TRANSLATION

KINGDOM OF CAMBODIA

Nation Religion King

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ROYAL GOVERNMENT OF CAMBODIA

NATIONAL STRATEGIC DEVELOPMENT PLAN 2014-2018

FOR GROWTH, EMPLOYMENT, EQUITY AND EFFICIENCY

TO REACH THE STATUS OF AN UPPER-MIDDLE INCOME COUNTRY

ROYAL KRAM OF

HIS MAJESTY THE KING OF CAMBODIA

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PROMULGATION OF THE LAW ON

THE ADOPTION OF THE NATIONAL STRATEGIC DEVELOPMENT PLAN

2014-2018

Article 1: Adopted the attached National Strategic Development Plan 2014-2018.

Article 2: The Royal Government of Cambodia shall continue the implementation of the National Strategic Development 2014- 2018.

Article 3: This law shall be promulgated as a matter of  urgency.

Royal Palace, Phnom Penh, 17 July 2014

Signature: NORODOM SIHAMONI

Having submitted to the King for signature

Prime Minister

Signature: Samdech Akka Moha Sena Padei Techo HUN SEN

Having submitted to Samdech Akka Moha Sena Padei Techo HUN SEN

for signature

Senior Minister and Minister of Planning

Signature: CHHAY THAN

Samdech Akka Moha Sena Padei Techo HUN SEN

Prime Minister of the Kingdom of Cambodia

FOREWORD

The Royal Government has adhered to the principle of national solidarity to rally all Cambodians, inside and outside the country, from all walks of lives and political tendencies, under the motto “Nation-Religion-King” with the objective to build and protect the nation and social achievements while ensuring the country's independence, integrity, sovereignty, peace, democracy and progress. Besides, Cambodia is attaining “gainful returns from peace” through high rate of economic growth and poverty reduction that took place in the past decade and has significantly contributed to the regional and global economic integration. The political stability, which has not been prevailing for years, has enabled Cambodia to carry out its reform measures in all sectors in order to build institutional capacity, improve socio-economic infrastructure, and create favourable environment to attract both domestic and foreign investments, with the aim of ensuring high rate of economic growth and poverty reduction.

In recent years, Cambodia has experienced significant developments not only in political and security but also in economic and social aspects. Such environments of political stability, peace, and safety are the prerequisites for Cambodia to make use of its socio-economic potentials. The 1993 General Elections have prompted the adherence to the principles of pluralist democracy, market economy, and the respect for human rights, freedom and dignity. In addition, the Royal Government of Cambodia (RGC) formulated the National Programme to Rehabilitate and Develop Cambodia (NPRD) in 1994, the first five-year Socio-Economic Development Plan (SEDP I 1996-2000) to lay out its rehabilitation and development vision putting emphasis on macroeconomic stability, social development, and poverty reduction.

Moreover, Cambodia’s picture was remarkably changing during the 1998-2003 period that constituted an important historical epoch of changes not only in socio- economic spheres but also in political aspects. Evidently, the General Elections in 1998 and the successful implementation of our “Win-Win Policy” that dismantled the political and military organisations of the Khmer Rouge have begot peace for the whole nation and the integration of former Khmer Rouge soldiers and people living in their occupied zones into the mainstream of society. In this context, the Royal Government Cambodia formulated the 2nd Socio-Economic Development Plan (SEDP II 2001- 2005) in order to guide the continued efforts in socio-economic development as well as successfully implemented the "Triangle Strategy" that focused on (1) building peace, restoring stability and maintaining security for the nation and the people; (2) integration of Cambodia into the region and normalisation of relationships with the international community; and (3) promoting economic and social development. This has set the stage for a profound transformation of Cambodia from a region of uncertainty, war, internal strife, instability and backwardness into an epicentre of sustained peace, security and social order, respect for democracy, human rights and dignity, cooperation

and shared development. Another aspect of significant developments from 2003 till today includes the transparent, free and fair general elections on 27 July 2008 and on 28 July 2013, which was recognised as the “Miracle on the Mekong” once again, as well as other achievements that had been realised through the successful implementation of the SEDP II 2001-2005 and the “Rectangular Strategy” for Growth, Employment, Equity and Efficiency. As a result, Cambodia achieved steady macroeconomic stability and considerable economic progress including annual average economic growth of 8.4% in the period of 1994-2006 and from 1999 to 2006 the economy was growing at an annual average rate of 9%. Indeed, the achievements could not have been possible without valuable contributions of Cambodia’s Developments Partners. This also reflects that all types of cooperation financing that Cambodia has hitherto received from its development have been more and more efficiently and effectively used. One the whole, the national plans and development strategies that have been passed and successfully implemented have provided a roadmap for RGC to move towards socio-economic development and poverty reduction. The implementation of the “Rectangular Strategy” is the further efforts to sustain the achievements that the Royal Government has hitherto realised the “Millennium Development Goals” with the aim of improving and enhancing public institutional capacity, promoting good governance, and modernising economic infrastructure in order to foster economic growth, create jobs for all citizens, ensure social equity, and increase public sector efficiency as well as protect natural and cultural resources, which is vital for sustainable development and poverty reduction. Within this conceptual framework, there is a need for the RGC to fine-tune its policy priorities and further improve sectoral strategies to reflect the actual contexts of Cambodia based on practical experiences in the implementation of the “Rectangular Strategy” for the Third Legislature of the National Assembly.

To further expand the achievements gained in Third Legislature of the National Assembly, the “Rectangular Strategy - Phase II” that was formulated to serve as the fundament of the Royal Government’s economic policy is the “Socio- Economic Policy Agenda” of the RGC of the Fourth Legislature of the National Assembly. In this regard, the RGC has resolved on preparing the National Strategic Development Plan (NSDP) 2006-2010 as a new national plan using the structure of the Rectangular Strategy of the Royal Government. In the preparation of this new plan, Royal Government had adhered to the full ownership in the preparation process by ensuring the consultation with and the comment sharing of all stakeholders. With unwavering implementation of the "Rectangular Strategy" and NSDP 2006-2010, the RGC has created a favourable environment and necessary conditions enabling Cambodia to step forward with increased hopes and strong confidence on the road of further reforms and development along with the firm determination of the RGC to serve the interests of the nation and respond to the aspirations of the people.

Currently, we have the Rectangular Strategy, National Strategic Development Plan, Sectoral Development Strategies, and other policy documents, investment programmes, and the national budget. The National Strategic Development Plan is the second important policy document of the RGC and is the roadmap for the implementation of the Political Platforms of the Royal Government as well as the Rectangular Strategy. Therefore, to ensure consistency in terms of hierarchy, role, substance, and synchronisation of these documents, the RGC has synchronised    the

timeframe of the National Strategic Development Plan with that of Political Platforms of the Royal Government” and the “Rectangular Strategy”.

In this context, the National Strategic Development Plan 2006-2010 was updated to the National Strategic Development Plan Update 2009-2013 to accomplish two primary goals; first, to synchronise the time period covered by the NSDP Update with the term of the Fourth Legislature of the Royal Government in order to ensure that the actions, programmes, and projects of all ministries and agencies are aligned to implement our prioritised policies that are outlined in the Rectangular Strategy Phase II; second, to ensure that the actions to be laid out by line Ministries and Agencies to implement these prioritised policies are formulated taking into account the potential impact of the global economic downturn on our economy.

The NSDP Update 2009-2013 has been prepared based on the further refined methodology that is focused on identifying who is responsible for implementing the priority policy or policies in each area of the Rectangular Strategy II; what specific actions the responsible institution(s) has/have planned to implement the priority policy(ies); and the responsible institution(s) best estimate on how much it will cost to implement the planned actions during 2009-2013. Besides, the NSDP Update 2009-2013 has been formulated with wide consultation with the government institutions, development partners and civil society organizations to manage the efforts in strengthening the harmonisation of planning, public investment expenditures, and resources from all sources that will be available to implement the RGC’s public investment programme. As part of this effort, the Ministry of Planning and the Ministry of Economy and Finance have worked closely with the line ministries and agencies to ensure that the process of identifying the public investment projects by the ministries and agencies is closely linked to the formulation of the Budget Strategic Framework for the concerned ministries and agencies.

As a result, through the firm efforts of the Royal Government in implementing NSDP Update 2009-2013, the Cambodia economy has grown with the average of 7% per year. GDP per Capita has exceeded 1,000 US dollars and the poverty rate was reduced to 19% in 2011. Particularly, Cambodia has remarkably succeeded in achieving Cambodian Millennium Development Goals, which Cambodia was chosen by the United Nations to be the example country for achieving Millennium Development Goals.

Based on the lessons learned and results achieved in the Fourth Legislature of the National Assembly, the RGC recognized that the Rectangular Strategy for Growth, Employment, Equity and Efficiency is still crucial and suitable for Cambodia to pursue its implementation by keeping the four angles, expanding the coverage, and prioritizing the policies and mechanisms to be more concrete as the Rectangular Strategy Phase III, which ensures development sustainability and poverty reduction in response to the aspirations of the people and both national and international new contexts.

NSDP 2014-2018 has been formulated for the implementation of the Rectangular Strategy Phase III with the identification of the priorities, indicators and timeframe for the implementation and with the identification of mechanism for the

Monitoring and Evaluation of the Result Framework, especially setting the responsibility of the line ministries and agencies within each angle in order to gain high benefits from ASEAN Economic Integration in 2015 and to move out of the Least Developed Countries and to be become an Upper-Middle-Income Country in 2030. For the preparation of NSDP 2014-2018, the RGC has used the existing procedures and mechanism as for the preparation of NSDP Update 2009-2013 and spent a longer time period improving this national plan.

On behalf of the Royal Government, I would like to deeply thank our development partners for their technical and financial support that has greatly  contributed to our progress. Indeed, we are now entering a new era in which the Royal Government and its institutions must take full ownership of our development processes and be accountable for our own destiny. As we move forward, the Royal Government will take full charge of the entire development process to ensure that all resources, government and external development partners, are clearly directed to priorities and sectors chosen. In this regard, the Royal Government will vigorously work towards achieving a greater “net real transfer” of development resources to the targeted beneficiaries in our rural communities.

Once again, I would like to emphasise that the successful implementation of the Royal Government’s prioritised policies outlined in Rectangular Strategy Phase III for our mandate in the Fifth Legislature of the National Assembly will require dedicated and concerted efforts by all RGC’s ministries and agencies, development partners, private sector, civil society organisations, and other relevant stakeholders. I urge and expect all government agencies, development partners, private sector, civil society organisations, and other relevant stakeholders to strictly adhere to the priorities set out in the NSDP 2014-2018 that is the road map for the implementation of the Rectangular Strategy Phase III.

Phnom Penh, May 30, 2014

Sd/-

Hun Sen

                        NATIONAL EMBLEM AND FLAG OF THE KINGDOM OF CAMBODIA                         

                                                         CAMBODIA AT A GLANCE

                                        GENERAL                                                                                          

Total Geographic area: Sq. Kms.                                                     181,035 Number of Municipality                                                                                                  1

Number of Provinces                                                                                  24

Number of cities/krongs                                                                              26

Number of Khans                                                                                        12

Number of Districts                                                                                   159

Number of Sangkats                                                                                 227

Number of Communes                                                                           1,406

Number of Villages                                                                             14,119

Fiscal Year                                                                                January-December

Currency                                                                                     Cambodian Riel (CR)

                                                           TABLE OF CONTENTS

Foreword...............................................................................................................................  i

National Emblem and Flag of the Kingdom of Cambodia...................................................... v

Cambodia at a Glance.......................................................................................................... vi

Table of Contents................................................................................................................ xiii

List of Tables, Text Boxes, and Annexes.......................................................................... xvii

CHAPTER I: INTRODUCTION................................................................................................. 1

1. Preamble.................................................................................................................. 1
2. Development Planning in Cambodia – A Recall......................................................... 1
3. The Rectangular Strategy......................................................................................... 2
4. National Strategic Development Plan (NSDP) 2014-2018.......................................... 4
5. The Structure of NSDP 2014-2018............................................................................ 5

CHAPTER II: MAJOR ACHIEVEMENTS AND CHALLENGES IN THE IMPLEMENTATION OF NSDP UPDATE 2009-2013 .......................................................................

Poverty Reduction ………………………………………………………………………………...            6

Poverty Rates at Sub-national Levels…………………………………………………………...           7

1. Good Governance: The Core of the Rectangular Strategy...................................... 8
   1. Fighting Corruption................................................................................................. 8
      1. Legal and Judicial Reform..................................................................................... 9

III. Public Administration Reform.............................................................................. 12

1. Reform of the Royal Cambodian Armed Forces.................................................. 15
2. Environment for the Implementation of the Rectangular Strategy........................ 16
   1. Peace, Political Stability, and Social Order........................................................... 16
      1. Cambodia’s Integration into the Region and the World........................................ 19

III. Favourable Macroeconomic and Financial Environment...................................... 20

1. Partnership in Development............................................................................... 23
2. Enhancement of the Agricultural Sector............................................................... 24
   1. Improving Agricultural Productivity and Diversification........................................... 24
      1. Land Reform and De-Mining................................................................................ 28

III. Fisheries Reform................................................................................................ 32

1. Forestry Reform................................................................................................. 34
2. Further Rehabilitation and Construction of Physical Infrastructure..................... 41
   1. Further Rehabilitation and Construction of Transport Network............................... 41
      1. Water Resources and Irrigation System Management.......................................... 44

III. Development of the Energy Sector and Electricity Network................................. 47

1. Development of Information and Communication Technology............................. 47
2. Private Sector Development and Employment..................................................... 49
   1. Strengthening of the Private Sector and Attracting Investment............................. 49

Job Creation and Ensuring Better Working Conditions for Workers and Employees    ...........................................................................................................

III. Promotion of Small and Medium Enterprises....................................................... 58

IV.

Establishment of Social Safety Nets for Civil Servants, Employees and Workers...............................................................................................................

1. Capacity Building and Human Resources Development...................................... 66
   1. Strengthening the Quality of Education........................................................... 66
      1. Ensuring Enhanced Health Services............................................................... 68

III. Implementation of Gender Policy................................................................... 73

1. Implementation of Population Policy.............................................................. 76

CHAPTER III: MACROECONOMIC FRAMEWORK FOR NSDP 2014-2018............................. 79

1. Introduction............................................................................................................ 79
   1. Achievements during 2009-2013.......................................................................... 79
   2. Targets and Policies for 2014-2018...................................................................... 86

Outstanding Issues…................................................................................................ 86

General Policy Directions in the Rectangular Strategy Phase III…............................. 87

A Results Framework................................................................................................ 88

Fiscal Policy.............................................................................................................. 90

Monetary Policy and Financial Sector Strategy………………………………………          92

Business Sector Development………………………………………………………….          94

Decentralization and De-concentration (D&D)………………………………………..         97

Economic Outlook 2014-2018………………………………………………………….          98

Budget Revenues and Expenditures: 2014-2018................................................... 101

CHAPTER IV: KEY POLICY PRIORITIES AND ACTIONS 2014-2018................................. 104

1. Good Governance: The Core of the Rectangular Strategy.................................... 106

1. Fighting Corruption............................................................................................. 106
   1. Legal and Judicial Reforms............................................................................... 108

III. Public Administration Reform............................................................................ 110

1. Reform of Armed Forces.................................................................................. 112
2. Overarching Environment for the Implementing the Strategy........................... 113
   1. Peace, Political Stability, and Social Order......................................................... 113
   2. Favorable Macro-economic and Financial Condition and Environmental Sustainability     ......................................................................................................

117

III. Partnership in Development............................................................................. 120

1. Deepening Cambodia’s Integration into the Region and the World................... 122
2. Promotion of Agricultural Sector......................................................................... 123
   1. Improved Productivity, Diversification and Commercialization............................... 123
      1. Promotion of Livestock Farming and Aquaculture.............................................. 127

III. Land Reform and Clearance of Mines and UXO............................................... 129

1. Sustainable Management of Natural Resources............................................... 134
2. The Development of Physical Infrastructure...................................................... 146
   1. Development of Transport and Urban Infrastructure............................................ 146
      1. Water Resources and Irrigation System Management........................................ 150

III. Electricity Power Development.......................................................................... 156

1. Development of Information and Communication Technology........................... 158
2. Private Sector Development and Employment................................................... 163
   1. Strengthening Private Sector and Promoting Investment and Business.............. 163
      1. Development of Industry and Small and Medium Enterprises............................. 167

III. Development of Labor Market.......................................................................... 169

1. Banking and Financial Sector Development..................................................... 173
2. Capacity Building and Human Resource Development...................................... 175

I. Strengthening and Enhancing Education, Science and Technology and Technical     Training.................................................................................................

175

1. Promotion of Health and Nutrition...................................................................... 180

III. Development of Social Protection System........................................................ 193

1. Enhancing Implementation of Population Policy and Gender Equity................. 199

CHAPTER V: COSTS, RESOURCES AND PROGRAMMING............................................... 205

1. Total Public Investment Requirements............................................................... 205
2. Potential Sources of Funding the Public Sector Investment Expenditures......... 208
3. Programming:PublicInvestmentExpendituresandDevelopmentCooperation Financing     ...............................................................................................................

210

CHAPTER VI: MONITORING AND EVALUATION................................................................ 213

1. Introduction.......................................................................................................... 213
2. M&E Framework in the Plan Cycle 2014-2018.................................................... 213
   1. Challenges Related to M&E................................................................................. 221
   2. M&E System Development and Capacity Strengthening.................................... 221

CHAPTER VII: CONCLUSIONS.......................................................................................... 235

                                   LIST OF TABLES, FIGURES, TEXT BOXES AND ANNEXES

TABLES

TABLE 2.1: RICE PRODUCTION AND GROWTH, 2009-2012............................................................... 25

TABLE 2.2: CULTIVATED AREA UNDER FOUR MAIN CROPS …….................................................          25

TABLE 2.3: KEY STATISTICS RELATED MINE CLEARANCE...........................................................          32

TABLE 2.4: INLAND, MARINE AND AQUACULTURE PRODUCTION, 2009 TO 2012..........................          33

TABLE 2.5: KEY INDICATORS OF NATURAL RESOURCES AND ENVIRONMENTAL MANAGEMENT.....                  35

TABLE 2.6: PROGRESS IN RURAL DEVELOPMENT.......................................................................        40

TABLE 2.7: TOURISM STRATEGIC DEVELOPMENT PLAN (2009-2013) INDICATORS......................            53

TABLE 2.8: SCHOOL ENROLMENT AND COMPLETION RATE........................................................          68

TABLE 2.9: TRENDS IN PERFORMANCE INDICATORS FOR REPRODUCTIVE, MATERNAL, NEWBORN  AND CHILD HEALTH  2009-2013.............................................................

TABLE 2.10: TREND IN NATIONAL BUDGET ALLOCATION AND EXPENDITURE FOR HEALTH 2008-

2012…………………………………………………………………………………...

TABLE 2.11: WOMEN IN THE WAGE EMPLOYMENT SECTOR........................................................          74

TABLE 3.1: PROJECTIONS OF KEY MACROECONOMIC INDICATORS: 2013–2018…………………             99

TABLE 3.2: REAL GDP (CONSTANT 2000 PRICES) GROWTH RATES BY ECONOMIC ACTIVITY:

2014-2018……………………………………………………………………………… TABLE 3.3: CAPITAL INVESTMENT REQUIRED TO ACHIEVE GDP GROWTH TARGET BY

ECONOMIC    SECTOR…………………………………………………………………….

TABLE 3.4: INDICATIVE RECURRENT BUDGET EXPENDITURE FOR SELECTED MINISTRIES AND

AGENCIES:    2014-2018………………………………………………………………….

100

101

102

TABLE 4.1: ESTIMATED RUBBER AREAS FROM 2012-2018............................................................... 128

TABLE 4.2: ESTIMATE MATURE AND IMMATURE AREA PRODUCTION AND YIELD FROM 2012-

2018…………………………………………………………………………………...

129

TABLE 4.3: KEY INDICATORS FOR AGRICULTURE, FORESTRY AND FISHERIES....................................... 129

TABLE 4.4: KEY INDICATORS ON MINES AND ERW........................................................................... 133

TABLE 4.5: KEY INDICATORS OF MINISTRY OF RURAL DEVELOPMENT.................................................. 145

TABLE 4.6: TARGETS FOR THE EXPANSION OF POSTAL SERVICES....................................................... 160

TABLE 4.7: TARGETS FOR THE EXPANSION OF TELECOMMUNICATION SERVICES................................... 160

TABLE 4.8: MINISTRY OF INFORMATION INDICATORS........................................................................ 161

TABLE 4.9: MAIN INDICATORS OF THE TRADE SECTOR...................................................................... 164

TABLE 4.10: KEY TOURISM INDICATORS........................................................................................ 166

TABLE 4.11: MOEYS SELECTED CORE INDICATORS AND TARGETS................................................... 179

TABLE 4.12:  SELECTED CORE INDICATORS AND TARGETS OF MOH……………………………..             189

TABLE 4.13: CORE MONITORING INDICATORS 2014-2018………………………………………..            203

TABLE 5.1: CAPITAL INVESTMENT REQUIRED ACHIEVING GDP GROWTH TARGETS

AND POTENTIAL SOURCES OF FINANCING THE NEEDED INVESTMENT: 2014 – 2018.........

206

TABLE 5.2: RESOURCE MOBILIZATION TARGETS FOR PUBLIC SECTOR INVESTMENTS 2014-2018             208

TABLE: 5.3 ALLOCATION BY SECTOR AND SUB-SECTOR OF TOTAL INVESTMENT BASED ON

NSDP     2014-2018……………………………………………………………………………

212

TABLE 6.1: HIERARCHY OF M&E INDICATORS................................................................................ 218

TABLE 6.2 CORE MONITORING INDICATORS.................................................................................... 223

TABLE 6.3 ADDITIONAL INDICATORS TO THE CORE MONITORING INDICATORS......................................... 227

FIGURE 6.2: A POSSIBLE PROGRAM STRUCTURE AND LOG-FRAME OF OBJECTIVES – MINISTRY

LEVEL……………………………………………………………………………………

215

BOXES

BOX 2.1: A BRIEF ON THE NEW POVERTY LINE …………………………………...........................           6

BOX 2.2: CALCULATING PROXY POVERTY RATES AT THE PROVINCE LEVEL.................................               8

BOX 3.1: INCLUSIVE AND SUSTAINABLE GROWTH TO REDUCE POVERTY – A RESULTS

FRAMEWORK............................................................................................................ 89

ANNEXES

Annex I:    ABBREVIATIONS & ACRONYMS.................................................................................... 237

Annex II:    WEBSITES OF MINISTRIES AND AGENCIES...................................................................... 240

CHAPTER I

INTRODUCTION

                                           CHAPTER 1                                          

                                        INTRODUCTION                                        

Preamble

1.1.           The Royal Government of Cambodia (RGC) has been successfully rebuilding Cambodia through the last two decades from a state of near total destruction. The civil war lasted nearly three decades, and an economic isolation/embargo was in force virtually since the early 1970s until 1993. Through the ‘Win-Win Policy’ of the RGC, peace was finally established in 1998 with the dismantling of the Khmer Rouge. Meanwhile, based on a national reconciliation among different erstwhile warring factions, the Paris Peace Agreement was reached in 1991, and the first general elections in 1993 followed thereafter. Inflows of Foreign Direct Investment (FDI) and Official Development Assistance (ODA) formally began since 1993. In the first decade until early 2000s, the highest priority of RGC was rebuilding the society, the economy and the infrastructure. In the second decade, the country began pursuing planned development in a market framework.

1.2.           Cambodia is classified as a least-developed country (LDC) by the United Nations. Its per capita income exceeded USD 1,000 the first time in 2012. There has been a near 5- fold increase in the per capita income in the last decade or so, which is a notable achievement. In this regard, the country might be moving out of its least-developed country status in the near future.

Development Planning in Cambodia – A Recall

1.3.           The Royal Government of Cambodia (RGC) outlined its long-term vision for the future in the National Program to rehabilitate and develop Cambodia (NPRD) in 1994 for initiating the process of rebuilding and rehabilitating the social, physical, and institutional infrastructure. Based on this vision, the First Five Year Socio-Economic Development Plan (SEDP I, 1996-2000) was formulated, setting clear goals to be reached by 2000. This Plan’s focus was on establishing macro-economic fundamentals, social development contours, and poverty alleviation strategies. At the same time, a 3-year rolling Public Investment Program (PIP) was evolved for 1996-1998, so that domestic and external development cooperation resources could be channelled into priority areas for achieving the goals set out in the plan. Since then, PIPs is updated annually.

1.4.        The Second Socio-Economic Development Plan (SEDP II 2001-2005) was prepared focusing on economic growth and poverty reduction. For RGC, the most formidable development challenge had been to develop the private sector as an engine of economic growth: to transform the economy, and to achieve poverty reduction (as well as improve people’s wellbeing). Following the preparation of SEDP II, there were two important developments: First, after the United Nations Millennium Summit in 2000—which declared the Millennium Development Goals (MDGs)—Cambodia developed its own set of MDGs called the Cambodia Millennium Development Goals (CMDGs), focusing on poverty alleviation and human development. Second, a National Poverty Reduction Strategy (NPRS) was adopted in December 2002. Since that time, achieving CMDGs and alleviating poverty have assumed centrality in Cambodia’s development strategies.

1.5.        The Third Five-year Development Plan for 2006-2010 was formulated as an overarching national policy document for pursuing prioritized goals, targets and actions for the next five years. The new plan was renamed as National Strategic Development Plan (NSDP) 2006-2010. RGC of the Third Legislature attempted to create a favourable environment and necessary conditions, enabling Cambodia to step forward on the road for further reforms and progress. RGC adhered to the principle of national solidarity to rally its citizens from all walks of live under the motto “Nation-Religion-King” to build the nation and ensure national independence, integrity, sovereignty, peace, democracy and progress.

1.6.        Following the General Elections of 2008, RGC announced a Socio-economic Policy Agenda of the RGC of the Fourth Legislature 2008-2013. With it, another plan was drawn up to replace NSDP 2006-2010 to synchronize the planning process with the political mandate. The new plan was named NSDP Update 2009-2013 and was the implementation tool for the RGC’s priority policies during the Fourth Legislature. NSDP Update 2009-2013 was launched at the time of the international financial crisis and the economic recession in advanced economies (starting in 2008-2009), resulting in a declining demand for Cambodia’s exports on the one hand, and increased macroeconomic and financial risks on the other. These (external) developments presented unexpected new challenges for Cambodia, for which RGC took systematic and sequenced measures to mitigate the negative impact of the international financial cataclysm and global economic recession. The planning methodology in NSDP Update 2009-2013 was so defined as to prepare the country for shocks and yet progress on the path to development.

The Rectangular Strategy

1.7.        The Royal Government of Cambodia (RGC) has evolved a ‘Rectangular Strategy’ (RS), which has been the hallmark of development since about 2004. The NSDP 2006- 2010 carried forward the agenda laid out in the first Rectangular Strategy, and the NSDP Update 2009-2013 on the RS Phase II. This NSDP 2014-2018 carries forward the agenda laid out in RS Phase III, which was unfolded in September 2013. RS provides a development framework, which will be implemented through the next five-year period.

1.8.        The RS is a dynamic document that lays out the political commitment to a socioeconomic development process in the coming five years. RS has undergone three changes in the last decade to keep up with the times. A graphic presentation of the latest version of the RS, i.e. RS Phase III, could be seen in Figure 1.1. It is evident that it encompasses issues such as good governance, rule of law and institution building—the basic premise of any society—along with social, economic and human development and sustainable management of natural resources in this complex set of inter-woven rectangles.

                                                                                                                                                                                                                                                    National Strategic Development Plan 2014-2018

                                                                       FIGURE 1.1: RECTANGULAR STRATEGY - PHASE III                                                                   

Peace, Political Stability, Security and Public Order

Fighting Corruption

Legal and Judicial Reforms

Public Administration Reform

Reform of Armed Forces

Deepening Regional and Global Integration

Chapter I: Introduction                                                                                                                                                                                                                          3

1.9.        In essence, its present phase combines four key elements necessary for taking forward the development forward:

1. Ensuring an average annual economic growth of 7%. This growth should be sustainable, inclusive, equitable and resilient to shocks, through diversifying the economic base to achieve a more broad-based and competitive structure, with low and manageable inflation, a stable exchange rate and steady growth in international reserves.
2. Creating more jobs, especially for youth, through further improvement in Cambodia’s

competitiveness to attract and encourage both domestic and foreign investments.

1. Achieving more than one percentage point reduction in the poverty rate annually, including realizing the Cambodia Millennium Development Goals (CMDG), while placing high priority on the development of human resources and sustainable management, and use of environmental and natural resources.
2. Improving institutional capacity and governance at both national and sub-national levels and ensuring effectiveness and efficiency of public services to better serve the people.

1.10.     Most elements of the RS Phase III also embed one or the other complementary factors required for achieving sustainable growth in addition to achieving the Millennium Development Goals (MDG) and other goals beyond these.

National Strategic Development Plan (NSDP) 2014-2018

1.11.     Some key challenges facing the planners and other stakeholders at this juncture while drafting this plan could be grouped into the following:

1. The Cambodian economy, having achieved a per capita GDP exceeding USD1,000, will be moving towards becoming a low-middle income country soon. This in itself is a welcoming factor, but it will result in the country becoming increasingly less eligible for grants and will have to rely on (concessional or other) loans. The country will have to raise more resources at market rates (or with some concessions but all on returnable basis)—from both, internal and external sources—to finance the public sector plan investments. Next, it will require instilling greater efficiency in expending resources. This twin challenge will have to be accepted sooner rather than later, since by 2030 Cambodia aims to join the group of countries identified as ‘upper- middle income’ countries, and by 2050 become a developed country.
2. The current times are challenging because the world economy is yet undergoing a prolonged recession and financial crisis, and with Cambodia increasingly getting integrated into the regional and global system, it will not be left untouched by it. It was adversely affected in 2009, though it rapidly recovered; but to sustain growth will require an entirely different set of strategies, including diversifying markets, both for exports and investments. New partnerships would also imply newer forms of institutional arrangements, for which there is need for internal preparedness.
3. Cambodia would integrate into ASEAN by 2015; by this time, many barriers between countries will come down. The government will require being prepared for free movement of skilled workers, of capital, and equalization of tax rates. These will pose issues for the labour markets, land use, and budget revenues, which this plan will need addressing.

1. Good governance continues to assume a central position in RS Phase III. However, the next phase in good governance will require significant efforts to bring-in e- governance to make governance effective. For this to happen, the government will require ‘electronic-wiring’ of the whole country, developing on-line databases at different levels, and providing e-services. Investment in human capacities within the government and physical investments required for modernising governance will thus assume an important place.
2. With greater integration into the ASEAN, industrialization and weaving into the international division of labour are critical. The Industrial Development Policy (IDP) of the RGC is a key roadmap for this. Presently, the proportion of public investment into human capital is still limited. In contrast, Malaysia and Korea have this proportion in the range of 5% of GDP. More resources and concerted effort (to guide investments) in the human capital sector are essential requirements.
3. For Cambodia to have a greater control over its economy (esp. the monetary policy), it should have its currency acceptable to its people and to the countries in the region. De-dollarization, thus, is to assume primacy.
4. Finally, the environmental issues must also assume centrality, which currently not that it does not presently, but there is scope to step up efforts to save especially the Tonle Sap (and other water systems) and forests for sustainable development, sustainable livelihoods of people in rural areas, and sustainable agriculture.

1.12.     The RS Phase III is sensitive to all these issues; resultantly, this NSDP (2014-2018) attempts to put forth actionable proposals for achieving the intents stated in RS Phase III.

The Structure of NSDP 2014-2018

1.13.     The NSDP 2014-2018 is organised in seven Chapters. Following the Introduction in this Chapter, the plan presents a summary of major achievements and challenges faced in the implementation of NSDP Update 2009-2013 in Chapter II. Chapter III outlines the Macroeconomic Framework for NSDP 2014-2018. Chapter IV presents RGC’s key policies and actions that the concerned line ministries and agencies will undertake (in conjunction with the sub-national administrative authorities) to implement these policies. Chapter V details issues of costs, resources and programming. A results-based, analytical framework of the M&E for the period 2014-2018 is presented Chapter VI. Finally, Chapter VII presents the broad conclusions.

CHAPTER II

MAJOR ACHIEVEMENTS AND CHALLENGES IN THE IMPLEMENTATION

OF

NSDP UPDATE 2009-2013

                                            CHAPTER II                                           

POVERTY  REDUCTION

2.1.           In 1993-1994, the poverty rate was estimated at about 39% according to a poverty line drawn up in the 1990s. According to this (old) poverty line, the poverty rate was 14.6 % in 2009: the CMDG target was achieved. However, the government redefined the poverty line in 2011, raising the bar. At the same time, the government decided that the target for reducing the poverty rate will continue to be 19.5% by 2015, despite an (upward) revision in the poverty line.

2.2.           Recent trends in the poverty rate, based on the new poverty line (Figure 2.1), suggest that the target of halving the proportion of people below the national poverty line between the early 1990s and 2015 has almost been met, despite a stiffer poverty line and an unchanged goalpost. Reasons for this achievement: double-digit growth in GDP for 3-4 years (2004-2007), urbanization, labor-absorption in non-farm sectors, and reduction in consumption inequality.

Figure 2.1: Trends in Poverty Rates in Cambodia by Broad Strata, 2007-2011

Source: Calculated from CSES

POVERTY RATES AT SUB-NATIONAL LEVELS

2.3.           There was a steady reduction in the rural poverty rates from about 53% in 2007 to about 21% in 2011: steep in 2008 and 2009, and gradual thereafter. This is similar to the aggregate trend, and expectedly so, as close to 80% of the population resided in rural areas in these years. The reduction in poverty rates in Other Urban Areas is similar. Phnom Penh, however, shows only a gradual fall in poverty rates. What this suggests is that trends in poverty reduction are led by significant changes having happened in rural areas.

2.4.           The CSES is the only source that collects data on consumption and standards of living in Cambodia, but its sample size and design do not permit disaggregations at province level. However, using the Commune Database (CDB)1 it is possible to group together proxy (stock) indicators of poverty to arrive at a composite Poverty Index, and hence poverty rate (see Box 2.2 for the method).

Figure 2.2: Poverty Rates in Provinces, 2011

Source: Calculated, based on CDB and benchmarked with CSES

1 CDB is an administrative database. It collects data from villages and communes from records maintained at that level. These data are a ‘project database’, not an official source, and their authenticity is yet to be verified. However, this is the only source that provides broad-based data at sub-national levels.

2.5.           A profile of (proxy) poverty rates constructed at the provincial level is given in Figure 2.2. Provinces in the south and southeast of Cambodia, which are more densely populated and have had a long tradition of practicing sedentary-farming, have a lower poverty rate compared to those in the north, northeast and northwest. Of particular concern are the north eastern provinces, where indigenous communities mainly dwell. These provinces are predominantly rural and to an extent ‘un-integrated’ in the national mainstream. Relatively high poverty rates are seen in Siem Reap and Battambang, despite them having a long tradition of farming. Siem Reap is the most important tourist attraction of Cambodia and Battambang is an important paddy-growing province. The reasons for high poverty rates to persist there require more detailed analysis and should form a part of the future research agenda.

1. GOOD GOVERNANCE: THE CORE OF RECTANGULAR STRATEGY

2.6.           Good governance remains at the core of the Rectangular Strategy. Four major reform areas to promote good governance continue to be RGC's priority in its pursuit for achieving sustainable, steady, and equitable socio-economic development, equal opportunity, equality before law, and social justice. These are: (i) fighting corruption; (ii) legal and judicial reforms; (iii) public administration reforms (including decentralisation and de- concentration); and (iv) reform of the armed forces. The ultimate objective of the reforms, as well as that of other reform programs including public financial management reform, land reform, and forestry and fisheries reform, is to strengthen the capacity, efficiency and quality of public services to raise public confidence in government and respond to the needs and aspirations of the people and business community. Major developments that have taken place in these areas are summarised below.

I.              FIGHTING  CORRUPTION

2.7.           The Royal Government of Cambodia (RGC) placed high priority on governance and set it as the core of the Rectangular Strategy Phase II, and governance is still the core of the Rectangular Strategy Phase III.

2.8.           The Royal Government of Cambodia in the Fourth Legislature implemented various activities to curb corruption. The National Anti-Corruption Council and Anti-Corruption Unit (ACU) were established, and anti-corruption mechanisms, including rules and regulations, were  put  in  place.  The  Anti-Corruption  Law  has  been  enacted  and  disseminated   to

government ministries and other relevant institutions. A focal point in each ministry/institution has been established for coordinating their work with ACU. Declaration of assets and liabilities has been done twice. Together with this, RGC has also set out a public service fee schedule and duration schedule for service provision, which government ministries and institutions are to follow for eliminating loss due to informal payments and other malfunctions within government institutions.

2.9.           During the years 2009 to 2013, Ministry of National Assembly-Senate Relations and Inspection (MONASRI) has promoted policies of Good Governance for promoting economic growth, employment, equity and efficiency. The achievements could be stated in three headings:

• First, through its Program on Strengthening National Assembly-Senate Relations, MONASRI disseminated nine priority laws mentioned in NSDP Update 2009-2013, to 83,338 persons (in groups and public meetings) in 197 districts nationwide and answered 9,517 questions.
• Second, through its Inspection Program, MONASRI conducted several investigations in public establishments on mismanagement of state property. It also monitored the enforcement of the laws: the Law on Forestry; Law on Fisheries; Law on Drug Control; Land Law; Traffic Law; Law on Management of Private Medical, Paramedical, and Medical Aide Practice; and Law on Environment and Protection of Natural Resources. The ministry received 203 complaints from the public, of which it investigated 55% and referred the remaining complaints to other concerned public institutions.
• Third, through its Program on Strengthening Institutions and Developing Human Resources, 501 staff members of MONASRI (from both, sub-national and national levels) were trained in-country as well as internationally, on various skills such as administration, finance, complaint-handling, human-resource management, and inspection.

2.10.        Even though significant achievements have been made, MONASRI has still been facing numerous challenges. First, its work results have so far not been in consonance to the plan because of budget constraints and capacities. Secondly, it lacks legal documents (Law on Inspection; Procedure for inspection, monitoring law enforcement, complain handling, and Law Dissemination; and Human Resource Development Policy); which remain a barrier for MONASRI to fully exercise its roles and functions effectively. Thirdly, limitation of staff capacities leads to outdated law and methodology of information dissemination.

II.             LEGAL AND JUDICIAL REFORM

2.11.        In order to achieve a credible and stable legal and judicial system that promoted human rights and dignity, strengthened the rule-of-law principle of a liberal democracy, ensured social justice and created a reliable environment for attracting investment, the RGC of the Fourth Legislation was committed to accelerating the Legal and Justice Reform through:

• Continuing the implementation of seven strategic objectives of Legal and Justice Reform:

➢ Strengthening of the protection of fundamental rights and freedoms.

➢ Modernization of the legislative framework.

➢ Providing better access to legal and judicial information.

➢ Enhancement of the quality of legal process and related services.

➢ Strengthening judicial services, including judicial power and prosecutorial services.

➢ Enlargement of alternative dispute resolution mechanisms.

➢ Strengthening of Legal and Judicial sector institutions to fulfil their mandates.

• Continuing the promotion of the adoption fundamental laws:

➢ Law on the statute of Judges and Prosecutors.

➢ Law on the Organization and Functioning of Courts.

➢ Law on amendment of the Law on Supreme Council of the Magistracy.

• Continuing organizing programs and disseminating knowledge on laws and procedures to the people, and providing legal training to increase awareness and implementation for law enforcement officials.
• Strengthening the capacity building of judges and prosecutors.
• Creating mechanisms that contribute to promote and process:

➢ Statute of Court Clerks.

➢ Statute of Notary.

➢ Statute of Bailiffs.

• Providing legal assistance.
• Continuing the promotion of alternative dispute resolution mechanisms.

2.12.        For the reform of the structure of justice system, Ministry of Justice (MOJ) set up two more Provincial Courts, the Pailin Provincial Court (upgraded from Provincial Department), and the Oddar Meanchey Provincial Court (a new court) in January 2011. In the past 5 years, RGC has constructed seven buildings and repaired three buildings of Provincials Courts in addition to the two new courts set up, stated earlier.

2.13.        Laws that were adopted during 2009 to 2011

• Law on Implementation of the Civil Code, promulgated in December 2011.
• Law on non-Civil relegation Procedure, promulgated in July 2010.
• Law on personal relegation status Procedure, promulgated in June 2010.
• Criminal Code, promulgated in November 2009.

2.14.        Drafted laws were finalized and sent to the Council of Ministers for its review and approval, including:

• Draft Law on the Organization and Functioning of Courts.
• Draft Law on Statutes for Judges and Prosecutors.
• Draft Law on Statutes for Bailiff.
• Draft Law on Juvenile Justice.

2.15.        For legal and judicial framework, MOJ has drafted 5 draft Laws, 2 inter-ministerial Prakas, 7 Prakas, 4 Guidelines, 1 Royal Decree, and an explanation for each of the laws on Suppression of Human Trafficking and Sexual Exploitation.

2.16.        For education and dissemination of laws, MOJ has widely disseminated fundamental Laws and Laws related to promoting the cause of protecting women and children to judges, prosecutors, court clerks, justice officers and officials,a total of 9,200 participants in both the capital and provincials.

2.17.        Law distribution through media has been deployed for disseminating laws to the people. Short spots on "violation of the law" have been produced and broadcast, to enhance people’s understanding of the law. Round table meetings to discuss the Criminal Procedure Code and the Criminal Code as well as short spot on criminal code were broadcasted through radio and TV 5,200 times between 2009 and 2012.

2.18.        MOJ distributed 156,164 copies of booklets of fundamental laws to legislative institutions, executive bodies, courts, justice officials, police, military police, City Hall authorities, Provincial Governor’s offices, Bars Association, public and private libraries, and universities.

2.19.        For developing, strengthening, and training human resources, MOJ focused on improving law and court service delivery by providing 39 trainings on fundamental laws, laws related to protect women and children, and other skills to judges, prosecutors, court clerks, justice officers and officials, in both capital and provinces.

2.20.        According to Legal and Judicial Reform Policy, MOJ set up a Model Court Working Group. The strategic plan of the model court is to manage court registers (for example: managing statistics, following up, collecting, searching, and providing information related to litigation; thereby, all model courts has a standard). Model courts can help judges, prosecutors, the court clerk, and other related officials perform tasks simpler and more efficient. To carryforward this work, the Working Groups created 27 of court register civil and criminal books and have trained judges, prosecutors, court clerks and justice officers at municipal and provincial courts on the court registers. Moreover, their tasks were monitored and evaluated regularly.

2.21.        Mechanisms for alternative dispute resolution to reduce the backlog of cases at the provincial court and to expedite dispute resolution for the citizen and the poor have been implemented by the Ministry of Justice and the Ministry of Interior (MOI). MOJ and MOI had jointly established 20 Centres for Legal Services at the city/district/commune levels in 2007; however, the cooperation ended in 2010.Seeing this successful mechanism in dispute resolution, MOJ financed by RGC, has continued to operate 20 centres and established 31 new centres in city/district/commune and another 56 Commune-Sangkat Dispute Resolution Committees.

2.22.        International cooperation in legal and judicial areas especially mutual supports through judicial means among ASEAN countries was strengthened.

• Treaty on Mutual Legal Assistance in Criminal Matters (ASEAN) in January 2010.
• Agreement on Transfer of Sentenced Persons and Co-operation in the Enforcement of Penal Sentences between Cambodia and Thailand in August 2009.
• Memorandum of Understanding on the cooperation on Legal and Judicial matters between the Ministry of Justice of Cambodia and the Ministry of Justice of Viet Nam in December 2009.

Agreement on extradition, between Cambodia and the South Korea in January 2011.

2.23.        Although significant progress of Legal and Judicial Reform has been made through the implementation the work has also faced many challenges. The drafts of a numbers of laws such as (1) Organisation and Functioning of the Supreme Council of Magistracy; (2) Statute of Court Clerk; (3) Statute of Coteries; (4) Case Pending could not be completed as

planned due to the nature of complexity and they require revision and further consultations with line ministries. Other challenges faced have included:

• Human resource

➢ Shortage of judges, prosecutors,  court  clerks,  and  administrative  officials  at  the MOJ, and municipal and provincial courts.

➢ Shortage of qualified special judge in the Labor Court, Juvenile Court, Commercial Court, and Administrative Court.

➢ Shortage of registration officials in the court registers (Model Court Project).

• Institutional capacity management:

➢ Shortage of office buildings in the ministry and provincial courts, and residences and      offices for judges and prosecutors.

➢ Shortage of buildings for dispute resolution mechanism.

➢ Limited budget for MOJ and municipal and provincial courts.

➢ Shortage of lawyers for legal assistance.

➢ Shortage of budget for process criminal cases.

➢ Limited transportation for field visits.

III.           PUBLIC  ADMINISTRATION REFORM

2.24.        Good governance, the core of the Rectangular Strategy, is critical to achieving the priorities of the Royal Government. Public Administration is a strategic instrument of implementation. The Council for Administrative Reform (CAR) implemented the National Program for Administrative Reform to systematically and gradually transform the Administration and the Civil Service in order to serve people better.

2.25.        Governance Action Plans (GAPs) is to facilitate coordination among national and sectoral reforms in the context of successive. The GAPs cover a broad span of reforms including the legal and judicial reform, reform of armed forces, reform of public finances, decentralization and de-concentration, reforms concerning investment and trade, management of social services and management of natural resources.

2.26.        The Royal Government achieved significant results in the area of public administration reform during the Fourth Legislature period, including:

• Managing an appropriate size of civil service while almost doubling the average monthly salary of civil servants.
• Establishing Special Operating Agency (SOA) including the introduction of a public service database and the expanded scope of the “single window” mechanism to 24 municipal/district/khan office.
• Restructuring the administration system and other organizational structures at the capital, province, municipality, district and khan levels in accordance with the Law on Management of the Capital, Provinces, Municipalities, Districts and Khans.
• Developing and establishing the sub-national financial management system in compliance with the Law on Financial Regime and Property Management of Sub- national Administrations.

2.27.        Meanwhile, the followings illustrate the breadth of achievements that have contributed to developing human and institutional capacity within the Public Administration Reform and the Civil Service:

• Integration of all civil servants into unifying systems more conducive to motivation and career progress has been completed.
• The legal and regulatory framework for the Civil Service is in place, including a Common Statute and all Particular Statutes.
• Management and control systems are operational and effective (for recruitment, promotion, retirement).
• Civil servants have been integrated into a new classification system more conducive to career progression.
• The payroll system has been automated through ICT.
• Innovative schemes to enhance performance and accountability such SOA is being deployed.
• The Performance Management and Accountability System is being implemented to better mobilize human resources and identify capacity development needs.
• The Policy on Public Services Delivery has been approved and is being implemented.
• A Human Resources Management Information System is operational and personnel management mechanisms have been streamlined and steadily strengthened.
• A system of functional allowances for management and specialised skills was implemented.
• Communication tools have been deployed to inform about the reform (bulletin, website, periodic workshops and seminars).
• For basic salary preparation, the RGC achieved the implementation of the 20% annual increase in basic salary.

MANAGEMENT  FRAMEWORK

2.28.        For the past five years (2008-2012), all ministries achieved following targets:

• Recruited 37,802 new personnel as civil servants.
• Retired 11,993 civil servants.
• IssuedIdentification Card to 41,711 newly recruited civil servants in the database.
• Issued 19,269 Royal Decrees and Sub-Decrees for civil servants.
• Issued 477 Royal Decrees and Sub-Decrees for retired civil servants.
• Issued 6,365 Royal Decrees and Sub-Decrees for promotion of civil servants.
• As of December 2012, payroll of 181,930 civil servants were automated through ICT.

DECENTRALISATION AND DE-CONCENTRATION REFORM PROGRAMME (D&D)

2.29.        To promote the implementation of D&D Reform Programme effectively, the RGC of the Fourth Legislation developed, approved, and implemented the Law on Administrative Management of the Capital, Province, Municipality, District and Khan (2008), elections at the sub-national tiers (2009), establishment of the National Program on Sub-National Democratic Development (2010) and approval of the National Program’s first three-year Implementation Plan (IP3: 2011-2013). All aforementioned represent a commitment to the political, administrative and developmental reform at the sub-national levels.

2.30.        In mid-2011, IP3 became operational. It focused on mainstreaming gender and establishing basket funding arrangements. Major achievements of the IP3: 2011-2013 are following:

• Established sub-national administrative structures and nearly 10,000 civil servants were integrated into the new structures.
• Developed procedures and guidelines for Districts, Municipals and Khan, both for

Councillors as well as Administrators and Governors. The design of Sub-national Administration (SNA) systems was largely completed. The RGC also continued the provision of coaching and mentoring services to SNA Councils and Organizational Development (OD) process. An enormous amount of training was implemented across the reform.

• Five Ministries completed their functional mapping exercises and are making decisions about which functions to transfer to SNAs, either permanently or on a pilot basis. Much was learned through this rigorous process and at least two pilots are currently being designed. Several studies were completed to clarify the general mandate, which will serve as a basis for developing a regulatory environment which promotes SNAs essential role in poverty reduction.
• Established the District/Municipality (DM) Fund, created by a transfer 0.8% of the national recurrent revenues to sub-national levels. These funds support an extensive and active capacity development program, including organizational development, training, and coaching and mentoring of councillors. Projects were identified by DMs, and implementation of the DM fund will take place during 2014. Resources, through the CS Fund, equivalent to 2.8% of recurrent revenues have continued to enable Communes and Sangkat to implement their local development priorities.
• In terms of enabling SNAs to manage their own personnel, two key instruments were

(i) an amendment to the law on the establishment and functioning of the Council of Ministers (which has been approved by the King) and (ii) a draft sub-decree on the delegation of power to SNA for the management, appointment, movement and termination of civil servants working at Sub-national levels. These will legally permit the RCG to delegate powers to SNAs for the management, appointment, movement and termination of civil servants working at Sub-national levels.

• Social Accountability Strategic Plan for Sub-National Democratic Development was approved by NCDD. The plan will be jointly implemented by government and civil society and was developed with extensive consultation with NGOs. The plan aims  to

(i) improve citizens’ access to information in terms of sub-national performance and budgets; (ii) develops processes for citizens to monitor service delivery and expenditure; (iii) develops interface mechanisms for local governments and communities to agree on a set of actions which will improve service delivery. The plan emphasizes a process of constructive engagement.

• Planning systems and procedures have been updated, and, as a matter of routine, all SNAs have 5-year development plans and 3-year investment programs; CS plans continue to be developed and coordinated through District Integration Workshops.
• Significant progress was made in establishing two National Associations to represent the needs and interests of SNA councillors.
• To enhance the good governance in the framework of delivering public service to citizen in good quality, transparency, and response to the local need, the Royal Government of Cambodia issued the Decision to establish One Widow Service Office (OWSO) and District Ombudsman Office at district/municipality/Khan level. Based on this decision, from 2005 to 2013, the MOI has established and operated 24 OWSOs in 23 provinces to provide 186 administrative service types that were delegated by 10 ministries/institutions. Meanwhile, the MOI is also preparing to open new 13 OWSOs in municipalities and Khan in Phnom Penh in 2014. To ensure the application of good governance and other principals related to public service delivery, the MOI also established District Ombudsman Office at district/municipality/Khan of OWSO. The District Ombudsman Office is an independent and neutral institution that receives and mediates complaints made by citizen in relation to service delivery of district/musicality/Khan  administration.

2.31.        These whole of government reforms are complex and require a continuous process of dialogue and consensus-building among policy makers. In particular:

• The transfer of functions from central to local governments is critical for improving service delivery and local accountability. Although progress has been made in developing functional mapping and review processes, functions have not yet been transferred. Key challenges include getting consensus on the functions to transfer and designing mechanisms that will not disrupt service delivery.
• The National Program and IP3 identified several new central-local fiscal transfer mechanisms and local revenue sources. While the DM fund has been developed, other mechanisms, including conditional transfers, the Sub-National Investment Facility (SNIF), and own source revenues remain at an early stage of formulation.
• SNA personnel will need to be increasingly accountable to SNA management. Currently, staffs have not been formally transferred to SNAs, and some positions have dual accountabilities to both Councils and the national level. SNAs will need to be provided more autonomy to restructure their offices, attract, hire, fire, discipline, reward, manage and develop human resources. The challenge will be to provide this autonomy yet retain critical elements of a national civil service system.
• Strengthening horizontal and vertical SNA accountabilities is an important IP3 objective. Relationships between councils and Boards of Governors needs review, councillors' oversight role with respect to Central Government service delivery functions needs strengthening, and the Central Government will need to increasingly develop and inspect policies and standards.
• Mechanisms to encourage SNAs to be more innovative and to take more initiative within the scope of their poverty alleviation mandate need further development.

IV.           REFORM OF THE ROYAL CAMBODIAN ARMED FORCES

2.32.        The reform of the Royal Cambodian Armed Forces (RCAF) as one angle of Rectangle Strategy demands an effective protection of sovereignty and territorial integrity, security and social order of the Kingdom of Cambodia. The reforms of the RCAF based on the RGC defence strategiesincorporate in the Rectangular Strategy Phase II and the NSDP Update 2009-2013, achieved the following:

• Reform of Armed Forces: RCAF has reform the organizational structure and has strengthened the technical and fighting capacity. It has also developed policies for the Armed Forces of Category 2, and those retired.
• Borders Protection: The RCAF has been working diligently towards protecting the

nation’s borders and improving diplomatic relations with other countries.

• Capacity Building in RCAF: RCAF has been conducting training in combat and diplomatic skills, learning new technologies, knowledge and skills in defence, upgrading weaponry, and participating in peace missions under the umbrella of the United Nations.
• Military Community Development: The wars in the past left many areas contaminated by mines and explosive remnants of war. RCAF’s Engineering Unit, in collaboration with Cambodian Mine Action and Victim Assistance Authority (CMAA) and other mine- action agencies, undertakes demining operations. The Mine and Explosive Action Centre was established under the Ministry of National Defence (MND). RCAF received significant lands under social concessions after the mines were cleared from them, which it has cultivated for agricultural development.
• Business Development: The RCAF has been authorized to undertake commercial activities since 2012. It established the Department of Development (DOD) in the MND to generate income, promote image of the military, and improve the standards of living of the military community.

• Gender Improvement: The RCAF has been encouraging female military officers to move up the organizational ladder, despite the fact that the number of female military officers is relatively low as of now. Gender awareness within the military communities has also been improving remarkably, though it requires further enhancement.

2.33.        Although significant progress has been made in the reform process, the RCAF still has many major tasks to perform and continues its implementation:

• Science, Technical and Vocational Knowledge and Skills: RCAF still needs strengthening defence activities, defence industry, business development, science, technical and vocational knowledge, and skills. All of this requires more resources.
• Physical Resources: The management and utilization of RCAF’s lands, equipment, factories, machinery and enterprises, are yet not efficient, resulting in low earnings from them, and the consequent low standards of living (of the military community).
• Military Community Development: Strategic development partnerships for long-term investment cooperation require putting in place.

2.  ENVIRONMENT FOR THE IMPLEMENTATION OF THE RECTANGULAR STRATEGY

2.34.        There are four main aspects addressing this issue: (i) peace, political stability, security, and social order; (ii) partnership in development; (iii); favourable macro-economic and financial environment; and (iv) Cambodia’s integration into the region and the world.

I.           PEACE, POLITICAL STABILITY AND SOCIAL ORDER

2.35.        The practice of holding free and fair elections is now well established. So far, five General Elections have been held to elect members of the National Assembly. The latest one was held in July 2013, electing the Fifth Legislature. Three elections have been held to elect members of the Commune Councils across the country – first one in February 2002 and the second one in April 2007 and third 2012. An era of dynamic stability is now in place, with an emphasis on freedom of expression and free speech in an environment of accountability and responsibility for each individual’s actions, both within RGC and the general public. RGC is committed to make every endeavour to ensure that these hard earned gains continue to enhance and get fully integrated into the Cambodian society and psyche.

2.36.        The MOI has been engaged in three major roles: (i) managing the sub-national public administration institutions; (ii) ensuring internal security of the nation, and public order through the National Police Forces (NFP); and (iii) leading and coordinating the implementation of RGC’s Decentralization and De-concentration Reform Programme (D&D). The MOI made significant progress in broadening and strengthening the sub-national public administration institutions, ensuring internal security, and putting in place institutional arrangements to guide the D&D reform process achieve democratic development at the sub- national level.

2.37.        The MOI through the National Police Forces (NPF) effectively put down all terrorist activities. The MOI also provided safeguarding safety and wellbeing of the people, prevented all attempted aiming at controlling national solidarity and causing political instability and social chaos, and prevented attempts to use Cambodia as a springboard to create disturbance the neighboring countries. The achievements were also made in the overall safety and security, the organisation of elections of Commune/Sangkat Councils   in

the third mandate in 2012, the general elections of the Fifth Legislature of the National Assembly in July 2013, and attainment of safety for the hearings of the Extraordinary Chamber in the Court of Cambodia.

2.38.        The MOI successfully suppressed all types of crimes and assured full security, public order, and safety for the people, especially through implementing the “Safe Village/Commune”  policy.

2.39.        In spite of strong commitment and remarkable success, there are still some challenges emerging from limited institutional capacity, including human resources and equipment; as well as yet no complete legal framework to guide the work. Moreover, the overseas criminal elements, taking advantages of Cambodia's weakness in some corners, has used all means to infiltrate and hide in our country, evading the legal network and carrying out criminal activities. The control of foreigners is not as yet as comprehensive as it needs to be to safeguard national security. Despite a significant reduction in crimes, the incidences of armed robberies, murders, illegal drug circulation and trafficking, rapes, women and children trafficking, and violation of law and money laundering are still high. There are too many traffic accidents. The administrative management is complicated in cities and towns by juvenile delinquency in public places; night clubs and dancing halls are negatively affecting the youth, causing inactiveness in study, drop outs from schools and leading to the conduct of other wrong doings.

COMBATING DRUGS

2.40.        The National Authority for Combating Drugs (NACD), through Implementation of the Strategic Development Plan (2009-2013) by upgrading on drug control with continuing the collaboration and increase the multi-sector cooperation with national and international institutions by using social labors and with the support of international community, has achieved the following:

• Strengthening the institutions: NACD is responsible for implementation the RGC’s drug control policy. It had developed a law on the control of drugs conjunction with the three international drug control conventions of 1961, 1971 and 1988, and 1972 Protocol, which the law on drug control adopted and promulgated in January 2012.
• Drugs demand reduction: NACD increased cooperation with Ministries, Provincial and Municipal Drugs Control Committees, the local and international development partners, and other stakeholders. It also conducted public awareness on drug abuse. Otheractivities involved drug demand reduction are as following:

➢ Integration of the awareness on the dangerous drugs into educational curriculum

➢ Dissemination at community level to say no drugs.

➢ Dissemination on the danger drug through medias.

➢ Dissemination on the occasion of the national and international public holiday.

➢ Dissemination on the cover of products about the drug education messages putting on invoices, water bottles, buckets, boxes and buses and so on.

➢ Dissemination  at  entertainment  services   at   hotel,   Tourism   Transportation Association,  and other  entertainment  places  and  guest  house  to  distribute  the information on drug control law, the risks caused by drug abuse and drug and HIV/AIDS problems.

➢ Dissemination through the documentary  Film  production,  CD,  VCD  and  Karaoke accounted for 134 titles and encouraged concerned organizations to show off and demonstrate publicly to the people about the form of art and spectacle regarding drug education.

➢ Dissemination through poem, song, painting competition  and  concert  programs broadcasted on radio and TV, especially with the involvement of actors, actress and comedians.

• Drugs supply reduction: NACD increased cooperation with ministries/Institutions and law enforcement agencies to crack down on the offences in production, trafficking, distribution of precursor chemical diversions. It also suppressed illegal extraction of precursor chemicals from Ephedra plants.
• Strengthening the effectiveness of treatment, rehabilitation and reintegration: NACD has made strong effort resulted as the following:

➢ Prepared the books regarding the guideline on drug detoxification and treatment at referral hospitals, health care centres for drug treatment and rehabilitation.

➢ The Royal government decided  to  provide  drug  addicts  with  subsidies  who  are under treatment in the rehabilitation centres governed by Ministry of Social Affairs Veteran and Youth Rehabilitation.

➢ Promoted the drug detoxification and treatment program according to doctor’s

prescription at drug treatment.

➢ Adopted community based on treatment and rehabilitation to carried out by mental health and drug services of the Ministry of Health.

➢ Operated the treatment program for drug users who used opiates and heroine for methadone at the Khmer Soviet Friendship Hospital.

➢ Developed a National Strategic Plan was designed in response to HIV/AIDS in relation to drug use (2008-2010) for implementing Harm Reduction programmes in Cambodia.

➢ Developed the guideline on the implementation of the needle/syringe programme to effectively curb the spread of HIV/AIDS infection among drug users.

➢ Evaluated and made recommendations  to  expand  services  and  improve  quality services and the needle/syringe programme in Cambodia.

• Strengthening the effectiveness of the law enforcement:

➢ Collaborated with the local authority and municipal and provincial department of tourism to take administrative measures to make contract with the local vendors, tourism services, entertainment places to prevent drug trafficking, distribution, and abuse.

➢ Established 14 Border Liaison Offices (BLO’s) along the border of the country and the Mekong River to control and curb drug trafficking and precursor chemicals across the border.

➢ Trained drug law enforcement officers in 11 municipalities and provinces on the drug control skills and harm reduction associated with drug abuse.

➢ Produced training documents on precursor chemical control in DVDs to train law enforcement officers and officials serving at the checkpoint and law enforcement officers at district and municipal level near BLO of neighbouring countries throughout the countries.

➢ Shared Cambodian law enforcement officers experiences with a particular skill at foreign countries.

• Strengthening and expansion the international cooperation: NACD has continued to everlastingly strengthen and expand the cooperation with international community in many forms:

➢ Bilateral cooperation with neighboring countries.

➢ Cooperation with international partners.

➢ Cooperation with development partners.

2.41.        While implementing the NSDP Update 2009-2013 on drug control, some challenges and difficulties faced were as follows:

• Cambodia is one of the countries in the region affected by all forms of drug abuse in both natural drugs and synthetics trafficked through the Golden Triangle, a source of production of a variety of drugs and also a favourable geographic location for drug traffickers. International drug traffickers have made attempts to use Cambodia for drug production and transit, through organized networks and complicated means.
• Synthetic drug production has dramatically increased in response to its demand for industrial applications. The capacities of law enforcement officers are limited in precursor chemicals control, which provides opportunities to the international drug traffickers to divert these chemicals to manufacture illicit drugs.
• Some constraints also include law enforcement officers’ capacities, financial resources, materials, and professional morality. Fighting against the drug traffickers from the whole region simultaneously is thus difficult.
• No country in the region (or the world) has really succeeded in treating, rehabilitating and socially reintegrating drug addicts.
• Due to the global financial crisis, there is limited international cooperation in fighting against drugs.

II.         CAMBODIA’S INTEGRATION INTO THE REGION AND THE WORLD

2.42.        Cambodia's integration into the international communities, particularly the sub- regional and regional, and the world has significantly contributed to enhancing the prestige of Cambodia. Cambodia has also continued to perform foreign, peaceful, neutral, and non- allied policy frameworks, and has strengthened international relationship and bilateral cooperation and its role as a member of the WTO and ASEAN Community on the basis of equal right and equal footing as other members so that mutual benefits can be ensured.

2.43.        Cambodia has so far established diplomatic missions with 165 countries and has had 34 embassies and permanent missions to overseas. Meanwhile, there are 26 foreign diplomatic embassies in Phnom Penh.

2.44.        Cambodia has actively participated in international and regional communities. The cooperation activities the Cambodia has made so far include politics, security, economy, trade, and social and environmental atmospheres. As a chair of ASEAN in 2012, Cambodia successfully hosted ASEAN Summits, East Asia Summit, the first ever ASEAN global dialogue, ASEAN Ministerial Meetings, and other regional and sub-regional meetings such as Asia-Europe Meeting (ASEM), East Asian summit, ASEAN Regional Forum, Asia Cooperation Dialogue, Conference on Interaction and Confidence Measure in Asia, the Triangle Cooperation Cambodia-Laos-Vietnam (CLV), the Cambodia-Laos-Myanmar- Vietnam (CLMV) Cooperation, the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) among Cambodia-Laos-Myanmar-Thailand-Vietnam, Greater Mekong Sub-regional (GMS), Mekong-Ganga Cooperation and Mekong-Japan Cooperation, Mekong-Korea Cooperation, and Lower Mekong Initiative (LMI) with America.

2.45.        Other major achievements that the government achieved in the world communities include:

• Elected as a member of the World Heritage Committee in 2009, Cambodia hosted the 37th Session of the World Heritage Committee in 2013.

• Within the international cooperation frameworks, Cambodia has joined UN's peace- keeping missions in Sudan and South-Sudan, Chad, Lebanon, Syria, Central Africa, and Mali, and has joined and hosted multi-national military exercises.
• Cambodia has joined several international conventions, including 12 conventions and protocols on the fight against terrorism, other conventions regarding the protection of the rights of workers and human rights, environmental conservation and protection, reduction and control of light weapons, nuclear weapons and chemical weapons proliferation.

III.        FAVOURABLE  MACRO-ECONOMIC  AND  FINANCIAL ENVIRONMENT

1. MACRO-ECONOMIC MANAGEMENT 2009-2013

2.46.        The average economic growth achieved was 5.6% per year during 2009-2012. However, if the growth in 2009 (an economic crisis year) is excluded, economic growth was average 7%.The Gross Domestic Product (GDP) per capita increased to USD 1,036 in 2013 (estimate). Inflation has been under control and the exchange rate has been stable. Trade deficit declined from -15.3% of the GDP in 2008 to -13.9% in 2012. Cambodia received development cooperation financing from development partners of about USD 5,430 million between 2008 and 2012: USD 3,580 million was grant and USD 1,850 million was loan. Based on projections, Cambodia is likely get USD 1,200 million (USD 600 million as grant, and USD 600 million as loan) in the next 2-3 years. During the crisis period of 2009-2010, 40,000 job-losers and unemployed workers received short-term trainings in agriculture, industry, technology, handicraft, and services, from “Prime Minister’s Fund” and “Self- Employment Creation Fund”.

1. PUBLIC FINANCIAL MANAGEMENT

SITUATION OF PUBLIC FINANCES2009-2013

2.47.        The average budget revenue between 2009 and 2013 (estimated) is 13.56% of the GDP--tax has been the major revenue. The General Directorate of Taxation developed and implemented several legal letters, especially regulation on Tax on Property. The General Directorate of Taxation also expanded its Automatic Declaration System in all provinces, and recruited and trained more than 300 new customs officers. Customs regulations, which are consistent with the international practices were also developed and implemented. Trade Facilitation and Customs-Private Sector Partnership Mechanism are now functional, and the Customs Database Automatic System has been put in place at 20 international checkpoints, covering nearly the entire customs operation. The Customs Risk Database Management System and Creditability of Businessmen Management System were developed and operated. Budget expenditure management too has improved, enhancing accuracy in forecasting expenditure requirements and linking these with national priorities. The expenditure priorities include education, health, agriculture, rural development, and improvement and expansion of physical infrastructure such as roads, bridges, schools, hospitals and irrigation. The average national budget expenditure increased 17% a year, of which17.6% was recurrent expenditure and 16.8% was capital expenditure.

2.48.        Payroll expenditure increased from 1,437 billion Riels in 2008 to 2,672 billion Riels in 2012, in conjunction with the policy to raise salary by 20% each year. Health expenditure increased from 427 billion Riels in 2008 to 778 billion Riels in 2012. Expenditure on education increased from 607 billion Riels in 2008 to 907 billion Riels in 2012.  Expenditure

on labor and vocational training increased from 39 billion Riels in 2008 to 99 billion Riels in 2012.Between 2008 and 2012, the total investment on physical infrastructure was 9,852 billion Riels, on transportation 6,821 billion Riels, on irrigation 2,251 billion Riels, and on electricity 780 billion Riels.

2.49.        Public investment expenditures through domestic financing increased from 711 billion Riels in 2008 to 1,327 billion Riels in 2012. At the same time, foreign financing increased from 1,926 billion Riels in 2008 to 2,860 billion Riels in 2012. Meanwhile, the debt situation also improved, as could be seen in Chapter III.

1. FINANCE  MANAGEMENT FINANCE SECTOR SITUATION 2009-2013

2.50.        During 2009-2013, significant progress has been made in this financial sector. Broad money (M2) had increased on average 21% per annum over the 2008-2012 period. Cambodia’s finance sector is undergoing a transition. Its financial market are developing, especially the security markets, by diversifying institutions and financial instruments. Inter- bank/money market is likely to grow when the debt security market is established. Next, the Insurance sector is making good progress.

1. BANKING SECTOR DEVELOPMENT

2.51.        The banking sector in Cambodia has been developing rapidly in terms of the numbers of operators, transactions, and scope. Many overseas banks—with many years of experience—have continuously invested in Cambodia. By the end of June 2013, Cambodia’s banking system consisted of 21 branches of National Bank of Cambodia, 33 commercial banks (23 domestic banks and 10 foreign banks, and these banks have 171 province-city branches), seven specialized banks and five representative offices.

2.52.        The total cash deposits with banks increased from 41% (of the GDP) in 2008 to 81% in the first semester of 2013. The total net domestic assets of the banking system increased dramatically from 1,513 billion Riels to 11,289 billion Riels (about 7.4 times), the total net foreign assets increased from 10,346 billion Riels to 19,874 billion Riels (approximately two-fold), the total credit to GDP ratio increased from 24% to 43%, and the total deposit to GDP ratio increased from 23% to 46%, during this period. Financial deepening, measured by M2 (money supply) to GDP ratio, increased from 28% to 53%, suggesting that the banking sector is now playing an increasingly important role in economic activities. The out-reach of the banks has expanded: the customers increased to 2,002 thousand customers by the end of June 2013, compared to 930 thousand customers in 2008.

2.53.        The banking institutions in Cambodia remained healthy and their capital has increased steadily, from 3,783 billion Riels in 2008 to 10,861 billion Riels at the end of June 2013, a 2.9 fold increase. The non-performing loan to total credit ratio (NPLs) has decreased and remained at a low level, to 2.5% (of the total loans) at the end of June 2013 compared to 3.7% in 2008. Both, the liquidity ratio and solvency ratio remained at a relatively high level and stood at 82% and 26%, respectively. The levels of both ratios are higher than the minimum requirement stated in the regulation.

2. MICRO-FINANCE SECTOR

2.54.        Expanding and improving the efficiency of financial services and products, especially the capacity to expand the scope of services is the main target of developing

financial system in Cambodia. Microfinance institutions have grown noticeably and have played an active role in providing loan to small enterprises, particularly people in the rural areas. Licensed microfinance institutions have increased from 18 in 2008 to 37 in June 2013. Of these, seven MFIs have been allowed to receive deposits from the public since 2009. The total assets of MFIs have increased from 1,362 billion Riels to 5,277 billion Riels (increased around four-fold) and the total credit has increased from 956 billion Riels to 4,479 billion Riels (increased five-fold) in the same period. The total deposits increased from 27 billion Riels in 2008 to 1,554 billion Riels in June 2013, which suggests that micro-finance sector is relying increasingly on domestic sources for funds. The total number of people who have access to the micro finance has gone up from 1,007 thousand to 2,456 thousand. The micro finance sector in Cambodia is in a healthy condition and the micro-finance institutions are well compliant with the law and regulations of the National Bank of Cambodia. More specifically, the ratio of non-performing loans to total credit was about 0.4% in June 2013. Meanwhile, both the liquidity ratio and solvency ratio remained high, which respectively stood at 180% and 21%.

3. NON-BANKING FINANCE SECTOR

• Insurance Sector

➢ Insurance premiums increased to USD 30 million, a growth rate 20% a year.

➢ Strengthened capacity of the insurance service providers through regulations to ensure sustainable development of insurance sector in accordance with the rules of the International Association of Insurance Supervisors (IAIS).

➢ Increased creditability of insurance companies through their annual financial information reports.

• Pension Sector

➢ Established the National Social Security Fund for Civil Servants, National Fund for Veterans, Fund for Cripples, and National Social Security Fund for Workers to improve social protection and inculcate a savings culture.

➢ Formulated a law on Volunteer Pension of Private Sector.

• Securities Sector

➢ A Supervising and Monitoring Framework was formulated with the following laws:               the Law on State Security, Law on Publishing, Law on Buying and Selling Public Security, and Law on Bankruptcy.

➢ Other achievements: Established a management structure for the Cambodia's Securities Exchange; established Securities Exchange and Commission of Cambodia and Cambodia's Securities Exchange; licensed 16 companies to be recognized as security corporations; issued recognition to agencies engaged in clearances related to securities, securities registration, and securities transfer registration; and issued recognition to certified accounting firms and independent auditors, and firms providing valuation services on securities.

➢ Phnom Penh Water Supply Authority officially opened for trading in Cambodia's Securities Exchange.

• Other Non-Banking Sectors

➢ Formulated Financial Trust Development.

➢ Provided vocational certificates and licenses for valuation services and property services to 87 firms.

➢ Property development business licenses have been offered to 20 firms to manage

and develop capital inflow in this sector.

➢ Valuator Association has been established and it has become the 8th full member of the ASEAN Valuator Association.

➢ The Regulation, Monitoring and Management Mechanism Framework, has been established to officially develop mortgage services and encourage capital inflow.

➢ Professionalism has been encouraged in mortgage operations using information technology system for regulators, operators, and authorities.

1. LEGAL FRAMEWORK AND FINANCIAL INFRASTRUCTURE DEVELOPMENT

2.55.        The National Bank of Cambodia (NBC) has helped improve the banking infrastructure by strengthening the legal frameworks, setting up the National Payment System, and establishing the Credit Bureau. The Credit Bureau has been incorporated with joint ownership of the Association of Banks in Cambodia, the Cambodia Micro-finance Association, and private service providers to reduce credit-risk, avoid delinquent borrowers, and bring about greater transparency. Settlement instruments in the banking sector such as Settlement of Credit/Debit Card through ATM, Point-of-Sale (POS), and mobile banking, have also been modernized. As of end of June 2013, there were 718 ATM machines operating in the country. NBC is now working closely with the banking institutions to introduce the Negotiable Certificate Deposit (NCD). NBC has also been promoting inter- bank and money market development to enhance the efficiency of liquidity management and to develop usage of negotiable instruments.

2.56.        Although the banking and financial sector has been playing an important role for economic development, the financial sector is at a fundamental stage and it faces following challenges during the implementation of the National Financial Sector Development Plan 2009-2013 and Financial Sector Development Strategy 2011-2020:

• There is high dollarization in the economy, which constraints the use of market-based instruments in implementing monetary policy.
• A well-organized institutional infrastructure is required, e.g. that having an efficient information system for banking operations, harmonization of legal and regulatory frameworks, and a wider use of the Payment System.
• The supervisory framework and the financial stability mechanisms are yet below the international standards.
• Money market and inter-bank market are yet not operational.
• There is lack of market instruments, especially government bonds, which are essential for operations in the money market and inter-bank operations.
• Knowledge regarding the benefits of using financial services is not widely known, especially in rural areas, and the human resources are still limited.

IV.       PARTNERSHIP IN DEVELOPMENT

2.57.        Recent achievements in building partnership have provided Cambodia a strong foundation and new opportunities in continuation of progress and solving on-going challenges so that effectiveness of development cooperation financing can be enhanced. The Royal Government has succeeded in mobilizing development cooperation financing from the development partners for its socio-economic development. Likewise, the disbursement reached about USD 1 billion per annum during the last 5 years. Development cooperation therefore accounted for approximately 10% of the country’s GDP in the recent years, potentially contributed to a high economic growth rate, increased GDP per capita from USD 760 in 2008 to USD 1,036 in 2013, and reduced poverty rate from around 47.8% in 2007 to 19.8% in 2011. Besides demonstrating the international community’s support for

the Royal Government’s development programme and reform effort, this increased level of external resources has supported the creation of a positive environment, which has been associated with expanded public and private investment, primarily in the infrastructure, garment, agriculture, construction and tourism sectors.

2.58.        RGC has successfully led the “Cambodia Development Cooperation Forum” since 2007, replacing the former “Consultative Group Meeting” mechanism. Moreover, Cambodia has been recognized as a role model and leading partner country in implementing the “Paris Declaration” and “Accra Agenda for Actions on Enhancing the Effectiveness of Cooperation Financing” in the Asia-Pacific region.

2.59.        However, there is much more to be done in achieving the effectiveness of cooperation financing. The challenges that the government and stakeholders have been committed include:

• Ensuring the alignment of external assistance with national priorities.
• Harmonizing processes for managing external flows.
• Building capacities for improved public sector management.

2.60.        These strong commitments from all stakeholders in strengthening partnership in development are key to complete the ‘unfinished-business’ towards more effective use of development resources. Achieving development results would also require building broader and more inclusive partnerships, and strengthening national systems, in accordance with the commitments made at the High-Level Forum in Busan in late 2011.

2.61.        External financial support would be tapering off gradually from henceforth. Cambodia, therefore, needs to secure alternative funding sources as well as concentrate on mobilizing domestic revenues. Regional integration, including with ASEAN in 2015, represents an additional challenge—though also an opportunity—that highlights the need for all the development stakeholders to have a more engaged collaboration.

3.  ENHANCEMENT OF AGRICULTURAL SECTOR

2.62.        The enhancement of agricultural sector set in RS II of the Royal Government of the Fourth Legislature of the National Assembly is a key foundation for the growth of the economyand rural economy, equity, and food security. The four sides of this enhancement are: (i) Improving agricultural productivity and diversification; (ii) Land reform and de-mining;

(iii)   Fisheries reform; and (iv) Forestry reform.

I.           IMPROVING AGRICULTURAL PRODUCTIVITY AND DIVERSIFICATION

2.63.        The Ministry of Agriculture, Forestry and Fisheries (MAFF) leads, manages, and carries out activities to enhance crop production to contribute to: (i) Ensuring food security; (ii) Controlling quality and safety of agricultural products; (iii) Promoting agricultural productivity and agricultural diversification; (iv) Reducing poverty by increasing farmers income through value-added agriculture; (v) Ensuring market access for agricultural products.

1. RICE PRODUCTION

2.64.        As of 2013, areas under all crops have reached more than 3 million hectares. During 2009-2012, average paddy yield increased from 2.83 tons per ha to 3.11 tons and

total production increased from 7.58 million tons to 9.29 million tons. Cambodia has a surplus of paddy from 3.5 million tons in 2009 (about 2.24 million tons of milled rice) to 4.7 million tons in 2012 (about 3.03 million tons of milled rice). The increases in paddy production, rice export, and rice surplus clearly shows that Cambodia has significantly achieved her “Policy on the Promotion of Paddy Production and Rice Export” in rice production.

Table 2.1: Rice Production and Growth, 2009-2012

Source: Ministry of Agriculture, Forestry, and Fisheries

2.65.        Horticulture and industrial crops: The cultivated areas under maize, cassava, mung bean and soybean have increased from 704,660 ha in 2011 to 716,370 ha in 2012. The cultivated area under horticulture and industry crops in 2012 was 912,880 ha compared with 856,777 ha in 2011.Production increased from 9.93 million tons in 2011 to 10.85 million tons in 2012. Cultivated area under permanent crops was 193,751 ha in 2012, 17.5% higher compared with 2011 (164,840 ha).

Table 2.2: Cultivated Area under Four Main Crops (ha)

Source: Ministry of Agriculture, Forestry, and Fisheries

2.66.        Agricultural cooperative development: In 2012, there were 375 farmers’ cooperatives established nationwide. These farmers' cooperatives involved in various business activities such as agricultural production, agricultural inputs supply and purchasing of agricultural products and market, and credit services for agricultural value change.

2.67.        Agricultural Product Export Promotion: In 2012, 25 agricultural products (a total export volume of 0.68 million tons) were inspected and granted phyto-sanitary certificates for export. About 68 private companies exported 205,717 tons of milled rice to 57 countries in 2012. The export amount was 1.9% higher compared to 2011. An increase in the number of countries importing rice from Cambodia suggests that external markets are recognizing Cambodian rice. The total cassava export volume in 2012 was 0.22 million tons, consisting of cassava flour (48,874 tons), cassava chips (126,276 tons), and fresh cassava (50,540 tons).

2.68.        Agricultural Research and Development: During 2009-2013, the following was achieved:

• Collected, conserved and used germ-plasm of major crops.
• Improved specific traits of the rice varieties most preferred.
• Improved yield and quality of rice, legumes and vegetables.
• Strengthened laboratory capacity.
• Developed agricultural equipment.
• Developed tools for storage and packaging of agricultural product.
• Developed technology packages for increasing rice productivity.
• Conducted studies on long-term trends in soil fertility for rice production.
• Investigated nitrogen transformation in soil and water layers.
• Determined nitrogen fertilizer efficiency on paddy yield in rainy season.
• Continued researching on pests, and found 11 additional rice pests.
• Conducted varietal screening for resistance to brown plant hopper damage.
• Adopted rice varieties released by Cambodia Agricultural Research and Development Institute.
• Developed technology for growing mung bean after wet season rice.
• Conducted training and extension.
• Field visits were conducted at 35 locations.
• Wrote research papers and extended knowledge.

2.69.        Nevertheless, agricultural research and development for rice and other crop productions continue to face several challenges including:

• Limited budget for agricultural R&D activities and also, there is no earmarked budget line for it.
• CARDI (research facilities) is unable to offer adequate incentives to its skilled researchers; hence, it is unable to retain some of its best researchers.
• Unreliable electric supply to research institutes has resulted in damage to research equipment and laboratory facilities.
• Limited infrastructure and transport facilities for R&D activities.

2.70.        Cambodian farmers also continue to be confronted with various constraints requiring solution. These include:

• Lack of human resources, infrastructure, and budgets for research and development, and extension.
• Inadequate policy support for scientific agricultural research.
• Inadequate legal instruments.
• Limited investments by the private sector on agriculture.
• Climate change, causing natural disasters: drought, flood, pest outbreaks, others.
• Limited farmers’ knowledge, making it difficult to introduce new technologies, and

limited farmers' capacities to partner with the private sector.

1. LIVESTOCK

2.71.        Over the period 2009-2012, the number of cattle raised has declined from 3.58 million heads to 3.38 million heads and the number of buffalo also declined. The number of pigs and poultry has increased from 2.12 and 23.33 million heads to 2.46 and 27.32 million heads respectively between 2009 and 2012. The overall number of domestic animals probably increased by 3% per year, this growth is due to increased demand for animal products,  mainly  meat.  The  livestock  and  poultry's  share  of  Cambodia  GDP  in  2012

accounted for 3.9% at current prices. The private sector has taken the lead in livestock production through acquiring improved breeds of animals, providing improved animal feed, setting up processing facilities, reducing animal diseases through vaccinations, and encouragement from the government for livestock production.

2.72.        Although MAFF has finalized several legal documents related to livestock such as, the Law on Animal Health, and the Animal Production Sub-degree, challenges still remain:

• Veterinary services are yet weakat both national and sub-national levels.
• Capacity research and Diagnostics of animal diseases is limited due to insufficient human resources and legal frameworks.
• There is no health insurance for the staff working in dangerous places.
• It is difficult to control the physical movement of animals and animal products.
• Sanitary inspection of animals, meats and animal products at slaughterhouses and markets, is not yet done fully.
• Quality control on animal feeds is limited.
• Investment on animal feed production is still limited.
• Prevalence of scientific breeding has yet not caught up at the country level.
• Markets for livestock are underdeveloped.
• Diseases like H5N1 and the like have still not been fully eradicated.

1. AGRO-INDUSTRY SECTOR

2.73.        According to MAFF Strategic Plan 2009-2013, agro-industry sector plays key role implementing activities that are mentioned in Sub-sector Policy 2 on "Market Expansion for Agricultural Products" and Sub-sector Policy 3 on "The Framework of the Development of Institutions and Law Regulations".

2.74.        Technical service supports through Implementation of program activities: Under agro-Industry sector, MAFF implemented two projects of Program 2: "Encouragement of market access of agricultural products”. In this regard, 3,960 farmers received a number of trainings from different sub-programs such as "Training on feed processing and formulation", "Enhancement of standard quality and safety of agricultural products", and "Training on Contract farming" between 2009-2012.

2.75.        RGC has encouraged the "Contract Farming Mechanism “as it is key to ensure markets for farmers. MAFF prepared a sub-decree on "Contract Farming" in 2011 and has prepared the draft law on "Agricultural Products Quality and Safety”, and other legal regulations, such as guideline on "Contract Farming" and Prakas on "Agricultural Enterprises and Agro-Industry Statistics Management".

2.76.        Notwithstanding the significant progress that has been made, a number of challenges remain to:

• Farmers have limited information on agricultural product / processing enterprises.
• Producer and buyer parties are not fully aware of "Contract Farming mechanisms".
• There is limited cooperation from organizations involved in the preparation of the “Law

on Quality and Safety of Agricultural Products", officials, and the budget.

• Infrastructure, human resources, equipment, materials and management structure are still in limited.
• Research and development on post-harvest processing technology and management are still at a nascent stage.

1. RUBBER

2.77.        In 2012, total areas under rubber plantation were 280,355 ha. In this regard, 54,209 ha or 19.34% of total areas under rubber plantation were under agro-industrial rubber plantations (existing), 118,448 ha or 42.25% under economic land concession companies (new investment), and 107,696 ha or 38.41% under smallholding rubber plantations. Some 55,361 ha plantations are already being tapped, producing about 65,000 tons for exports.

2.78.        In 2013, total areas under rubber plantation is 307,854 ha implying that the RGC has reached its target (300,000 ha by 2020) set in the Strategy for Natural Rubber Development 2011-2020 much in advance.

2.79.        Although significant progress has been made, MAFF faces some challenges that include:

• Lack of human resources, budget, material and equipment, and transportmeans.
• Lack of coordination between the central and sub-national levels.
• Since the smallholders are scattered across the country and (road) infrastructure is also limited, there are problems in extending technical support, marketing the product and collecting data on production.
• Rubber companies are yet not following up Sub-decree No.55, dated on June 04, 2007 on the issuance of rubber quality certification.
• Cambodia Rubber Research Institute lacks land for constructing a station or sub- station for testing, quality control, and such details.

II.         LAND REFORM AND DE-MINING

2.80.        The RGC’s land reform programme is focused on measures to strengthen land management, land distribution and land use, to ensure the security of land ownership, to eradicate illegal land holding, and to prevent concentration of unused land in few hands. Land reform is also crucial for the increase and allocation of agricultural land within the framework of granting social land concessions to farmers in order to enhance agricultural productivity and diversification, and rural poverty reduction.

2.81.        In meeting the above plans, during 2008-2013, the Ministry of Land Management, Urban Planning and Construction (MLMUPC) achieved the following:

• Land Administration:

➢ Aligned the Land Law with the new civil code – already in place.

➢ Law on granting rights of ownership for Private Entities/Properties of Co-owned Buildings to Foreigners.

➢ Sub-decree on Mortgage (Pawning), Transferring Rights for Long-term Lease or Rights on Economic Land Concessions.

➢ Sub-decree on Managing and Using Co-owned Buildings.

➢ Sub-decree on Managing Cities (Borei).

➢ Studied types of rights of occupying flooded land in the rainy season and cultivating the land during the dry season in areas around Tonle Sap Lake and the low-land areas covered under the Mekong River’s water scheme.

➢ Carried out land registration using modern technical survey and equipment.

2.82.        Significant progress has been made in land registration especially the implantation of "Old Policy-New Action" framework.

• Registered land and distributed 380,000 land titles (under directive 01).
• Number of land titles given out through systematic titling was 2,257,151 (numbers).
• Another 603,302 titles were given out through sporadic land titling.
• State land registered: 515 land titles, equal to 257,886 ha.
• Registration of Economic Land Concession: 130 cards, equal to 101,179 ha.
• Registration of long-term lease right: 303 cards, equal to 65,829 ha.
• Registration of indigenous people’s community lands, 8: Mondul Kiri has 6 indigenous communities land titles were issued and Rattanak Kiri has 2 indigenous communities land titles were issued.
• Provided legal trainings and legal procedures on systematic land registration to around 100,000 administrative commissions throughout the country. Moreover, 269 undergraduate students in land management and 296 associate degree students are being trained at the Faculty of Land Management and Land Administration.

2.83.        Land disputes resolution: As of 2012, the number of dispute cases received was 5,608. The authorities solved 2,325 cases involving 10,982 families and all cases equal 36,119 ha. Yet, 1,807 cases were rejected and 524 cases were withdrawn.

2.84.        Land management and urban planning: the Ministry has successfully implemented the work of land management and urban planning as follows:

• Regional planning: The Ministry has prepared a national strategy for coastal zones integration for the four provinces, namely Kep, Kampot, Preah Sihanouk, and Koh Kong.
• Municipal and provincial planning: Land use master-plans have been established for Phnom Penh, Preah Sihanouk, Kampot, Battambang, and Kep.
• Town, District, Khan planning:

➢ Has prepared 10 master-plans and town land use plans and four urban land use plans. These include: Kratie town, Battambang town, Steung Treng town, Bavet town, Poi Pet town, Kampong Cham town, Soung town, Siem Reap town, Chbar Morn town, Khemarak Phoumin town, Kompong Trach urban area, Neak Leung urban area, Steung Hav urban area, and Anlong Veng urban area.

➢ Master plans and town land use plans are being established for Kep Town and Preah Sihanouk town.

➢ Has prepared land use master-plans for 17 districts, 01 khan and 03 towns: These include: Stoung district, Komreang district, Phnom Prel district, Ponhea Krek district, Snoul district, Chloung district, Peamro district, Chormksan district, Koh Thom district, Kirivong district, Ochrov district, Keo Seima district, Sen Monorom district, Banteay Srey district, Tbong Khmom district, Sala Krao district, Chantrea district, Khan Meanchey, Preah Vihea town, Serei Sorphorn town, and Kompong Chnang town.

➢ Master plans and land use plans are being established for Taveng district, Andong Meas district, and Oyadao district in Rattanak Kiri Province.

• Commune Level Plans:

➢ Land use plans in 120 communes in 11 provinces have been prepared.

➢ Land use maps have been produced for 1,633 communes/sangkats.

➢ Provided  technical  assistance  in  facilitating  the  demarcation  of  administrative boundaries  for 148 communes/sangkats.

2.85.        Preparation of legal instruments to ensure the high efficient and effective implementation of the Program:

• The Ministry has decided to implement:

➢ Sub-Decree on the Procedures for Making Commune/Sangkat Land Use Plan.

➢ Instruction on the Preparation of Commune/Sangkat Land Use Plan.

➢ Circular on Managing and Developing Coastal Areas of the Kingdom of Cambodia.

➢ Royal Decree on the Establishment of a National Committee for Managing and Developing Cambodia’s Coastal Zones.

➢ Royal Decree on the Establishment of a National Committee for Land Management and Urban Planning.

➢ Sub-Decree on the Establishment of a Committee for Land Management and Urban Planning at the Municipal, Provincial, District, and Khan Levels.

• Has finalized the Draft Sub-Decree on Urban Planning for Municipalities, Towns, and Urban Centres.
• A Draft Law on Land Management and Urban Planning is also being prepared.

2.86.        Capacity and Technical Skills Training:

• Has trained technical staff at all levels: district, Sangkat/Commune Council, local authorities at district level, Sangkat/Commune Councils, local communities, and NGO staff (totally 3,533 participants) on the procedures for making commune/sangkat land use plan, reading and using map, as well as projects monitoring and evaluation.

2.87.        Distributions of Land under Social Land Concessions:

• Approximately 31,000 households received lands under the program by the end of 2013.
• Granted social land concessions to around 4,000 households (for veterans, militants, former soldiers and their families).
• Granted social land concessions to around 7,000 households (for militants and their families stationing at the western and northern territories of the country).
• Granted social land concessions to around 15,000 households (poor civilians) in the form of land gift.
• Land has been allocated to 5,000 families under the Land Allocation for Social and Economic Development Project (LASED) in cooperation with Development partners, national and international NGOs.

2.88.       

Construction Management and Development: Construction Sector has been considered one of the 4 key pillars of Cambodia’s economy. Achievements made in this construction sector include:

• There were 2,156 construction projects in 2008, and the total construction size was

3,191,569,144.

• There were 2,230 construction projects in 2009, and the total construction size was 6,614,747 sqm, costing about USD 1,988,851,951.
• There were 2,149 construction projects in 2010, and the total construction size was 3,287,468 sqm, costing about USD 840,459,529.
• There were 2,129 construction projects in 2011, and the total construction size was 5,257,587 sqm, costing about USD 1,734,598,584.
• There were 1,694 construction projects in 2012, and the total construction size was 6,528,452 sqm, costing about USD 2,109,607,242.

• Decentralized/delegated function to the municipality, district, and khan so they have authority to issue a permission letter for construction and for other services relating to the construction work with the size smaller than or equivalent to 500 sqm at the one window service office in the 23 municipalities/districts/khans.
• Issued a Prakas on the Procedure of Registering Construction Companies and companies advising Construction Plan Projects to make it easy to manage those companies. Up to 2012, 1,205 companies (including enterprises, construction companies, and companies advising construction plan projects) were registered.
• Established a Board of Cambodian Architects aiming to accumulate and manage civil engineers and architects who have professionally registered in the Kingdom of Cambodia, as well as to enhance their professions, qualifications, architects work, and the prestige of the national architecture. Recently, the Board of Cambodian Architects has become a member of ASEAN Engineering and Architects Advisory Group.
• Established a Cambodian Constructors Association to respond to the progress of the new era and to contribute to the development of the construction sector. The Cambodian Constructors Association has become a member of ASEAN Constructionists  Federation.

2.89.        Concerning to Agricultural land management and Use, The Ministry of Agriculture, Forestry and Fisheries reviewed and assessed the existing agricultural land uses in order to develop agricultural land use planning and crop zoning. MAFF also developed the draft agricultural land legislation frameworks such as draft agricultural land law and agricultural land management guidelines to ensure effective land use planning and sustainable land use management.

2.90.        The Royal Government has made significant results as follows:

• Drafted agricultural land use planning and crop zoning.
• Draft National action plan on sustainable land use management.
• Draft guideline on soil fertility management and conservation.
• Strengthened the capacity of complex labs: Soil, water and plants Laboratory and Department of Agricultural Land Resources Management.
• Drafted agricultural law.

2.91.        Notwithstanding the significant progress that has been made, a number of challenges Cambodia faced:

• People in all places need land titles to ensure their land tenure security, to reduce land disputes and to improve their living standards, as well as to develop the national economy.
• State (tax) revenue received from the transfer of land rights has not been fully collected, and the land information has not yet been completely updated; therefore, the cadastral information system can be inaccurate to some extent.
• The participation and the responsibility of relevant institutions and the technical officers are limited, especially for land management and urban planning making it difficult to prevent illegal constructions, and constructions which are either not in the different from the permit list or are technically differently defined.
• Disputes on land use made by concerned parties at the time of public display of master plan at the local areas cause the difficulty and the delay in adoption.
• Land identification and land management, and participation of the Sub-National Working Group for implementing social land concessions program have not been fully implemented.

MINES AND ERW

2.92.        Until 2012, over 64,000 Cambodians were killed or injured by landmines and ERW. The casualty number was 186 in 2012. These remnants of war also continue to prevent national reconstruction and development.

2.93.        With support from the international community, RGC has made great efforts over the past 20 years to clean the uplands from landmines/ERW. Between 2009 and 2012, the Cambodian Mine Action and Victim Assistance Authority (CMAA) with support of the mine action stakeholders, implemented a Baseline Survey (BLS) in 124 landmine/ERW- contaminated districts.

2.94.        Between 2009 and 2012, the mine clearance operators cleared and released 40,529ha of contaminated land for productive uses such as agriculture, resettlement, and infrastructure (schools, health centres, roads, and irrigation system), benefiting tens of thousands of households. Cambodia not only cleared landmines within the country, but also participated in UN peacekeeping missions. It sent 278 demining personnel to Sudan and Lebanon between 2010 and 2012, and also shared its experiences in mine action with a number of affected countries.

2.95.        Table 2.3 below indicates the achievements made by the sector in term of casualty reduction and clearance/release of contaminated land between 2009 and 2012.

Table 2.3: Key Statistics Related Mine Clearance

Note: Clearance progress made between 2009 and 2011 includes land cleared outside of BLS polygons. Clearance progress made in 2012 excludes land cleared outside Base Line Survey (BLS) polygons.

2.96.        The end of 2012 saw completion of the Baseline Survey in a majority of Cambodia’s provinces where landmine contamination was previously reported. The survey results show that about 191,482 ha of contaminated land remain to be cleared. In addition, large areas which might be contaminated by ERW remain to be surveyed systematically in the coming years.

2.97.        Mine action in Cambodia relies on financial support from the government and development partners. RGC is concerned by the decrease in funding since 2011. This situation requires intensified resource mobilization and increased national contribution to ensure sustainability and efficiency.

III.        FISHERIES REFORM

2.98.        RGC has implemented fisheries reforms to promote small-scale fishing. In 2012, the annual inland and marine catch quantities were 509,000 tons and 99,000 tons, respectively. In addition, the production of aquaculture products was 74,000 tons in 2012, an increase of 3% over 2011.

Table 2.4: Inland, Marine and Aquaculture Production, 2009 to 2012 (Unit: Tons)

Source: Ministry of Agriculture, Forestry and Fisheries

2.99.        Developing aquaculture development is an important additional policy of the Royal Government in order to help ensure food security. Aquaculture has been implemented through pursuing diverse approaches including enhancing rice-field fisheries and establishing Community Fish Refuge Ponds which can help increase farm aquatic production by up to 15% per annum.

2.100.     Aquaculture development includes both fish and freshwater prawn. Total production of bred fish and freshwater prawn was up to 74,000 tons, an increase of approximately 3%; fingerling production was 140 million heads, an increase of approximately 8%; crocodile production was 250,000 heads, an increase of 25% due to its skin has high economic value.

2.101.     The Fisheries Administration (FiA) established 516 communities for the management and sustainable use of natural resources within communities (the community fisheries development). Some 477 communities belong to the inland fisheries, and 39 are of marine, involving 156,628 family units (332,168 persons, including 33% women). There were 328 communities are officially registered.

2.102.     For conservation, FiA established additional 50 conservation areas after the abolition of the fishing lots. Eight Tonle Sap fisheries conservation areas totalling 22,500 ha have been established, and approximately 726,221 ha of flooded forest around the Tonle Sap were planted to serve as breeding ground for multiple aquatic lives. FiA has also encouraged community participation in planting the flooded forest at approximately 100 ha per year. Alongside, 27 patrolling stations were built. The other 97 conservation areas are along the Mekong River.

2.103.     There are many challenges, nevertheless, faced in the fisheries sector:

• Illegal fishing activities continue, especially the use of electrocuting fishing devices, fishing nets, application of Samras, cutting of flooded forest within community fisheries and state fisheries domains, trawling within the inshore fishing area.
• Community fishery groups do not have budgets or capacity to implement their activity plans and most of community members are poor.
• Communication between key stakeholders to ensure effective implementation of policies to reduce illegal cases and fish export and import is lacking.
• Lack of cross-border collaboration among key players.
• Community fishery groups are not adequately growing and their management is weak.
• There is limited law enforcement, compliance to regulations and a lack of awareness about the importance of fishery resources among fishers and other stakeholders.
• There are insufficient numbers of fisheries staff to replace those who have retired.
• Human resources development at both national and sub-national levels is limited, especially in the field of research.
• Equipment and funds to support the management, research activities, extension, conservation and protection of fishery resources.
• The effects of climate changes.

• There are adverse effects from hydro-dam construction in Upper Mekong and its tributaries.
• Effect of chemical inputs on fish.

IV.       FORESTRY REFORM

2.104.     The implementation of the Law on Forestry and regulations along with good collaboration between all concerned institutions, forest resources are now more strictly managed. In this regard, MAFF developed a 20-year plan for forestry (National Forest Program 2010-2029). The National Forestry Program (FA) that has 6 main programs achieved the following:

• Forest Demarcation, Classification and Registration: The forest cover in 2010 was 10,363,789 ha, equal to 57.07% of the country land. Demarcated forest boundary with poles posted for permanent forest was 2,513 Km.
• Conservation and Development of Forest Resource and Biodiversity Program: Established three protected forest areas, which are equivalent to 394,255 ha:

➢ 101,348 ha of which are protected forest OYa Da in Ratanak Kiri Province

➢ 292,690 ha of which are protected forest Seima in Mondul Kiri Province

➢ 217 ha of which are conservation areas of crane birds in Kampot Province. MAFF has also implemented bird and animal conservation projects: At Prek Lopao lake in Takeo; at Unlongpring in Kampot; at Ang Trapieng Thmar in Phnom Srok District, Banteay Meanchey; in Kampong Thom; a Siamese Crocodiles project in Siem Reap; an Elephant project in Central Cardamom Mountains; and many biodiversity projects, including in the triangular zone with Lao PDR and Thailand. The private sector has planted trees in 80,692 ha.

• Strengthening Forestry Law Enforcement and Governance: The Forestry Administration (FA) drafted eight laws and issued 43 Prakas related to the conservation of the forest, wildlife, biodiversity, and fisheries.
• Monitoring and Reporting of Forest Crimes: The FA identified more than 235,042 ha of land, which were illegally cleared for cultivation. As a result,13,062ha of which were confiscated. The FA also identified 3,480 chainsaws, at least 3,262 of which were confiscated.
• Voluntary activities for community development: The FA also sent 198 personnel to join the national and provincial working groups and voluntary youth groups to facilitate land measurement activities.
• Community Forestry: The Community Forestry Department acquired 229,563 ha of land located in 251 sites in19 provinces from MEFF. The FA signed an agreement with the community forest management committees for 200 sites covering 168,923 ha in 16 provinces.
• Capacity development: Between 2008 and 2012, the FA sent 6,338 staff members to attend meetings, workshops, short- and long-term training programs in the country and overseas.

2.105.     There are many challenges faced in the forestry sector:

• Lack of regulations; hence, limited law enforcement.
• Lack of awareness about the importance of forestry resources among relevant stakeholders.
• Shortage of incentives, equipment, and human capital/knowhow to perform the tasks in remote areas.
• Fighting against illegal logging and land grabbing is challenging since offenders constantly change their methods of poaching timber products, transportation, and

clearing forestland.

• Shortage of cooperation and involvement of the local authorities and relevant institutions.
• Influx of migrants into protection forest and wildlife conservation areas.

ENVIRONMENTAL PROTECTION, CONSERVATION, AND CLIMATE CHANGE

Green growth and Low-carbon Development

2.106.     The Ministry of Environment (MOE), the National Climate Change Committee and National Council for Green Growth, have formulated National Climate Change Strategic Plan (2014-2028), and the National Policy on Green Growth Development and National Strategic Plan on Green Growth Development 2013-2030.

2.107.     Management of Natural Protected Areas: MOE has appointed park rangers for patrolling, observing, monitoring, recording data, and preventing natural-resource-related crimes, for managing the 23 natural protected areas and RAMSAR sites. The management structure includes authorities from both national and sub-national administrations. Consequently between 2009-2012, 23 natural protected areas expanded its areas from 3,100,199 ha to 3,111,041 ha. Meanwhile, the government created community protected areas up to 115 as of 2012.

Table 2.5: Key Indicators of Natural Resources and Environmental Management

2.108.     MOE has created a green buffer zone to prevent encroachment on the protected areas through developing agro-industry projects and ecotourism projects. Another green buffer zone has been created through setting up protected area communities, a strategy in which forestlands within the protected areas are given to the local communities and ethnic groups for sustainable management and (local) consumption for non-timber forest products. Carbon-credit investments within the protected areas have also contributed to bolstering the economy.

2.109.     MOE drew-up maps for 21 protected areas, erected 1,204 border posts, and set up

581 posts for the protected area communities. It also identified 115 protected-area communities, covering 211 villages having a land area of 158,994 ha.

2.110.     Biodiversity Conservation: MOE works with the United Nations Convention on Biodiversity (UNCBD), and it is the Secretariat of the National Steering Committee for Biodiversity. MOE developed the 5th National Report on Biodiversity and ratified the Nagoya Protocol on access to genetic resources and fair and equitable sharing of benefits arising from their utilization.

2.111.     Women’s Capacity Improvement: MOE conducted a survey among employees of its ministry to identify their needs and suggestions for strengthening gender-mainstreaming within the ministry. The ministry also joined with its stakeholders to mainstream gender in climate change issues and has formulated Gender Mainstreaming Strategic Plan Phase II, 2013-2018.

2.112.     Environmental Quality Management: MOE has undertaken measures to strengthen waste management at source and at final dumpsites to control environmental pollution. MOE has also encouraged urban waste recycling and has tried to coordinate large-scale investments in waste management. Additionally, the ministry strengthened the sewage management systems at the sub-national levels, by setting up wastewater treatment plants in the provinces of Battambang, Preah Sihanouk, Siem Reap, the coastal provinces, and provinces surrounding the Tonle Sap Lake.

2.113.     MOE has improved its surveillance on major pollution sources, e.g. factories and large enterprises, by encouraging installation of liquid waste treatment plants at source, air purification devices before emission, and noise reduction equipment. To achieve all this has required the participation of owners of the polluting sources and strict law enforcement, including warnings, fines, and compliance of courts judgments. MOE has achieved the national goal of pollution control through monitoring the environmental quality (including water quality at the Tonle Sap Lake, the Mekong River, and major streams surrounding the Tonle Sap Lake), on a monthly basis. Furthermore, the air quality in Phnom Penh, Siem Reap, Battambang, and Preah Sihanouk Provinces, has been tested and found to be good.

2.114.     The National Climate Change Committee (NCCC) was established for coordinating national climate change responses. The Climate Change Department at the Ministry of Environment is the secretariat of the NCCC. The Cambodia Climate Change Strategic Plan (CCCSP) was endorsed by the RGC. Nine line ministries and agencies have also developed their sectoral climate change strategic plans. RGC has raised around USD 250 million from multi/bilateral sources to implement projects addressing climate change. The pilot programme for climate resilience has assisted RGC to strengthen three priority sectors— water, agriculture, infrastructure—to adapt to climate change, while the Cambodia climate change alliance programme has funded 21 projects on climate change. Additionally, Cambodia has approved 10 clean-development mechanism projects, nine of which have been registered by the UN CDM Executive Board, having the projects to reduce approximately two million tonnes of greenhouse gas emission. Both national and sub- national levels have begun raising awareness and disseminating climate change related knowledge and policies. The Ministry of Education, Youth and Sports has started to integrate climate change issues into the formal and non-formal education systems. The Ministry of Environment has played an active role in leading the climate change negotiation process under the climate change talks of the United Nations Framework Convention on Climate Change (UNFCCC).

2.115.     Bio-safety and Modern Bio-technology: MOE has made significant progress in bio- safety and biotechnology, including developing a legal framework for reducing risks from modified organisms, and strengthening the capacities of laboratories engaged in biotechnology. MOE has also helped raise public awareness and participation in the fields of bio-safety and modern biotechnology.

2.116.     Education and Communication: MOE has carried out environmental education activities based on four main pillars:

• Formal environmental education.
• Informal environmental education.
• Capacity building.
• Cooperation and networking for environmental education.

2.117.     Other achievements also include: capacity-building for primary and secondary school teachers, development of learning/teaching materials on conservation of natural

resources, biodiversity and environmental quality management (focusing on provinces surrounding the Tonle Sap Lake), organizing quarterly environmental debate programmes for the youth, organizing the National and World Environment Day, and organizing the National Environmental Clean-up Day. Moreover, MOE conducted 3 drawing contests on environment to promote awareness on environmental issues. In addition, the MOE has worked with the ASEAN on environmental education, development of guidelines and implementing an “Eco-School” programmes, and sending Cambodian youth to join environmental efforts with other youth from ASEAN for information and experience sharing.

2.118.     In spite of significant achievements, MOE faced major challenges as follows:

• Lack of means to manage natural protected areas.
• Influx of migrants into natural protected areas.
• Disobeying the sustainable conservation policies within the natural protected areas.
• Clearing and occupying forestland, under the garb of being ‘poor people’.
• Increasing population, driving up the demand for land for agricultural production from protected forests and wildlife habitats.
• Lack of information on biodiversity and natural resources.
• Lack of budget for coordinating activities with the communities in the natural protected areas.
• Lack of funds, transport, and equipment for analysis.
• Biotech laboratories having limited capacities.
• Lack of qualified human resources and work places.
• Lack of materials and equipment for carrying out environmental impacts assessment.
• Lack of data and data management mechanisms for analyzing to support responses to climate change.
• Limited inter-ministerial/institutional cooperation for coordinating activities including provision of funds and monitoring and evaluation to respond to climate change.
• Absence of action plans and detailed studies stipulated under the adopted policies and strategies for supporting climate change adaptation activities and reduce greenhouse gas emissions.

DISASTER MANAGEMENT

2.119.     In 2009, the natural hazard which seriously hit the Kingdom of Cambodia was the Typhoon Ketsana. In accordance with the damage and loss assessment (DaLA) in socio- economy, the typhoon had left 43 people dead, widespread damage to houses, rice crops, and infrastructure which estimated at about USD 132 million and the amount of USD 191 million required for the recovery. Subsequently, the 2011 flood was impacted on the people devastatingly that the country had never faced since the 2000 flood. The flood had caused of 250 people dead, damages and losses of houses, agricultural and infrastructure sectors with the total amount of USD 451 million. The recent raining flood and Mekong flood in 2013 had caused of 168 people dead and damages of rice transplanting approximately 62,878 ha. Whereas, the Avian Influenza Virus had caused of 1 people dead in 2010, 8 people in 2011, 3 people in 2012, and in 2013 alone 14 cases infected with H5N1, within 8 of them died and 2 people were cured. Besides, there were a number of natural hazards such as lack of water for cultivation in the certain areas, strong wind-storm, lightning, and so on which annually occurred and caused considerable damages and losses of human life, houses, and destruction of other infrastructure networks.

2.120.     In reducing the disaster risk impact caused by the mentioned natural hazards, the Royal Government of Cambodia had formulated and promulgated a “Strategic National Action Plan for Disaster Risk Reduction (SNAP) 2008-2013” through the strengthening of a

mechanism with the effective involvement and coordination among the relevant stakeholders either the RGC, development partners, private sector or civil society organizations. Those accomplished laws, regulations, and plans include:

• A resolution of the Royal Government of Cambodia on the establishment of the Inter- Ministerial Committee for formulation a draft law on disaster management. The draft law had gone through the consecutive meetings up to the plenary session of the Council of Ministers on 14 December 2012 with the decision for further improvement that could meet the reality of the situation and perfectness (February 2009).
• A sub-decree on the establishment of the Cambodian Food Reserve System in order for the disaster response to victims or other emergency events timely (May 2012).
• A direction on the establishment of a village disaster management mechanism namely the Village Disaster Management Group (VDMG) for strengthening the community- based disaster risk management (CBDRM) (July 2010).
• Development of a National Contingency Plan (NCP) for the disaster response aim at minimizing the impact of potential disasters.
• Development of a strategic plan on climate change for disaster risk management sector and incorporation into the national strategic plan on climate change adaptation of the National Committee on Climate Change.
• In the regional cooperation framework, the National Committee for Disaster Management (NCDM) has implemented the agreement on the establishment of ASEAN Coordinating Centre for Humanitarian Assistance on Disaster Management (AHA Centre) by contributed the amount of USD 30,000 to the AHA Centre Fund on the annual basis which commenced from the fiscal year 2012.
• In closed collaboration with the organization partners, the Provincial Contingency Plan (PCP) for responding at provincial level had been developed by 11 flood-prone provinces. The plan has been annually updated which usefully to the preparedness for disaster response.
• The natural and man-made safe areas had been built and equipped with bathrooms, latrines, and shelters for human beings and animals at 958 places in 112 districts of the 17 provinces through collaboration with organization partners.
• Foods, rice seeds, and fertilizers were distributed to the poor people of 342,853 households in 200 targeted communes of the 7 provinces around Tonle Sap Lake.
• Mainstreaming the disaster risk reduction into education sector by developing the textbook and incorporating into school curriculum at grade 4 and 8. The disaster risk reduction has also mainstreamed into the project plans of the MAFF and MOWRAM. Along with this, the disaster management activities have been integrated into the safety village, Sangkat-commune policy guideline.
• The national forum on disaster risk reduction was established aim at promoting the disaster management through the information sharing, strengthening coordination, and implementing the joint activities with line ministries and agencies.

2.121.     Goalsand action plans yet unaccomplished and challenges in disaster management:

• Reforming the disaster management mechanism to meet the requirement at all levels remained pending.
• The disaster management team and reform of the working structure at line ministries and agencies had not been considered.
• Law on disaster management, legal framework, legal instrument, standard operation procedure, and policy guideline for the effective disaster management has not been achieved.
• The NCDM and the Sub-National Committees for Disaster Management were inadequate in resources and capacities for implementation of their tasks and requirement of the communities.

• Norm and procedure had not in place for implementation of CBDRM and the guideline on integration the disaster risk reduction into the Sangkat-commune development plan has not also been launched.
• The organizational structure and human resources at the Municipality-province, Town, Khan-district, and Sangkat-commune levels had not been improved

RURAL DEVELOPMENT

2.122.     Rural Development is a major crosscutting sector, covering rural infrastructure, primary health care, agriculture, rural water supply and sanitation, and rural credit since the poverty rate is high among the poor living in rural areas. RGC has adopted a multi-pronged approach to foster rural development and empower local communities to plan and manage development. Decentralization of public services and provision of rural credit to households and small businesses are two of examples of the RGC’s efforts in this sector.

2.123.     Since 2007, Rural Development is a priority sector among other priority sectors of the RGC under the Public Financial Management Reform Program (PFMRP), which is now Step 2, for budget allocations and timely disbursements.

2.124.     Institutional and human resource capacity development have been progressing though the development of policy and regulatory framework under the following regulations:

(i) Policy 1: Ensure that the standards of living in rural areas are promoted and that the rural-urban gap narrows, nearing equality by 2025; (ii) Policy 2: Promote rural economic growth through integrated rural development with participation from both national and international  communities.

2.125.     Major achievements in rural development sector from 2009-2012 include:

• Training on planning and other skills:

➢ In accordance with the PFMRP, MRD trained 1,575 officials (495 at the national and   1,080 from sub-national levels). Some 450 officials also got computer training.

➢ A training-needs-assessment of officials at the sub-national was carried out.

➢ Training of the clientele in vocational-training skills was carried out in 5 provinces in skills like hairdressing, beauty treatment, repairing generators, tractor machines, motorbikes, and electronic devices, in addition to training in English language. The outputs of the implementation of the plan for a period of five years from 2009–2012 are:

• Training given to 2,666 ministerial civil servants (613 female).
• Basic skills training given to 1,460 the clientele (512 female).
• Rural transport infrastructure development:

➢ Prepared a road inventory in nationwide.

➢ Constructed of 2,587.89 Km of laterite road.

➢ Rehabilitated 3,954.95 Km rural laterite roads.

➢ Constructed 19.9 Km DBST rural roads, 23.1 Km of concrete roads, 141 m of balley (metal) bridges, 7,594 m of concrete bridges, and culverts at 2,766 locations.

• Rural water supply:

➢ Prepared the groundwater map for 8 provinces: Svay Rieng, Prey Veng, Kandal, Takeo, Kompong Speu, Kompong Chhnang and Kompong Cham and a suburb in Phnom Penh capital.

➢ Prepared guidelines for water treatment and safe household water storing.

➢ Constructed of 10,678 new wells (1,132 mixed wells  and  276  ring  wells)  and repaired 4,122 wells.

➢ Renovated of 22 community ponds and 192 community ponds.

➢ Constructed of 3,580 rainwater reservoirs.

➢ Constructed 6 pipe water distribution systems.

• Primary health care and rural sanitation:

➢ Conducted sanitary education and training at villages and carried out disseminating campaigns on sanitation.

➢ Constructed 68,508 latrines in private houses and 420 public latrines.

➢ Promoted sanitation markets in 10 provinces: sanitation market  refers  to participation from the private sector in the constructing good quality and affordable home latrines (at clients’ own expenses).

• Rural community development:

➢ Arranged re-elections of the Village Development  Committees  (VDCs)  whose mandates had expired in 246 villages.

➢ Conducted Training of Trainers (ToT): 30 courses  for  sub-national  level  410 officers.

➢ Trained 423 courses for VDCs on the roles, duties and development plans of VDCs in 24 capital and provinces, with 13,398 participants.

➢ Provided the community with 635 kg of paddy varieties;

➢ Restored of two small canals with 2,400 m length and constructed four water gates.

➢ Donated 104 pigs, 31 cows, and 705 chickens to people.

➢ Provided 94 fishponds and 17,800 baby fish to people.

➢ Donated 200 bags of corn, 657 of sweet potato trees, 5,698 other fruit trees.

➢ Provided materials for building 240 compost fertilizer sheds to 240 households.

• Rural economic development:

➢ Shared  with  367  poor  households,  techniques  on  biogas  and  Neang  Kangrey cookers, and donated biogas plants (to 35 families) and Neang Kangrey cookers (60 families).

➢ Created initiatives for job creation and business management for 464 people.

➢ Provided agriculture market information and credit management to 171 people.

➢ Transferred techniques of Krama (45 households) and Haul (75 households).

➢ Cooperating with NGOs, microfinance enterprises in offering rural credit.

• Ethnic Minority Development:

➢ Determined the identity, culture and tradition of the ethnic minorities in Ratanak Kiri, Mondul Kiri, Kompong Speu, Kratie and Preah Vihear provinces, and issued certificates of recognition of the community identity to 69 communities.

➢ Disseminated the National Policy for Development of Ethnic Minority 7 times, of which two were carried out at the national level and five at sub-national levels.

Table 2.6: Progress in Rural Development

Baseline

Source: Ministry of Rural Development

1. FURTHER REHABILITATION AND CONSTRUCTION OF PHYSICAL INFRASTRUCTURE

2.126.     Infrastructure development including rehabilitation and construction is a key factor for supporting economic growth, enhancing economic efficiency, and strengthening competitiveness and promoting Cambodia’s economic diversification. In these regards, the Strategy Phase II of the Fourth Legislature outlined: (i) further rehabilitation and construction of transport infrastructure; (ii) water resources and irrigation system management; (iii) development of the energy sector; and (iv) the development of information and communication technology (ICT).

I.           FURTHER REHABILITATION AND CONSTRUCTION OF TRANSPORT NETWORK

2.127.     Significant progress has been made in rehabilitating and construction of physical infrastructure of national roads network, railways, ports, and main airports for a strategic transportation network connecting all parts of the country and with neighbouring countries. At the end of 2012, the national and provincial roads, under control of Ministry of Public Works and Transport (MPWT) and MRD measured the total roads network of 47,263 Km that include:

• 2,262 km of 1-digit national roads.
• 3,360 km of 2-digit national roads.
• 6,541 km of 3- and 4-digit national roads.
• 35,000 km (74%) of rural roads.

2.128.     During NSDP Update 2009-2013, the MPWT:

• Completed thirty road infrastructure rehabilitation and construction projects (1,972.7 Km) and another 35 projects (2,365.27 Km) are under progress. The projects have made the paved national and provincial road length to increase 5,596.28 Km (i.e. 45.72%). The total road length of paved roads now as in 2013 is 12,239.9 Km.
• Carried out periodic repair and maintenance on 13,666 Km of paved roads and on 5,148 Km on laterite roads. Carried out road repair and maintenance on 1,249 Km of all types of paved roads and laterite roads were 2,116 Km.
• Significantly improved the business operation of Port Autonomy de Sihanouk (PAS), Phnom Penh Autonomous Port (PPAP), and Kampuchea Shipping Agency and Brokers (KAMSAB) have improved significantly in the past five years.
• Prepared the Road Law and the new law on Road Traffic.
• The National Road Safety Committee (NRSC) has prepared the National Road Safety Plan 2011-2020, and Road Safety Action Plan 2011-2014.
• The Permanent Coordination Committee (PCC), under the supervision of the Overloaded Truck Inspection Committee, has undertaken measures against overloading of trucks.

2.129.     Road Safety Enhancement: The National Road Safety Committee (NRSC) has formulated a new draft law on road traffic; a National Decade Action Plan for Road Safety 2011-2020; and an Action Plan for Road Safety 2011-2014 focusing on use of safety helmets and safety belt, and controlling drunken driving.

2.130.     Road Safety Enhancement: There were a total of 31,992 road accidents (which caused 9,280 casualties, 24,417 serious injuries, and 28,602 slight injuries) in the 5 years 2009-2013. The road death toll during 2009-2013 increasing by 44.53% when compared

with 6,421 of the earlier 5 years.

2.131.     The Permanent Coordination Committee under the supervision of the Overloaded Vehicle Inspection Committee, conducted inspections of overloaded vehicles and arranged 6 educational/training programs, and disseminated laws, rules, and regulations concerning overloaded vehicles.

2.132.     Railway Concession: A 30 years concession agreement between the Royal Railways of Cambodia and a private company (Toll Royal Cambodia) was signed on June 12, 2009. The agreement included purchases of train engines, carriages and wagons, new equipment and facilities for railway maintenance. The new building of the Railway Department began construction in December 2012.

2.133.     Rehabilitation of Cambodian Railway: The total cost incurred so far is USD 141.6 million, of which USD 84 million is an ADB loan; USD 21.5 million a grant from the Australian Government; USD 13 million donated by OFID; USD 2.8 million in the form of railway tracks granted by the Malaysian government; and USD 20.3, RGC’s contribution.

2.134.     Road-Transport Related Activities:

• Registered 1,361,575 vehicles (in which 1,197,296 units were motorcycles and 164,279 units were cars and trucks, which is a sharp increase compared to the preceding 5 years). Vehicles registered between 1990 and 2012 were 2,175,418 units.
• Issued 428,579 driving licenses (in which 136,096 were motorcycle driver’s licenses and 292,483 were other driving licenses; this was a sharp increase compared to the previous 5 years).
• Some 426 sub-standard trucks were adjusted to comply with the laid down technical standards.

2.135.     Waterway, Transport and Merchant Marine:

• Waterways: The length of waterways in Cambodia is about 1,750 Km, of which only 850 Km are navigable in the dry season. Channel dredging was done depending upon surveys of Bench Mark Level (BM level) in the Mekong River (about 221 Km upper- stream from Phnom Penh at Kratie, and 97 Km down-stream Mekong from Phnom Penh at Ka-Orm Samnor); in Tonle Sap (about 146 Km from Phnom Penh at Chhnok Tru); and in Tonle Bassac (about 100 Km from Phnom Penh at Chhrey Thom).
• Waterway Transport: Ownership was transferred of 124 vessels; 97 ID Cards for vessels were issued; ID Cards for 23 units of vessels were extended; 200 navigational licenses were issued; 17 vessel operator licenses were issued; 870 vessels were technically inspected; and 905 water transport business permits were issued.
• Merchant Marine: ID Cards were issued to 36 vessels; technical inspections (for renewal and extension) were conducted for 147 vessels, 67 business patents were issued; 195 certificates of competency were issued; and 596 extensions of crew books were made.

2.136.     Sihanoukville Autonomous Port: Cargo throughputs: 12,141,414 tons, which is an increase by 49.57% compared to 8,117,654 tons in the previous 5 years. Container throughputs: 1,189,108 TEUs, which is an increase by 3.77% compared to 1,145,868 TEUs in the previous 5 years.

2.137.     Phnom Penh Autonomous Port: Some other achievements are as follows: Fuel and gas throughputs are 7,215,831 tons, increased by 54.75% compared to 4,662,963 tons in the previous 5 years; ship-calls are 7,979 vessels, increased by 22.94% compared to 6,490

vessels in the previous 5 years; passenger vessels are 11,495 units, increased by 54.15% compared to 7,457 units in the past 5 years; and container throughputs are 442,532 TEUs, increased by 157.97% compared to 171,547 TEUs in the previous 5 years. The total operating income in 2012 was USD 4,141,332 – a distinct increase compared the previous 5 years.

2.138.     Shipping Agency Service-Logistics: The Shipping Agency Service Logistics has carried out their roles and responsibilities at the international ports of Sihanouk Ville and Phnom Penh, and provided shipping services at private ports (Oknha Mong, Sre Ambel, Koh Kong, and Kampot). The KAMSAB achieved the following: 17,016 units (or 42,197,242 gross registered tonnage); Import cargoes: 17,703,253 tons; export: 5,808,156 tons; cargo consignment (D/O) for import: 938 containers, and for export: 5 containers; and port tally in case of PPAP: 3,223 vessels, and PAS: 2,708 vessels. Estimated total operating incomes: USD 17,605,648, showing a significant increase compared to the previous 5 years.

2.139.     GMS Cross Border Transport Agreement (GMS-CBTA): The Agreement, including its 20 Annexes and Protocols, is now in force. RGC has ratified and adopted 3 Protocols and 17 Annexes. To implement this agreement, RGC has entered into bi-lateral MOUs on Initial Implementation of the GMS Cross-Border Transport Agreement with Thailand and Vietnam.

2.140.     Cooperation with Lao PDR: Transport operation between Cambodia and Lao PDR opened in 2009 (Tropeang Kriel-Nongnokkean checkpoints). In quota, forty cargo vehicles have been authorized to operate through these checkpoints. However, other vehicles are not permitted yet. Cambodia and Lao PDR have also jointly approved the road and bridge connections and have encouraged plying vehicles in Kompong Srolao between Chhep District (Cambodia) and Monglapake (Lao PDR) to Kampong Thom and Siem Reap.

2.141.     Cooperation with Vietnam: The 2 parties signed MOU on Bilateral Agreement on Cross-Border Transport between the two countries. The quota has been increased, from 40 trucks earlier to 150 in 2009, and to 300 in 2010. These operate through 5 international check-points: Paokor-Mokbay, Prek Chak-Ha Tieng, Phnom Den-Tinh Bien, Tropeang Plong-Smach, and Tropeang Srae-Valy. The MPWT has requested the Council of Ministers (COM) to add Dakdam-Boprang as an international checkpoint.

2.142.     Cooperation with Thailand: Cambodia and Thailand had agreed to revise an MOU on change of road traffic direction, at the Poipet-Aranh Prateth border checkpoint in 2009. In September 2011, the Thai authorities proposed implementing the change of road traffic direction at the Poipet-Aranh Prateth border checkpoint and requested for opening 6 routes for inter-country passenger transport (Bangkok–Siem Reap, Bangkok–Phnom Penh, Trath– Koh Kong, Srash Keo–Phnom Penh, Srash Keo–Siem Reap, and Soren–Siem Reap). In June 2012, Cambodia and Thailand formally declared official opening of the inter-country transport operations applying the quota of 40 trucks.