The trip rom Phnom Penh to Battambang, or example, took14 hours compared to only 5 hours today. Security was also a problem. Some actions o the Khmer Rouge hadreused to sign the 1991 Paris Peace Agreement and continued fghting, which was an ongoing drain on limitedgovernment resources. In many parts o Cambodia, millions o land mines and unexploded ordinance were athreat too.

In total, ADB fnance rehabilitated 560 kilometers o important national roads and 23 bridges. Repairs were alsomade to the railway network at critical locations. In Sihanoukville, to boost trade, Cambodia’s deep sea port wasrehabilitated. Wharves were repaired, new equipment provided or moving containers, leaking port warehouseswere fxed, and the container yard was expanded and paved.

In Phnom Penh, with ADB fnance, new diesel generators were installed, existing generators were repaired, andall were provided with a good supply o spare parts. The Phnom Penh distribution system was also rehabilitated,along with re-equipping substations.



54

Four combined irrigation and ood controlschemes were repaired, which irrigated 10,000hectares o armland, and ADB provided theMinistry o Agriculture with critically neededconstruction equipment, spare parts and acomputerized system or managing spare parts.The project also fnanced a soil testinglaboratory and provided the Ministry o Agriculturewith 18,000 tonnes o chemical ertilizer or sellingon to armers to boost their very low production.With these sales, the ministry earned about$3 million to fnance its work. In the educationsector, ADB fnance repaired 67secondary schools, Phnom PenhUniversity, three technical institutes,and two teacher training colleges,and provided them with equipmentand materials.

As the frst intervention by anymultilateral or bilateral agency in

Cambodia or over two decades, the1997 ADB project completion reportcredits the bank with giving otherdevelopment partners the confdenceto venture into rural areas to begin orresume their operations. The projectalso laid a oundation or uture ADBoperations in Cambodia and createdgood relations in government agencies that have grown over the last 20 years. The bank has continued as wellto play a key role in development partner coordination in Cambodia.

Overall, the ADB loan signed in 1992 ensured that the initial boost to the economy provided by the presenceo the United Nations was sustained over the medium term. The removal o critical inrastructure bottlenecks

reactivated the country’s human resources, and returning reugees and demobilized soldiers were givenproductive work and the opportunity to develop skills in construction. This pioneering frst project helped to laythe oundations or today’s expanded markets, much greater public and private investment, and the integrationo Cambodia’s economy into world markets.



55

aDB MILeSTONeS IN CaMBODIa 1991-2012

1991: First ADB missions to scope possible assistance.

1992: First loan o $67.7 million plus $4.2 million or technical assistance.

1996: First ADB country director appointed.

1997: Opening o ADB ofce.

2000: ADB switly responded to the severe ooding in 2000 with $55 million loan or rehabilitation.

2002: ADB supported Cambodia to organize the frst Leaders Summit o the Greater Mekong Subregionin Phnom Penh.

2004: ADB launched the Learning Resource Center under the Greater Mekong Subregion, Phnom PenhPlan or Development Management.

2006: ADB moved its ofce rom the Norodom Boulevard compound to its current location.

2008: ADB President Haruhiko Kuroda joined Prime Minister Hun Sen to inaugurate the railwayrehabilitation in Poipet.

2008: ADB helped Cambodia to cope with rising ood prices through $35 million loan and grant orthe Emergency Food Assistance Project.

2009: ADB supported Cambodia to organize the frst Aid or Trade conerence in Siem Reap.

2010: ADB launched our regional Public Inormation Centers jointly with the World Bank.

2011: ADB supported Cambodia to organize the frst Southern Economic Corridor Symposium inPhnom Penh.

2011: ADB supported Cambodia to organize the 17th GMS Ministerial Conerence in Phnom Penh.

2012: ADB switly responded to the severe ooding in 2011 with $55 million, and $5.25 million grantcofnancing rom the Government o Australia to rehabilitate damaged inrastructure.

2012: ADB President Haruhiko Kuroda attended the 16th ASEAN Finance Ministers’ Meeting, 7th East Asia Summit, and ASEAN Global Dialogue hosted and chaired by Cambodia.



56

Cmbodi rsidnt Mission County Dictos

Country Director Assignment Period

Someth Suos 1996 1999Urooj Malik 1999 2004

Shyam Bajpai 2004 2006

Arjun Goswami 2006 2009

Putu Kamayana 2009 2012

Eric Sidgwick 2012 On going

Someth Suos

The trust and confdence given to me by the bank to open up operations as the frst Resident Representative/ Director to Cambodia, was a great honor. It gave me the opportunity to serve the bank as “Family Doctor” toan ADB member country at a time o great need or economic development. Cambodia was scarred by threedecades o tragic political events. No one could imagine such cruel destruction o human lie, culture and spirit,as well as inrastructure. In the early 1990s, I saw frst hand how the tiny number o Cambodian technical expertsand proessionals who had survived the killings were rebuilding the country with their actual bare hands, with littleaccess to technology or know-how, and relying on trial and error rather than modern techniques o decisionmaking. With my Khmer mother tongue, I was able to share my knowledge and experience o development issueswith top government ofcials, and gain rom them in-depth understanding o Cambodia’s needs regarding thepriorities o inrastructure development, poverty alleviation strategies and education. The working relationship be-tween the Royal Government and mysel over the years has been overwhelmingly trusting and I eel honored that Iwas able to achieve ‘good marks’ or the bank as well as the highest appreciation rom government thatstill resounds today.

Urooj Malik I had the unique privilege o supporting the development eorts o the Kingdom o Cambodia rom its transitionrom a war torn and tragic state to a market-based economy. Political stability has brought about high dividendsover the last two decades. Clearly, this could not have been possible without ensuring a lasting peace, a clearvision or development, and meaningul partnerships between the Royal Government and its major partners.Indeed, the strong leadership at the helm in ensuring that the above conditions are met, has been quiteremarkable. As Cambodia moves orward in its eorts to consolidate its economic gains and completelyeradicate poverty, one hopes to see a continued genuine commitment to democratization, sound developmentmanagement, and care or the natural environment. This will ensure that the ruits o growth are widely spread insociety and that the path to development secures sustainability in the longer term or the Kingdom o Cambodia.

Shyam BajpaiFor any development practitioner, Cambodia is an incredible learning experience, and I was most grateul or theopportunity to reresh my connections with the reality in the feld. When I came to Cambodia in April 2004, we hadmany serious issues: uncertainty about the ormation o a government, lack o an agreed development agenda,prospects o a sharp downturn in the garment sector, and serious concerns about whether poverty was beingreduced, despite all our eorts. Cambodia has come a long way since then on all these ronts and it is importantto remind ourselves that problems can be overcome, and that we should not allow ourselves to becomeoverwhelmed or rustrated by their size and complexity. In development, there will always be new problems asold ones are resolved, and we should not become perpetual worriers or pessimists. And it is or this reason thatI remain optimistic today about the uture o Cambodia.



57

Arjun GoswamiI consider mysel very ortunate to have had the opportunity o serving in the Cambodia Resident Mission. Having

wonderul colleagues who have nurtured strong relationships with Cambodian counterparts and stakeholders wasa special privilege. Whether it was organizing emergency overland travel rom Bangkok when the airport there wasclosed in 2008, or undertaking emergency ood assistance, none o this would have been possible without thosecolleagues and relationships. I came to Cambodia rom South Asia operations skeptical about regional cooperation.I let Cambodia ully converted to the regional cooperation cause ater seeing it in operation in Cambodia.The magical memory o the Mekong rom riverside restaurants in Phnom Penh, to the dolphins o Kratie, and theeagerness o students to learn, continue to inspire me long ater my ootprints have aded rom Cambodia. I cantruly say that one can take the man out o Cambodia but one cannot take Cambodia out o the man.

Putu KamayanaI am honored to have served in Cambodia or three years rom 2009 to 2012. I very much enjoyed being part othe ADB Cambodia Resident Mission’s strong and highly motivated team. Having excellent working relations

with the Royal Government, civil society organizations, the private sector, academia, and development partnersenabled ADB to support innovations not possible in some countries. This also helped us to be more responsive tothe needs o the government and the people o Cambodia. I was impressed too with how Cambodians value theircultural traditions, even as they continue to progress and open up to the world. It will be very important or theCambodian people to maintain their ancient traditions and heritage, which have inuenced the cultures o manycountries in the region. And it will also be increasingly important to ensure strong spiritual oundations as peoplestrive to achieve their aspirations.

Eric Sidgwick This is an exciting time to be in Cambodia and I am privileged to be back here again, ater serving as SeniorCountry Economist rom 2008 to 2010. The country has some unique challenges, but has made steady progressin the past decade. I’m looking orward to working with the government, private sector, development partners,

and Cambodia’s vibrant civil society in ensuring eective support rom ADB to accelerate progress in reducingpoverty as well as in promoting sustainable and inclusive economic growth. I am excited to be a part o theCambodia Resident Mission team which will be preparing the next Cambodia country partnership strategy thatwill ully align with and support the Royal Government’s planning directions or the next fve years and beyond.



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aDB County Ptnship Sttgy 2011–2013

The ADB Country Partnership Strategy (CPS) or 2011–2013 defnes ADB’s strategic approach in Cambodia asreducing poverty and promoting inclusive economic growth and social development and equity. It aligns ADBStrategy 2020 with Cambodian government priorities, and was developed in close collaboration with thegovernment, and with engagement o civil society, private business, and development partners. Over the threeyears o the 2011–2013 CPS, ADB investments and technical assistance are planned to total more than $500

million.The CPS prioritizes fve sectors: 1) transport (rural and provincial roads); 2) water supply, sanitation and urbandevelopment; 3) agriculture and natural resources (agriculture commercialization and irrigation support);4) education (lower secondary schools and vocational training); and 5) fnance (banking regulation, smalland medium-enterprise fnance, microfnance, and insurance).

Underpinning all activities o the CPS is a strong ocus on public sector management, including public fnancialmanagement, decentralization and deconcentration (D&D), and developing public sector capacity. Recognizingthat reducing corruption and improving public fnancial management and public procurement are important inCambodia, sector and project level governance risk assessments and management plans have been introducedacross all sectors supported by the CPS.

The CPS directly responds to our very important challenges critical or Cambodia’s uture: climate change,

decentralization, rural-urban linkages, and regional cooperation. The strategy also incorporates fve key crosscutting themes into all ADB activities in Cambodia—private sector development, governance, gender equity,knowledge solutions, and partnerships. Practical strategies are being put in place as well in the CambodiaResident Mission in areas o knowledge building, civil society engagement, development partner coordination,communications, and private sector engagement.

The CPS continues to maintain a geographic ocus on the Tonle Sap Basin, one o the poorest and mostenvironmentally sensitive regions in Cambodia, and it also urther strengthens integration o Cambodia intothe Greater Mekong Subregion.

At the request o the government, the time rame or the CPS matches the latter part o the National SocialDevelopment Plan (NSDP) Update covering 2009 to 2013, while the next CPS will be or fve years in order toalign with and support the NSDP 2014–2018. ADB team members and the government are undertaking a numbero ambitious analytical exercises and sectoral and thematic studies that will guide the development o the next

CPS 2014–2018 and support the preparation o the NSDP rom 2014 to 2018.

Cambodia was one o the frst ADB member countries to develop a country partnership strategy under new ADBguidelines—an achievement made possible because o the strong relationships that ADB sta have developedover the last 20 years with all levels o government.

With nearly 75% o the population engaged in agriculture, the CPS ocuses on boosting the competitiveness osmall armers as well as large-scale commercial agribusiness, and developing related rural inrastructure. Throughthese initiatives, the CPS is creating jobs, raising incomes, and improving ood security. ADB is continuing 20years o work too on improving irrigation systems in order to increase agricultural productivity and support thegovernment’s Rice Production and Export Promotion Policy.

Also under the CPS, initiatives to strengthen urban–rural linkages, including transport links both within the countryand with neighboring countries, are expanding business opportunities. Investments in the fnance sector, in trade

acilitation, and in industry-relevant technical and vocational skills training are improving the conditions or doingbusiness. The CPS is developing human capital too through measures designed to achieve gender equity, expandrural water supply and sanitation, and widen access to quality secondary education. ADB is also mainstreamingclimate resilience activities into ongoing and new projects using unding rom the global Pilot Program or ClimateResilience approved in 2011.

Through support to public-private partnerships, the CPS is preparing the legal, regulatory and institutionalrameworks to leverage additional private sector fnance or key inrastructure projects, with high potential inurban water, tourism, transport, and energy. To acilitate regional trade, competitiveness and tourism across theGreater Mekong Subregion, the CPS is continuing to improve cross border transport and trade acilitation alongthe Southern Economic Corridor that links Bangkok to Ho Chi Minh City, via Phnom Penh.

Lastly, improving portolio quality and efciency is a priority ocus o the 2011–2013 CPS. The Cambodia Resident

Mission has emphasized 1) applying innovations in portolio selectivity; 2) increasing the average size o projectsand introducing innovative fnancing mechanisms or projects or groups o projects, including cofnancing;3) building project management capacity o executing agencies; 4) selectively delegating projects to theCambodia Resident Mission to improve project administration and portolio perormance; 5) improving assessmento project readiness; and 6) improving monitoring and evaluation (M&E) o ADB activities through stronger resultsrameworks and joint supervision missions or cofnanced projects.



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S t r a t e g i c O b j e c v e 2 :

S o c i a l D e v e l o p m e n t a n d

E q u i t y

S t r a t e g i c O b j e c v e 1 :

I n c l u s i v e E c o n o m i c

G r o w t h

A g r i c u l t u r e

a n d N a t u r a l

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2 .

D e c e n t r a l i z a t o n

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U r b a n - R u r a l L i n k a g e s

4 .

R e g i o n a l C o o p e r a t o n

D r

i v e r s o f C h a n g e

1 .

P r i v a t e S e c t o r

D e v e l o p m e n t a n d

P r i v a t e S e c t o r

O p e r a t o n s

2 .

G o v e r n a n c e

3 .

G e n d e r E q u i t y

4 .

K n o w l e d g e S o l u t o n s

5 .

P a r t n e r s h i p s

- D e v e l o p m e n t

P a r t n e r s

- C i v i l S o c i e t y

- P r i v a t e S e c t o r

F a c i l i t a n g S e

c t o r : P u b l i c S e c t o r M a n a g e m e n t

C o r e A r e a :

I n f r a s t r u c t u r e

C o r e A r e a :

E n v i r o n m e n t ,

C l i m a t e C h a n g

e

C o r e A r e a :

R e g i o n a l

C o o p e r a o n

a n d I n t e g r a o n

C o r e A r e

a :

E d u c a o

n

C o r e A r e a :

F i n a n c e

S e c t o r


O t h e r A r e a :


O t h e r A r e a :

H e a l t h

O t h e r A r e a :

D i s a s t e r a n d

E m e r g e n c y

A s s i s t a n c e

A D B S t r a t e g y 2 0 2 0

P o

v e r t y R e d u c o n

C o r e : G o o d

G o v e r n a n c e

E

n h a n c e m e n t o f


P h y s i c a l

I n f r a s t r u c t u r e

P S D a n d

E m

p l o y m e n t

C a p a c i t y B u i l d i n g

a

n d H R D

P o r t o l i o

S e l e c v i t y

1 .

I n n o v a t o n s

2 .

P r o j e c t s i z e

a n d p a c k a g i n g

3 .

L e n d i n g

m o d a l i t y a n d

c o - fi n a n c i n g

4 .

A b s o r p t v e

c a p a c i t y o f E A s

5 .

P r o j e c t

i m p l e m e n t a t o n

r e a d i n e s s a n d

e ffi c i e n c y

6 .


e ff e c t v e n e s s

a n d i m p a c t

C a m b o d i a ’ s R e c t a n g u l a r S t r a t e g y f o r G

r o w t h , E

m p l o y m e n t , E q u i t y a n d E ffi c i e n c y , P

h a s e I I

A D B C a m b o d i a C o u n t r y S t r a t e g y 2 0 1 1 - 2 0 1 3

O v e r a r c h i n g O b j e c v e : P o v e r t y R e d u c o n

P r i o r i t y S e c t o r s



60

ADB Cambodia Resident Mission Team

Name of Staff Position

Mr. Eric Sidgwick Country Director

Mr. Peter Brimble Deputy Country Director and Senior Country Economist

Mr. Januar Hakim Senior Project Management Specialist

Ms. Karin Schelzig Senior Social Sector Specialist

Mr. Peter Broch Senior Transport Economist

Ms. Nao Ikemoto Senior Natural Resources Management Specialist

Mr. Ricardo Carlos V. Barba Senior Saeguard Specialist

Mr. Nida Ouk Senior Project Ofcer (Physical Inrastructure)

Ms. Vandy Dav Senior Finance and Administrative Ofcer

Mr. Chamroen Ouch Senior Programs Ofcer (Governance)Mr. Sophea Mar Senior Social Sector Ofcer

Mr. Sokunthea Sok Senior Procurement Ofcer

Mr. Poullang Doung Senior Economics Ofcer

Mr. Chanthou Hem Senior Project Ofcer (Agriculture and Natural Resources)

Mr. Piseth Vou Long Senior Project Ofcer (Agriculture and Rural Development)

Mr. Chantha Kim Programs Ofcer

Ms. Sokha Ouk Saeguards Ofcer

Ms. Chandy Chea Gender Specialist

Ms. Sothea Ros External Relations Coordinator

Mr. Sophana San Project Analyst

Mr. Sopheark M. Chea Project Analyst

Ms. Sovathavy Hel Senior Project AssistantMr. Mao Ouk Associate Operations Coordinator

Ms. Phalla Kong Senior Operations Assistant

Ms. Phalla Song Operations Assistant

Ms. Vanna Sin Operations Assistant

Mr. Dara Dy Operations Assistant

Mr. Vuth Cheng Senior Finance and Administration Assistant

Ms. Sovannary Teng Finance and Administration Assistant

Mr. Samnang Seng Associate Inormation Technology Coordinator

Mr. Dararith Kang Senior General Ofce Assistant

Ms. Sophy Pich General Service Sta (Secretariat)

Ms. Phirundeth Chin Receptionist

Mr. Kosal Meas Senior General Service Sta (Driver)Mr. Sothea In General Service Sta (Driver)

Mr. Virak Svay Driver

Mr. Bunthoeun Nin Messenger

Ms. Thany Kung Housekeeper



61

Cmbodi t Glnc



About the Asian Development Bank

ADB’s vision is an Asia and Pacifc region ree o poverty. Its mission is to help its developingmember countries reduce poverty and improve the quality o lie o their people. Despite theregion’s many successes, it remains home to two-thirds o the world’s poor: 1.8 billionpeople who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally

sustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 rom the region. Its maininstruments or helping its developing member countries are policy dialogue, loans, equityinvestments, guarantees, grants, and technical assistance.

Asian Development BankCambodia Resident MissionNo. 29, Suramarit BoulevardSangkat Chaktomuk, Khan Daun PenhPhnom Penh, CambodiaTel: +855 23 215805Fax: +855 23 215807www adb org/cambodia

Asian Development Bank in Cambodia: From Rehabilitation to Inclusive Growth (20-Year Anniversary)

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