KEY STRATEGIES AND ACTIONS

4.01  RGC attaches high priority and is firmly and fully committed to national sovereignty, peace and national reconciliation, stability and social order, democracy and protection of human rights, and sustainable development that will accelerate progress, prosperity, harmony, and enhance the living standards and dignity for Cambodians in all walks of life.

4.02  With a clear vision, RGC is committed to the following basic principles for taking the country forward:

• Strict adherence to democracy in governance, where all citizens are able at regular intervals to freely elect their representatives to govern at national and sub-national levels.

• Protection of individual and human rights, including full freedom of expression.

• Maintenance of peace, political stability, rule of law, equity and social order.

• Government at all levels to be fully responsive, responsible, effective, transparent, accountable and predictable.

• Government to ensure macro-economic stability, create and maintain key physical and institutional infrastructure, as well as a conducive climate and a regulatory framework for private sector to operate and flourish.

• Government to provide essential social services for human capital formation and enhancement -- health, education, cultural development --, and create an environment that enables individuals to seek and realize their full potential and contribute to their own well-being and the country's growth.

• Government to ensure sustainable management of nation's environment and natural resources -- forests, fisheries, land, water and bio-diversity -- on which human livelihoods and welfare depend.

4.03  This chapter presents major strategies and actions to implement programmes and efforts to reach the overall goals outlined in Chapter III and to overcome shortcomings listed at the beginning of Chapter II.  The chapter highlights key and major strategies developed through extensive consultations. This chapter provides only a macro overview of strategies and critical actions. It is intended to be a broad guide, not detailed listing of all work being done or to be done by ministries and agencies. More and clearer details could be found in sectoral plans already developed or to be developed soon. It should be noted that many goals to be achieved are essentially quantitative. Qualitative aspects though critical cannot be easily measured but over time could be experienced and would manifest themselves through improvements in various ways.

4.04  Poverty: Given that 90% of all the poor live in rural areas, special attention and targeted inputs and investments are needed in rural areas, especially those not covered by the 1993 survey (and poorer pockets of other areas), to rapidly bring down poverty levels and to reach overall CMDG targets for 2010 and 2015. Since a greater share of the poor are now closer to the poverty line, these targets are not beyond reach. Such special attention will include more and better health care, educational facilities, improved incomes through rural activities (farm and non-farm), improved rural infrastructure and so on. More funds should devolve to these areas through the Commune and Sangkat development fund and other measures. Achievement of progress to reduce poverty, a crosscutting issue, depends on the totality of pro-poor policies and efforts in all other sectors. Accordingly, RGC will ensure that:

• All its sectoral strategies keep in focus positive impact on poverty to reach the goal of bringing poverty index down to 25% by 2010.

• In particular, targeted investments and attention are directed towards underserved people and areas, especially those with high poverty prevalence.

• In addition to broad sectoral and macro-level approaches, and with EDP support, special and innovative grass-root level support schemes of direct benefit to the poor are devised and implemented^.

4.05  With established peace, social order and robust economic growth, Cambodia is at a critical threshold for faster and more equitable growth. The next ten years represent a decade of opportunity for steering the country forward to realise ambitious CMDGs and uplift the poor and vulnerable. RGC is committed to seize this opportunity to consolidate and build on past gains to make a positive impact during the five years of NSDP, 2006-2010. The time has arrived to divert attention from high level studies and surveys to concrete and tangible actions to accelerate progress in the lives of Cambodian people. It is time that significant gains are achieved at the grass roots level where it matters most to the ordinary citizen and for speedy reduction of poverty. Accordingly, RGC is committed to pursue strategies and actions that will:

• Factor poverty reduction and gender equity concerns in all activities.

• Ensure speedy reforms in all sectors, which will yield long-term benefits, however painful they may be in the short-term.

• Foster and facilitate equitable and spatially and sectorally well spread, in depth, robust and sustained macro-economic growth that readily provides opportunities and benefits to one and all.

• Significantly increase "real investments" for growth such as in infrastructure (urban, rural and national), productive sectors like agriculture and industries, and in human development (health, education).

• Target the most needy and least served people, including those with disabilities and indigenous people, and areas to help rapidly reduce poverty.

• Maintain a judicious balance between top-down (macro level reforms) and bottom-up (grass root) approaches.

• Focus on well tried, low-cost activities with potentially high-returns at the grass roots level where speedy changes are possible and will have a profound and positive impact, and/or that will directly benefit the poor.

• Optimise factor productivity -- capital, labour, land and natural resources, inputs -- in all activities.

• Promote adaptation and use of science and technology.

• Rely as much as possible on human labour for all construction work, to boost household incomes, especially in rural areas.

• Stress building of institutional and human capacity in all sectors and at all levels to create and sustain a critical mass of expertise and human capital.

• Evolve mechanisms to ensure as much funds as possible to be routed through sub-national levels for implementation of development activities.

4.06  These factors are central to and will influence and govern all the strategies outlined in this chapter. All of them in one way or the other impact on the achievement of goals and targets listed at Chapter III (Table 3.2). These factors will be taken into account in preparing new sectoral strategies or plans or in reviewing ongoing ones and activities. TWGs could play a useful role in the process.

4.07 The Rectangular Strategy (RS) "for growth, employment, equity and efficiency", provides a clear and focused framework to move the country forward on the path to fast socio-economic development. Goals and targets were listed in Table 3.2 of Chapter III on the basis of priorities for alleviation of poverty and for enhancing economic growth. Implementation of various strategies and actions under NSDP will be organised within the RS framework. These are discussed below along flow of Rectangular Strategy, starting with Governance. For each side of each rectangle as well as other crosscutting and generic subjects not specifically included in the rectangles, the proposed key strategies and anticipated actions for the next five years, 2006-2010, are presented and considered.

4.08  The Rectangular Strategy contains at its core Good Governance which will be promoted and pursued in an encircling Environment for its successful implementation, for the purpose of achieving speedy socio-economic progress in various priority areas listed under four other "growth" rectangles. There are therefore six (6) aspects of the strategy. The rest of this chapter is organised along the flow of RS.

Governance

4.09   Good governance is the most important pre-condition for achieving sustainable socio-economic development with equity, equal opportunity and social justice. It needs wide participation, sharing of information, openness and transparency, accountability, equality, inclusiveness and strict rule of law. Accordingly, Governance covers four reform areas, viz., (a) fighting corruption, (b) legal and judicial reforms, (c) public administration reform including decentralization and deconcentration, and (d) reform of the armed forces, especially demobilization.

4.10   RGC's Governance Action Plan (GAP I) approved in 2001, to promote multi- and cross-sectoral governance reforms is the main framework for various actions on this front. On the basis of experience gained, GAP II, 2005-2008 is being finalised. 

4.11  Fighting Corruption: Corruption is debilitating and inimical to orderly growth. It makes the playing field for economic factors and actors unpredictable and uneven and deters much needed domestic and foreign investment. It increases costs, renders Cambodia less competitive and makes the country lose important opportunities for growth. A variety of actions, in many areas including reforms and behavioural changes, are needed to combat corruption and instil a "culture of service" whereby public administration acts truly as an instrument of efficient, effective, speedy and impartial service to all Cambodians. The priority goals are:

• Reduce corruption significantly by 2010; and

• Strengthen education, publication and dissemination of legal and related material.

4.12  The strategy for drastic reduction and eventual elimination of corruption will follow a three-pronged approach -- enforcement, prevention and public support/public education. RGC is determined to take concrete actions that strike at the root causes of corruption by ensuring predictability, enhanced transparency and clear accountability in all its actions. Various proposed priority actions include:

• Fast track passing of the comprehensive Anti-Corruption Law, and make it conform to best international practices.

• Build capacity of the concerned institutions to effectively manage and enforce the Anti-Corruption Law, including strengthening inspection tasks.

• Set up an independent and effective body to fight corruption.

• Ensure the strictest and total enforcement of the law sparing no one from its provisions, however highly placed.

• Strictly adhere to competitive public bidding and transparency in all contracts, leases or disposal of state assets.

• Make audit processes and public procurement more efficient and effective to address accountability and transparency.

• Continue the already commenced concrete efforts to incrementally increase the low level of remuneration of civil servants so that the temptation for corruption could be reduced.

• Streamline the delivery of public services to contain opportunities for corruption particularly in areas related to trade, commerce and investment.

• Establish a Citizens' Bureau as a watchdog mechanism to contain corruption.

• Develop and enforce codes of ethics for the public sector.

• Continue to actively participate in the international arena for fighting corruption as was done in joining the Anti-Corruption Action Plan for Asia and the Pacific.

• Prevent and avoid any "waste" of public assets or resources, including incurring higher than necessary cost of production of goods and delivery of services; ensure in this regard that global competitive advantages are fully availed of for investments, avoiding those that are less competitive.

4.13  Legal and Judicial Reforms: With considerable progress so far, it is evident that the RGC is committed to accelerate legal and judicial reforms which are clearly considered as crucial elements in its Political Platform. Some essential regulations have been prepared and adopted to underpin the socio-economic development process through a trusted and respected (in-country and internationally) judiciary. In the efforts to build this confidence, the RGC has endorsed a vision and the Legal and Judicial Reform Strategy (June 2003) including seven strategic objectives. The Plan of Action for implementing that strategy (29 April 2005) include major strategies and actions:     

• Establish and pass basic laws and codes relating to judicial system, viz. law on the establishment of courts, law on the statute for judges and prosecutors, law amending the law on the establishment and functioning of Supreme Council of Magistracy, civil and penal codes and procedures, administrative codes and other regulations in order to ensure the independency of prosecution.

• Establish transparent procedures for preparing laws; carry out programmes to increase community awareness about rights and freedom; and establish office for protecting citizen rights.

• Ensure the sustainability of publishing and disseminating the Royal Gazette and court verdicts; establish a trilingual law lexicon; and strengthen legal aid.

• Establish Special Courts as needed such as the Commercial Tribunal, the Labour Tribunal, the Juvenile Tribunal and the Administrative Tribunal.

• Extend the model of the pilot court, already established at Kandal Province; provide the court with adequate and up-to-date facilities; and establish information office at each court.

• Establish code of ethics for judges, prosecutors, and judicial officials.

• Establish and strengthen mechanisms for conflict resolution outside of the court system.

4.14    Public Administration Reform: The reform of the Administration is a core governance strategy. The goal is to make Administration a potent instrument of public policy and make it more effective, efficient, neutral, transparent and responsive, to serve people better. With the foundations in place, the task ahead is to deepen and broaden reform processes to target poverty reduction while being sustainable. Building on achievements to date, the NPAR seeks to develop the capacity of the Administration to serve people better where and when needed. The following highlight the scope of the reform underway:

• The overall size of the Civil Service will essentially stabilise at current levels, but its composition will change significantly in favour of priority sectors and the front lines closer to the people outside major centres.

• Workforce management and control mechanisms will be strengthened to marshal human resources to priority needs.

• The remuneration of civil servants will increase gradually by 10 to 15% per year in line with means available to the Government.

• Public services will become less bureaucratic, more effective, accessible and transparent through implementing a mix of tools such as One Window offices.

• The capacity of people and institutions within the Administration will be developed urgently to uphold principles of good governance and to improve performance.

• The gradual automation of management and service delivery processes through information technology will be continued to enhance the quality of transparency of public services.

4.15    Priority actions envisaged include:

• Continue to increase civil service salaries according to budget availability.

• Articulate and implement a policy on public services and their delivery.

• Further develop and implement the allowances system to improve performance and reward merit.

• Enhance the control and management of the Civil Service through the strengthening of merit based HRM processes and practices and the further upgrading of the HRMS.

• Implement strategies and programmes for the redeployment of staff according to priority needs.

• Develop human and institutional capacity through the promulgation of a framework to manage capacity development, a more effective management of HRD including the implementation of an HRD master plan, and enhancing the value of training.

• Implement the PMGs programme as an innovative way to reward performance and merit and phase out salary supplementation practices.

4.16  Decentralization and Deconcentration (D & D):  Crucial to strengthening of democracy at the grass roots level is participatory local development in improving and delivering as many public services as are possible at the commune level. A key priority is building local management capacity and providing reasonable level of financial resources. RGC has recently introduced a pilot scheme for a "one window" service delivery in two districts, to make available some relevant administrative services to people and the private sector.

4.17  Grass root level development can best proceed by identification and prioritisation of local needs at the local level. As such, based on the overall goals outlined in the NSDP (Chapter III), each commune, district and province would prioritise their own needs and try to achieve them using increasing funds made available to them through block grants and other forms such as tax sharing and own revenues generated through local level taxes.

4.18  Following the major step taken by developing an overall framework for D&D in early 2005, the main strategies and actions proposed are:

• Draft and pass Organic Laws to clearly delineate the basic concepts of subsidiarity in order to provide clear guidelines for the devolution process and to specify functions, roles and responsibilities at various levels of the administration.

• Further delegate increased responsibilities and make available development and operational funds from line ministries to the provincial and other sub-national levels in accordance with the organic laws and related regulations and other amended rules.

• Build upon the considerable progress already made through individual initiatives of line ministries including the Priority Action Programme (PAP) ministries -- Education, Health, Agriculture and Rural Development -- as well as Ministry of Land Management, Urban Planning and Construction, to better define a framework under which deconcentration of services can develop more coherently.

• Systemise and better institutionalise the allocation mechanism to ensure full and timely transfer of funds and strengthen the "block grant" system (e.g. already developed Commune/Sangkat Fund) from the national budget to the commune councils, and develop block grant and sectoral allocations for provincial and other sub-national levels to ensure accountability and transparency of revenue collection and expenditures to the citizens and other stakeholders. 

• Increase and target provision of such funds on a priority basis particularly to remote and other regions where poverty levels are high, to help meet in a significant way local needs for infrastructure and other development.

• Explore appropriate avenues for provincial and other sub-national levels including communes/sangkats to develop their own resources including revenue generation from taxes to be collected at local levels, service charges and tax sharing for local budgets.

• Steadily implement a commune decentralization accounting system (CDAS) in provincial treasuries.

• Build up institutional capacity at all sub-national levels.

4.19  Armed Forces Reform and Demobilization:  The White Paper of National Defence articulates policies and programmes to be pursued, including distribution of social concession lands to demobilized landless soldiers who need land for their residence and/or for family farming in conformity with the Sub-decree on Social Land Concessions. Equally, efforts will continue to reform, build, train and strengthen the national police to become a truly professional force, equipped with modern technology, and capable of discharging its responsibilities for maintaining internal security, social order and harmony, and to protect people's lives and property. In performing its duties the police force will always act impartially and efficiently with due respect for human dignity and rights.

Environment for the Implementation of the Rectangular Strategy

4.20   Four aspects of this enveloping circle are: Peace, political stability and social order; Integration of Cambodia into the region and the world; Partnership in development; and, Favourable macro-economic and financial management. In addition, some critical crosscutting aspects are also considered as part of the overall environment for progress.

4.21  Peace, political stability and social order: constitute the fundamental basis on which any sustainable progress can take place. It is clear that the post-conflict reconciliation, democracy, social order and reduction in crime achieved in the past through dialogue and mutual adjustments are precious and need to be vigilantly safeguarded and enhanced. These are essential not only for progress of Cambodia but also to the fair image of the country all over the world. No efforts will be spared to ensure that they continue to be maintained in a dynamic and growing manner.

4.22  A major aspect of maintaining political stability and harmony is conduct of five-yearly general elections for various bodies of the State, viz., Senate (due in 2006), National Assembly (due in 2008), and Commune Councils (due in 2007). Since government budget alone cannot meet the heavy expenditure on these elections, external support will be needed as before.

4.23  Integration of Cambodia into the region and the world: By taking active partnership role in all aspects of ASEAN, attending and contributing to various region level initiatives and conferences, and by joining WTO (2004), Cambodia is well on the way to achieving this goal. Much more however has to happen to deepen, and benefit from, the integration process. The goal is to ensure that efforts for integration of the Cambodian economy into the regional and global economy pay due attention to benefiting the poor. In this regard, RGC will:

• Pursue full partnership in the implementation of various elements of the Initiative for ASEAN Integration, and in depth participation in the Greater Mekong Sub-region Program. In particular, the efforts would be to synergise national and regional activities consistent with the ASEAN Vision 2020, the Bali Concord II, the Vientiane Action Programme (VAP) for the period 2004-2010 including all plans of actions.

• Actively pursue and increase the number of free and favourable trade agreements with other countries to enhance access of Cambodian products and services to overseas markets.

• Attract investment, instil and upgrade skills, create employment and accelerate economic progress that will have a pro-poor bias.

• Adhere to the obligations and commitments of Cambodia as a member of WTO in particular to action programmes endorsed by the Cabinet Meeting of 27 February 2004 and assess the impact of WTO accession on poverty reduction targeting especially the agriculture sector, including impact on vulnerable groups, particularly women who are a predominant part of the informal sector.

4.24   Partnership in development: There are three (3) basic aspects of partnership between RGC and other stakeholders, viz., (i) with civil society, (ii) with the private sector business and investor community, and (iii) with external development partners. The goal is to strengthen partnerships with all the stakeholders to improve effective and coordinated use of resources in order to achieve equitable socio-economic development.

4.25   Ongoing efforts will be continued and strengthened to involve and associate all sections of the civil society in all appropriate aspects of RGC's planning and decision-making processes, and to make civil society an effective partner in the development efforts. Already, many NGOs, both national and international, are involved in socio-economic development as well as in promotion of democracy and human rights. A Law on Non-Government Organizations will be formulated soon with broad consultation with all relevant institutions and organizations.

4.26  The crucial role of the private sector as the locomotive and driving force for investments and economic growth cannot be over-emphasised. Attaching a high priority to facilitate private sector operations, several mechanisms have been put in place and efforts will continue to strengthen and deepen harmonious relations with the private sector, based on strict adherence to laws and regulations and focused on development priorities.

4.27  Relations with external development partners: RGC gratefully acknowledges that generous levels of financial and technical assistance received from EDPs since 1993 have in a large measure helped Cambodia's impressive progress. It is clear that as an LDC the country will continue to need such support for quite a length of time in the future as it moves forward towards its long-term vision. Various forms of cooperation with EDPs have evolved in the past, including annual aid-mobilization meetings (now CG meetings), sector level consultations, in-country periodic consultations and more recently, the formation of government-EDP joint technical working groups (TWGs) for various thematic and sectoral areas and an overarching Government-Donor Coordination Committee, which meets once every quarter to assess progress and guide future directions. All these mechanisms will continue to be strengthened to achieve effective and regular consultations and partnership through increasing RGC ownership and leadership. Meeting quarterly on a regular basis, or as often as necessary, TWGs will have an important role in assisting RGC to develop new sectoral plans, review ongoing ones, harmonise and coordinate external assistance to programmes and projects as well as to monitor their implementation and progress.

4.28  It is noted that a great deal of past resources spent directly by external development partners have been devoted to technical assistance and conducting various high level studies and surveys. While these have no doubt had their use, it is time now to ensure that resources are redirected to make available "additional funds" for concrete and tangible actions to accelerate progress in the lives of Cambodian people.

4.29  On a global level, through OECD/DAC initiatives, international compacts have been proclaimed through high level Rome (2003) and Paris (2005) declarations emphasizing that for aid-effectiveness it is essential to encourage and abide by the full ownership and leadership of the recipient countries in regard to formulation and implementation of development efforts. Furthermore, it has been agreed that EDPs would align their development assistance policies, priorities and programmes as well as harmonize their procedures to those of the host countries. Cambodia is one of the pilot countries for these efforts. Through Monterray Declaration of 2002 it was also agreed that developed countries would increase development assistance significantly.

4.30  A Strategic Framework for Development Cooperation Management is now being finalised to re-confirm and clarify RGC's policies and procedures, which would govern and guide both its relations with external development partners and assign roles and responsibilities within the government. This would further streamline processes to improve mutual cooperation between RGC and EDPs. Through various cooperation mechanisms outlined in that document, EDPs would be encouraged to move increasingly away from stand alone as well as TA projects and to start providing support through Sector-Wide Approaches, aiming eventually to providing largest proportion of resources through budget support as the preferred mode, conditioned on agreed upon reforms and/or sectoral progress.

4.31  Favourable macro-economic and financial environment:  The goal is to ensure macro-economic progress and financial environment to achieve more diverse and pro-poor economic growth. Already, sustained, robust and spatially and sectorally well-spread macro-economic growth and prudent financial management form the centrepiece of all socio-economic programmes. RGC has had success in macro-economic management in the past and was able to withstand both external shocks like those caused by East Asia crisis of 1997 as well as internal political uncertainties from time to time, in 1997 and during 2003-2004. Based on this experience RGC is confident that, with vigilance and timely actions, it would be able to successfully steer the situation in the future. The strategies and actions during NSDP are to:

• Ensure steady GDP growth of 6% per year.

• Maintain external sector and exchange rate stability.

• Contain inflation at under 5%.

• Mobilise more domestic revenues. 

• Directly provide, and encourage private sector, investments in the rural sector, which will also broaden the base of economic activities.

• Pursue progressive and strict budgetary policies both on the revenue and expenditure sides.

• Through strict implementation of the Law on Taxation and other measures, enhance collection of revenues, tax and non-tax, broadening the tax base, and root out the "culture of tax waiver and exemptions".

• Vigorously fight against smuggling through international borders and ensure collection of arrears.

• Target expenditure to priority sectors of development and hitherto underserved areas.

• Strengthen and strictly implement laws relating to public procurement.

• Conduct regular audit, internal and external, of revenue and expenditure sides of the budget including MEF and all ministries.

• Manage state assets including tangible and intangible properties, as well as state enterprises and joint ventures in a transparent and efficient manner both to safeguard the interests of the state and to enhance steady flow of revenues.

• Follow clear, transparent, public bidding procedures in disposal or lease of state property or rights, indeed in award of all state contracts.

• Maintain full vigil through MEF on signing of contracts with private companies.

4.32  A Public Financial Management Reform Program (PFM) is already in place and being implemented. A rolling (moving ahead one year, every year) five-year Medium-Term Fiscal and Expenditure Framework (MTF/EF) seeks to project income and expenditure and is followed in implementation. For ensuring increasing allocations and timely disbursements to priority pro-poor sectors, mechanisms will be set in place through which predictable, assured and increasing annual budgetary amounts are made available to Agriculture, Rural Development, Health and Education.

4.33  Led by the National Bank of Cambodia (NBC) and the MEF, the Financial Sector plays a crucial role in macro-economic stability and is vital for the pace and direction of economic growth. A well-functioning financial sector can break down the limitations of self-financing, and mobilise idle financial resources for productive investment. To link up saving, investment and economic growth, the financial sector needs to go hand in hand with private sector development and governance reforms, forming three pillars to support RGC's vision for generating and sustaining growth, which in turn is a major means to reduce poverty. The Financial Sector Blueprint (FSB), 2001-2010, adopted in 2001, is the guiding tool for policies and programmes in this sector and envisages the development of a sound, market-based financial system by 2010, to enhance resource mobilisation for sustainable economic growth. FSB, now under implementation, focuses comprehensively on various elements and aspects of the finance sector such as:

• A competitive, integrated and efficient banking system that is well regulated and supervised to generate finances for private sector investment and growth.

• A viable, pro-poor and effective rural finance system for providing affordable and accessible financial services for the poor to enhance rural income and reduce poverty.

• An insurance sector that protects businesses and individuals from unforeseen adverse events and a pension system that provides a secure retirement, both also providing capital for investment.

• An efficient and transparent capital market with a critical mass of issuers that mobilises funds for long-term investment.

• A money market that enables inter-bank transactions and provides banks, companies, and individuals with the means for effective liquidity management.

• Creation of Non-Bank Financial Institutions such as leasing companies, finance companies, investment companies, venture capital companies and development financial institutions.

• Put in place an accounting and legal infrastructure to ensure good corporate governance and transparency.

Table 4.1: Key Macroeconomic Forecasts
(In percent of GDP unless otherwise indicated)

4.34   As the figures in Table 4.1 show, the macroeconomic outlook for the next few years seems stable and promising. The mainly export-oriented garment industry, now the driving force in the economy, is likely to remain robust for some more years, but its rate of growth may decline, although the end of the quota system in early 2005 has not had any significant impact on the rate of increase.  Tourism has also contributed robustly to the economy and is expected to continue to do so, as will the trend of high increase in Construction. But there is need to broaden and deepen the base, especially by promoting agricultural growth that will also at once help reduce poverty. Accelerating much needed reforms in governance would help in attracting more investments, both domestically and from outside.

4.35  Some important factors that might impinge adversely on the economy are: continuing high oil prices; threats of terrorism any where in the world that would disturb international political climate and destabilize predictable economic environment; decrease in flow of ODA due to extraneous causes; unexpected outbreak of epidemics such as those that may arise from spread of "avian flu"; and, severe changes in weather affecting agricultural production.

4.36  With all the reforms already on way as well as those being undertaken and the further steps planned under the NSDP, RGC is confident that the forecasts shown above could materialize. Some portion of the national budget revenues in the past has come from 'budgetary' or 'program' support mainly from multi-lateral financial institutions, provided against specific reform and other actions. (In 2005, this is estimated at about CR 120 billion or US$ 29 million representing 0.5% of GDP and 5% of total domestic budget revenue). RGC expects that such support would continue during the NSDP as well.

4.37  Religious and cultural issues: The Royal Government's emblem accords highest status to "Nation, Religion and King". Religious beliefs, faith, family values and the rich and vibrant culture which has sustained them, during past millennia, have kept the social fabric in tact and growing in strength, adjusting to changing times and influences. They are the bedrock for building, strengthening, and maintaining the very vital "social capital" that no amount of economic development can alone create or sustain. They are thus an overriding issue cutting across all aspects of Cambodian life everywhere. Though these suffered a severe setback and rupture during the genocidal regime in 1975-79, they have revived robustly since then. RGC accords high priority to preserving and enhancing the country's rich and unique cultural heritage both to starch and strengthen the social fabric and also to attract "cultural tourists" to observe and admire Cambodia's past and present culture. RGC will provide adequate funds for this purpose.        

Enhancement of Agricultural Sector 

4.38   The four sides of this rectangle are: improving and diversifying agricultural sector (including nutrition and rural development); land reform and mine clearance; fisheries reform, and, forestry reform.

4.39   Improving and diversifying agricultural sector:  This sector embraces crops -- predominantly rice --, plantations, livestock and poultry. It is well recognized that, with immense but as yet unrealised potential both for boosting GDP and for uplifting the poor especially in the rural areas, quickest and high returns are possible at fairly low costs, especially in crops and more particularly in rice production and by diversification into cash and other crops. With women constituting the majority of the labour force, improvements in this sector would benefit women directly. The priority goals in this sector are enhancement of: food security, productivity and diversification; and, market access for agricultural products.

Table 4.2: Targets set for 2010 for the Agriculture Sector

4.40  A comprehensive Strategy for the Agricultural Sector as a whole is still to be developed. Through close cooperation among all concerned ministries and agencies, an "Agriculture and Water Resources Strategy" will be developed during 2006, which will take into account all ongoing sub-sectoral plans in this sector and include, inter alia, analysis of, solutions to, and strategies for:

• Agricultural land management issues: pros and cons of economies of scale and social dimensions and factors relating to small farm holders, farmers cooperatives, contract farming, large scale land concessions -- all in the context of increasing production, productivity and diversification, and for ensuring equity and social justice.

• Production of High Yielding Varieties (for example of rice) developed elsewhere, especially in nearby countries with similar agro-climatic conditions versus large scale investment in agricultural research to develop new varieties in Cambodia.

• Increased production of rice for export in preference or in addition to production of crops with special 'niche' value.

• Increased production of crops like fruits and vegetables for which Cambodia is currently heavily dependent on imports.

• Clear goals, specific targets and proposals for achieving increased crop production through: cropping systems that make the best use of limited water resources and reduce risk to farmers from year-to-year variations caused by natural occurrences; and, best crops to be grown every season taking into account soil conditions and other factors, export potential, improvements in irrigation, etc.

4.41  In the meantime, till a full-fledged Agricultural Strategy is in place, RGC will pursue action for enhancement on the following fronts:

• Food Security, productivity and diversification.

• Improve water management for agricultural and farm-scale aquaculture.

• Improve and extend agricultural extension services.

• Better market access for agricultural products, especially from remote areas.

• Foster a conducive climate for SMEs in the sector.

• Strengthen Institutional and legislative framework.

4.42  Given the low productivity in all crops due in part to poor soil conditions, the most important challenges in regard to crop production are:

• Identify through soil surveys and other means the best crops that could be grown in any given area to derive the maximum returns and benefits.

• Actively pursue intensive cropping including multiple seasonal crops on the same land.

• Vastly increase yields of all crops by use of better inputs (seeds, fertilisers, proper practices), improved and extended water management and crop protection; at the same time, also promote low-input, low-cost methods of increasing agricultural production, including System of Rice Intensification (SRI) as appropriate, so as to enhance farmer profits and to avoid over-use of pesticides.

• Diversify the range of crops that could be grown.

4.43   The priority strategies in the next five years, 2006-2010, would be:

• Speedily formulate and implement a comprehensive Agriculture and Water Resources Strategy.

• Focus on "intensive cropping" both by increase in the number of crops per year on the same land and in yield per crop.

• As a highest priority, increase rice yields to at least an average of 2.4 tons per hectare.

• Encourage cultivation of cash crops, including fruits and vegetables, both as a means to diversify and to ensure income security while continuing production of staple food crops to ensure food security.

• Initiate "one village-one product" concept to promote high value agricultural products, which may also attract private sector involvement through contract farming and other ways.

• Expand support services such as agriculture research, extension services, developing markets, provision of micro-credit in rural areas (including for farmer-owned and operated irrigation systems), etc.

• Improve agricultural products to conform to international standards.

• Accelerate and stabilize broad-based growth of agriculture output through sustainable development of high-value products.

• Modernise and increase agro-processing to add value to rural products and increase rice yields from paddy conversion, both to increase family incomes in rural areas.

• Strengthen and enlarge animal production and animal husbandry and veterinary services.

• Promote smallholder rubber cultivation and promote privatisation of state owned rubber plantations.

• Adopt and implement innovative measures to provide direct grant assistance to poor farmers for increased production of crops of their choice

• Continue promotion of export markets for niche products, including especially organic farm exports.

4.44  Livestock: Much of Cambodia's seasonal agriculture depends on animals for draught power for ploughing and other operations. Animals and poultry are also major sources of income and protein for rural communities. The challenge is to improve the quality and welfare of livestock by introducing better and quick growing species, and by extending enhanced animal husbandry and veterinary services to be within easy reach of the poor. NSDP will pursue various strategies in this regard, also to be spelt out in full detail in the proposed Agricultural Strategy.

4.45  Fisheries: Given the crucial role of fish in the lives of millions of Cambodians in terms of food, nutrition, income and livelihoods, the goal is to ensure sustainable access to fisheries resources for the poor. The priorities are:

• Enable and strengthen community-based development of fisheries sector by empowering local communities so that farmers can participate directly, actively and equitably in fishery plans, programmes and management, and to avoid over-fishing.

• Improve livelihood of poor people by enhancing their capacity to more effectively use fish after capture through better fish processing, handling, storage, transportation and trade.

• Transform fishing lots whose concession contracts have expired into fish sanctuaries, thereby to increase natural fish stocks, and conserve endangered species.

• Protect freshwater fisheries by sustaining the bodies of water, in terms of both quality and quantity, on which they depend.

• Encourage and promote private sector aquaculture to respond to the needs for fish, at the same time to decrease pressure on natural fisheries.

4.46  Food Security and Nutrition (FSN) are important crosscutting issues and significant improvements in Food Security and Nutrition are crucial to reduce the persistent high levels of malnutrition and micronutrient deficiencies among women and children. The key goal is to ensure that "poor and food-insecure Cambodians, by 2010, have substantially improved physical and economic access to sufficient, safe, and nutritious food at all times to meet their dietary needs and food preferences for an active and healthy life". Achieving this goal requires concerted efforts in various sectors outlined in this NSDP, with focus on the following elements especially with regard to the poor and food insecure:

• Increasing and ensuring food availability.

• Improving food accessibility (involving incomes and affordability).

• Ensuring optimal food use and utilisation through health and nutrition education (including improvements in child feeding practices and maternal nutrition), micronutrient supplementation and fortification programmes (iron, Vitamin A), further enforcement of universal iodisation and food safety standards, etc.

4.47  Forestry reform: Every effort will be made to maintain total forest coverage at 60% of land area and to continue reforestation, besides suspending issue of any concessions and keeping a strict watch over existing concessionaires to ensure that they submit Strategic Forest Management Plan (SFMP) along with the Environment and Social Impact Assessment (ESIA) and, after approval, continue to adhere to them. The challenge is to spell out a clear strategy to address management of concessions, annual coupes, community forests, and protected areas in a sustainable manner based on the following three pillars:

• Sustainable forest management policy to ensure the rational and strict monitoring of forest exploitation according to international best practices in forest management, to provide adequate forest reserves for domestic consumption, protection against drought and floods as well as preservation of wetlands, which serve as fish sanctuary.

• Protected Area System to protect biodiversity and endangered species.

• Community forestry as a sound, transparent and locally managed programme.

4.48  In order to achieve the above goals in the forestry sector, RGC is committed to implement a National Forestry Programme with the following priorities:

• Strengthening of forestry management and conservation.

• Promoting man-made plantation to substitute for national forest demands by encouraging private investment and public participation.

• Promoting forestry contribution to social and economic development.

• Promoting forestry contribution to poverty reduction by strengthening community forestry initiatives and by involving local communities in forest exploitation plans.

• Creating public awareness to add to, replant and use community plantations for firewood and charcoal needs and not destroy forests.

4.49   Environment and Conservation: The goals in preservation, conservation and sustainable use of all natural resources of the country, including bio-diversity, are not only to conserve the unique natural heritages but also to enhance environmental sustainability and to contribute to sustainable economic growth, poverty reduction and improvements in the lives of rural communities. Furthermore, natural areas are and would be actively promoted as attractive low-impact 'eco-tourist destinations' bringing in further benefits to the local communities. The environmental and social impact assessment, environmental education and awareness play an important role in achieving these objectives. Cambodia's aquatic resources, especially the Tonle Sap Great Lake and the Mekong River, their tributaries, and coastal areas are undergoing pressure from land development. The problem is also aggravated by Cambodia being at the lower end of the Mekong river basin, with several countries upstream. New Laws and National Policies will facilitate improved water resources management and sanitation. Successful implementation of the National Program of Action to Climate Change will depend on adequate resources.  

4.50   Land Reforms: Land and water are two fundamental natural resources that serve as the basis for socio-economic development and poverty reduction, especially in rural areas. The goals are: land tenure and land market development and pro-poor land access. The 2001 Land law will continue to be implemented to ensure an equitable, proper and efficient system of land management, distribution, land tenure security, eradication of illegal settlements and land grabbing, and the control of ownership concentration for speculative purpose. The priority is to issue clear, incontestable, legal land ownership titles to provide security of tenure to those in actual use of the land they occupy. The challenges are to control and curb further land concentration in few hands, including review of already granted large concessions exceeding limits under the 2001 land law, where land is still lying fallow and unproductive. Some priority actions envisaged are:

• Formulate and implement a comprehensive land policy.

• Continue to discuss and develop the required legal framework for effective implementation of the Land Law, including registration of indigenous people's land rights.

• Improve and implement land registration procedures for systematic titling and sporadic titling and issue titles for at least 32% of land parcels (urban and rural) by 2010.

• Implement the sub-decree on state land management, particularly in the area of identification, classification and establishing land maps and inventory.

• Review the existing economic land concessions and make them consistent with guidelines stipulated in the sub-decree on economic land concessions.

• Develop and implement scheme for social land concessions to provide small land parcels with titles for settlement and agricultural production; on a pilot basis provide these to a minimum of 10,000 landless households.

• Continue to establish horizontal and vertical geodetic networks nation-wide and orthophoto maps for the country.

• Establish surveying and mapping standards.

• Promote decentralisation and deconcentration of management functions in land and construction matters.

• Create Strategic Development Zone Plans for small areas, districts/khans, zones and national levels, and integrate them into the National, Regional and Urban Management Plan; as well as develop and provide services for and coordinate preparation of District Development Strategic Plans in 100 districts with priority to border areas.

• Improve transparency and accountability in the provision of services in land and construction domain, including land valuation system.  

• Strengthen the cadastral commissions and other mechanisms for land dispute resolution in order to ensure just and timely resolution of disputes.

4.51  De-mining operations are not only humanitarian and security related but have significant social and economic implications, particularly on land distribution and the security of poor farming households in remote areas. They open up avenues for rural development. The goal to is to steadily continue de-mining and UXO de-fusing or destruction and carry on public awareness campaigns to reduce the number of human casualties to less than 200 by 2010 from 797 in 2005, and to increase the area rendered mine free to 45,000 ha by 2010 from 32,974 ha in 2005.

4.52  Rural Development is an important cross-sectoral issue spanning from democracy at the grassroots to decentralization and to creation and improvement of rural infrastructure, health and education services to the rural people. It is thus an important element both in itself and as a vital ingredient for enhancement of agriculture and poverty reduction. This is also a priority activity for ensuring budget allocations and disbursement.

4.53  Provision and enhancement of rural infrastructure, particularly rural transportation, water supply and sanitation, improving access to rural finance and credit schemes, promotion of sustainable natural resource management, and stimulation of rural community development through decentralization and deconcentration are some of the main work undertaken as part of rural development. Support to commune councils will continue to be provided to undertake rural infrastructure projects such as road rehabilitation and construction including small bridges and culverts, water supply wells, sanitation structures, schools, water gates, and small scale irrigation systems. These efforts along with those planned for agricultural development would provide employment and income earning opportunities in rural areas and thus also stem internal migration to urban centres.

Table 4.3: 2010 Targets for Rural Development

4.54  The new Integrated Rural Accessibility Planning (IRAP) mechanism will be used to pay priority attention to underserved rural areas. Priority actions for the future include (in addition to those covered under D & D):

• Continue and accelerate provision and upgrading of rural infrastructure to improve access of rural people to services and easy reach to markets for rural products.

• Improve and increase sustainable access and use of safe drinking water and sanitation, particularly in rural communities in water scarce areas.

• Promote water management -- storage, drainage, and irrigation -- to achieve increased and more stable yields of crops and fish.

• Develop township centres that are adequately equipped with infrastructure to promote local economic activities and to provide livelihood for local population.

• Pursuant to the Commune/Sangkat Administrative Management Law (Article 27, Article 30 and Article 31), review and strengthen the role of Village Development Committees (VDCs) to boost and promote grass root level, participatory community development. 

• Expand micro-finance and reduce prevailing high interest rates by proactive measures, including encouraging formation of farmers' cooperatives.

• Provide vocational training and protect ethnic minorities.

• Assist in protecting rural areas from natural calamities like floods, droughts, etc., through educating and enabling communities for Disaster Preparedness and Risk Reduction.

• Provide safety nets to poor farmers suffering from natural calamities, including exploration of innovative measures like health insurance or weighted index insurance of crops, etc.

• Encourage increased private sector involvement in farm and village based enterprises in key sub-sectors including small scale commercial market-oriented aquaculture, crop and livestock production and agro-enterprises such as processing, post-harvest activities and mechanisation.

Rehabilitation and Construction of Physical Infrastructure

4.55  This RS growth rectangle covers: (a) further construction of transport infrastructure; (b) management of water resources and irrigation; (c) development of energy sector and electricity network; and (d) development of information and communications technology.

4.56   Transport Infrastructure: Transportation networks and facilities that connect all corners of the country are the arteries that transform the country into an integrated economy and are vitally critical for distributed economic growth. By facilitating trade, movement of goods and services, by fostering integration of domestic markets as well as enabling integration with the region and the world, they play a pivotal role in contributing to poverty reduction. They consist of roads, ports, inland waterways and ports, railways and airports. The objective is to create a convenient, comprehensive, safe, effective, cost-effective transport network that facilitates trade, promotes tourism and rural development and serves the needs of national defence.

4.57   Infrastructure and other related development efforts will focus on promoting integrated regional development of areas:

• Attracting tourists (including the triangular area of Siem Reap, Preah Vihear and Kampong Thom, and eco-tourist destinations).

• Industrial areas including industrial estates and coastal.

• Agro-industrial belts.

4.58  Much has been done to rehabilitate all types of roads, and importance accorded to roads, which form part of the ASEAN road network. The priorities for the NSDP period are:

• Finalize and enact a Road Law to overcome the lack of systematic, unified planning and budgetary process, and to clearly delineate roles and responsibilities of respective government ministries and agencies for road rehabilitation and maintenance.

• Prioritise, rehabilitate and reconstruct as many roads as possible.

• Accord priority to yet unreached communes or villages; expand the rural road net works to ensure that all communes have easy access to district headquarters and to national primary and secondary road net work.

• Address in a humane manner resettlement issues of people affected by road construction works.

• Ensure proper prioritised maintenance of all roads, bearing in mind that once a road is improved, traffic increases causing damage and needing better and more frequent maintenance of the road.

• Use as much as possible, especially for rural roads construction and maintenance, labour-intensive measures to increase rural incomes.

• Engage private sector on BOT and other basis, to construct and maintain roads and bridges where cost could be recovered by tolls. 

4.59   Apart from rural roads already discussed, and in addition to repair and rehabilitation of as many roads as possible, the quantitative target to be achieved during NSDP, 2006-2010 is to upgrade another 2,000 km of primary and secondary roads, taking the total of such upgraded roads to 4,100 km.

4.60   Ports:  Almost all bulk imports and exports of the country are handled by two ports: the Sihanoukville deep sea port and Phnom Penh inland river port, the latter capable of receiving ships of only limited tonnage capacity. To handle increased volumes, Sihanoukville is being upgraded and a second stage container terminal will be taken up for construction.

4.61   Railways:  The two main lines in the system both connecting Phnom Penh, one going south to Sihanoukville and the other north going to the Thailand border, are in dire need of rehabilitation and upgradation and all the rolling stock likewise need complete overhaul. A priority is to rehabilitate the southern line to handle higher volumes of cargo traffic from the port at competitive freight rates compared to road transport.

4.62   Inland waterways:  The immediate priority is to rehabilitate dredgers to carry out dredging on all major waterways, particularly Mekong and Tonle Sap rivers, to facilitate river transport.

4.63   Civil Aviation services are critical for the development of tourism, a vital sector generating significant multiplier effects in the economy. The Phnom Penh and Kang Keng International airport will be further improved under the existing BOT agreement. Siem Reap international airport is also due for upgradation. Some domestic airports need to be brought to higher standards to allow for higher traffic to remote areas with high tourism potential. RGC will explore various avenues for financing these endeavours, particularly through BOT arrangements involving the private sector.

4.64    Management of Water Resources and Irrigation:  Water resources support the needs of many sectors of the economy. The greatest pressure on the water resource accentuated by growing economic development activities occurs during the dry season or extended period of drought, when the risk of pollution is the highest; on the other hand, excessive water during rainy season causes floods leading to loss of lives and livelihoods and downward pressure on national GDP.  The objective is to mitigate the effects caused by above mentioned natural phenomena by adopting an integrated approach to water resources management and development. The emphasis is on: (a) ensuring that water in sufficient quantities, and of appropriate quality, is available to meet year-round demands of all sectors while sustaining aquatic ecosystems; (b) managing flood flows and enhance the capacities of communities to cope; (c) controlling water for agricultural purposes, by means of storage, drainage or irrigation as appropriate; and (d) keeping water resources free of contaminants to support the ecological system particularly fisheries. The priorities for the next five years are:

• Rehabilitate and reconstruct the existing irrigation and drainage systems particularly  in high poverty incidence areas and along the border areas;

• Expand surface water storage capacity and promote water harvesting technologies;

• Promote effective and sustainable development of ground water resources in areas with scarce surface water availability;

• Develop and apply measures on flood and drought mitigation and management;

• Strengthen and expand Farmer Water User Communities with increasing membership and participation of women;

• Promote investment by private sector in irrigation, drainage and other aspects of agricultural water management;

• Improve and install nationwide hydro-meteorological observing and monitoring systems to be able to provide to the public high quality, effective and real-time  hydro-meteorological forecasts;

• Promote appropriate and effective river basin management and water allocation systems.

4.65   Energy sector and Electricity:  One of the most important aspects of the economic policy is the further development of the energy sector to effectively respond to the increasing needs for electricity. The long-term vision is to ensure energy security for the country. A domestic power generation, transmission and distribution system will be put in place to meet the needs of all urban and rural communities and a growing economy. A 15-year Cambodia Energy Strategy 2006-2020 is under preparation. It is proposed to achieve energy independence through power trade and power exchange with neighbouring countries and integration with the region. Generating and making available low cost electricity would at once reduce costs of production in the manufacturing sector and costs of operation in all other sectors thereby attracting investments and boosting economic development. RGC places a high emphasis on involving private sector to lead the investment process in this sector.

4.66   The medium term strategy is to:

• Continue to rehabilitate and construct domestic power generation units.

• Attempt to avoid development of high cost energy sources and take into consideration of low cost ones including possibly gas from emerging oil and gas fields.

• Purchase electric power at reasonable costs from neighbouring countries through bilateral agreements, which will be reviewed and updated periodically.

• Continue to install and expand national power transmission and distribution systems. 

• Continue to expand rural electrification.

4.67   Oil and Gas:  The high prospects of exploiting offshore oil and gas resources in the country would provide a major boost to the economy. The challenge is to plan from now on to use this energy resource, and the substantial revenues it would generate, in an optimal manner to benefit the country and its citizens in the immediate and long term. RGC will soon commence conducting necessary studies to adopt good lessons learnt, and avoid pitfalls experienced, by other oil producing countries. A diverse range of productive on-shore uses exists for the associated gas from offshore oilfields (which is otherwise flared at collection platforms), such as fertiliser production, energy generation, energy-source for various kinds of industrial units, and the like. RGC will conduct various studies and endeavour to put in place necessary infrastructure so that the valuable oil and gas resources (including associated gas) are advantageously utilised to the maximum extent possible.

4.68   Information and Communication Technology:  The long-term development vision is to develop a cost-efficient and world-class post and telecommunications system that has a nation-wide coverage. The realization of this vision would require high levels of investment to build the backbone infrastructure of the telecommunications systems, especially high-speed optical fibre cables for the development of rural telecommunications systems. The immediate challenge is to bring down the cost of telecommunications to help businesses and people at large. Telecommunications and Information Technology (IT) should be made to work for the betterment of the poor. Priorities during NSDP, 2006-2010 are:

• Rapidly bring down the presently high cost of telecommunications.

• Expand the telecommunications network in urban areas and extend them to smaller cities and rural areas.

• Expand postal services from cities, urban areas to rural areas with quality, reasonable price and strengthen the capacity of responsible institution.

• Expand coverage of and improve efficiency and quality of government mass media: Radio, TV and press agency.

• Continue to follow an open policy in promoting a high level of private sector participation.

4.69  Emphasis will continue on promoting extensive use of Information Technology in all aspects of governance and government to improve efficiency and effectiveness in maintenance of records, data bases and websites which will provide easy access to public at large on all matters of their concern. Each ministry or agency will host its own website and keep it fully updated every six months or more often as needed. Such websites will contain all data and information pertaining to the ministry or agency.

Private Sector Development and Employment Generation

4.70  The four pillars of this rectangle are: (a) strengthening the private sector and attracting investments; (b) promotion of SMEs; (c) job creation and better working conditions; and (d) social safety net for workers.

4.71  Private sector strengthening: The private sector is considered the prime-mover of economic growth, while the government plays its role as the strategist, guide and manager of the development process, and the facilitator in creating a wholesome climate conducive to private investment and enterprise. To address critical issues impeding private sector development in Cambodia, a "Twelve Point Plan" has been adopted containing government commitments to improve the investment climate and trade facilitation.

4.72   RGC will continue to foster, maintain and enhance this favourable climate by:

• Increasing economic integration of Cambodia into the economies of the region and the world.

• Development of needed infrastructure and availability of a pool of skilled manpower (through technical vocational education and other vocational training).

• Creation and implementation of special economic zones which could attract foreign direct investments and create jobs

• Continuously strengthening the legal framework for enterprises, including laws, regulations and institutional capacity that facilitate business, trade and private investment in a climate of fair competition, transparency, accountability and predictability.

• Effectively and speedily removing the most important factors impeding private sector growth, identified in the recent Investment Climate Survey such as: poor governance; regulatory burdens, and weaknesses in the judicial and legal environment. 

• Removing the current uncertainty and unpredictability caused by these factors which make long-term and serious investors shy away from Cambodia, leaving the impression that those who are here are for quick returns and speculation or stay in the informal sector to avoid taxes and thereby maximize returns.

• Operating a "single window" as a speedy facilitating mechanism for trade and all private investor requirements from the government. 

• Continued open dialogue with the private sector through the Private Sector Forum and the Steering Committee for Private Sector Development to address concerns of the private sector.

4.73  To enhance export-led, pro-poor growth through diversification, RGC will continue to encourage, facilitate and provide support to private sector investment in some specific, priority sectors:

• Agriculture and agro-industry, including irrigation, because of their high potential for immense growth and multiplier effects in the economy by increase in incomes in rural areas and demand for consumption.

• Transport and telecommunications infrastructure.

• Energy and electricity generation and distribution.

• Labour-intensive industries and export-oriented processing and manufacturing.

• Tourism and related spheres.

• Human resource development.

4.74   Trade: Linking production to consumption or producers to consumers, trade is a powerful and important catalyst for socio-economic development. Promotion of trade for Cambodian products has been among top priorities. If market outlets are available, investments would flow to encourage and enhance production of goods and services using the country's natural advantages as has happened in the garment industry, and as could be achieved in agriculture, agro-processing, handicraft and other areas.

4.75  Since 2001, a trade policy framework for promoting local and external trade is in place as a means to promote growth and contribute to poverty reduction. Various initiatives and reform measures taken to implement it culminated in dynamic export performance and integration of the country in numerous regional bodies and accession to WTO in 2004. RGC has also successfully negotiated free and/or favourable trade agreements with many countries. However, there are still many bottlenecks similar to those in private investment in industries which inhibit growth in this sector. A Sector Wide Approach Programme for the Trade sector is under preparation. The immediate challenges are to ensure that favourable trade agreements already reached are taken advantage of by private trade to send Cambodian products to market overseas so that exports become diversified and broaden away from dependency on garment industry alone.

4.76  Various reforms that RGC will pursue in governance, legal and judicial sector and in public administration, as well as rehabilitation of basic infrastructure, would no doubt contribute to a better climate for Trade and Investment by private sector. In addition to addressing all the constraints in industrial, manufacturing and processing as well as trade, RGC will:

• Actively promote access to various external markets for unique and high quality Cambodian products, including agricultural products (particularly processed ones), fisheries products, and labour services.

• Promote Cambodian products abroad.

• Promote business membership organizations and strengthen their advocacy capacity.

• Reduce policy-based impediments to efficient transactions.

• Streamline customs inspections to make it more user friendly and free of delays and inherent costs, including formulating and implementing a revised Customs law.

• Reduce entry barriers such as high cost of registration and license fees.

• Help establish Export Processing Zones (EPZs) to promote export-oriented processing and manufacturing.

4.77  Tourism:  Growing at a steady and exponential rate, this sector is second only to the garment industry in boosting economic growth and in providing employment to a large number of Cambodians in numerous related fields -- hospitality, transport and others. The policies for tourism are based on three basic principles: (a) the development of tourism should be sustainable, anchored in the rich cultural heritage, history, and the exquisite nature of Cambodia's terrain, but more importantly, development that contributes to poverty reduction; (b) active and creative promotion of tourism to make Cambodia a preferred "culture and nature" tourist destination in the region and the rest of the world; and (c) apart from increased tourist arrivals, increase the number of days tourists stay, and the amount they spend, in the country and diversify their destinations. In addition, conscious efforts will be made to ensure that appropriate benefits of tourism go to people living in the vicinity of tourist destinations, both to reduce poverty and improve their livelihoods. Important initiatives will continue to be:

• An open skies policy (overland and water).

• Make visas easily available on arrival.

• As a signatory to the ASEAN Tourism Agreement (ATA) and other such agreements, strengthen intra-regional tourism.

• Strengthen capacity to promptly investigate and prosecute offenders related to sex tourism, any form of child exploitation and drug trafficking, and strengthen the provincial Child Safe Tourism commissions.

4.78  RGC’s continued improvement of physical infrastructure (roads, airports, ports) as well as providing a climate of peace and law and order will facilitate more tourist arrivals. Rising steadily at a robust level annual tourist arrivals are expected to reach about 3 million by 2010, increasing tourism related revenues to about US$ 1,500 million and employment to 400,000 people. For this purpose several promotional measures would be pursued such as:

• Form a Cambodia Tourism Marketing and Promotion Board, inter alia, to enable public – private sectors partnership and cooperation for tourism development.

• Establish Tourism Information Offices or Counters at international border checkpoints.

• Encourage formation of service providers such as hotel/guesthouses, tour-guides, aviation and related services, restaurants, transport, etc.

• Further improve and develop tourism products focusing upon at four prioritised areas (Siem Reap Angkor, Phnom Penh and peri-urban, costal zone and northeast) and expand to other destinations throughout the country.

4.79   Small and Medium Enterprises (SMEs) are usually grass root based and benefit rural communities in processing and adding value to products, as well as creating employment. They also provide an important link in Trade, as well as with larger enterprises. To foster and facilitate SMEs, RGC will take further measures like:

• Put in place measures to enable SMEs and micro-enterprises to function in a beneficial business environment and get better access to medium and long-term finance.

• Establish specific systems to support women in business and facilitate their access to SME development initiatives and services.

• Reduce registration procedures and help in start-up processes.

• Establish national standards and productivity institutions to help ensure quality of domestic products and productivity improvement.

• Promote consultancy services support to SMEs to assist development of modern production technology, improvement of product quality, management and access to markets.

• Promote vocational and skills training, both domestic and overseas.

• Strengthen the legal framework by creating laws on concerns such as factories, industrial zones, patents and inventions, measurements and industrial safety.

• Enhance cooperation among all government ministries and agencies concerned with SME promotion.

4.80   Rural Credit is an important ingredient for broad based economic expansion, for rural development, and for alleviation of poverty by supporting agricultural production and the creation and expansion of businesses (particularly SMEs), increasing productivity, generating incomes and for raising living standards. Much more funds will be needed to even partially meet the huge demand for rural credit. The most important challenge is to find ways and means by which rural credit could be made available at much lower rates of interest than prevailing now (48% per annum). To ensure increased and easy access to the poor for credit, especially for productive purposes, RGC will take measures to expand, and reduce the high cost of, rural credit by:

• Exploring and promoting institutions like user cooperatives, well known in some parts of Asia.

• Transforming NGOs doing this work into registered finance operators -- already the process has commenced and several have been issued licences.

• Improving supervision of such institutions to ensure that they conform to standards.

• Reducing the prevalent interest rates through best practices.

4.81  Employment creation and better working conditions: The main objectives are: create gainful employment opportunities in both formal and informal sectors; improve supply of qualified labour; and eliminate worst forms of child labour. The garment industry, growing at a very fast rate, has transformed the urban employment situation by creating and sustaining labour-intensive employment mainly for young women. In other sectors as well, a systematic policy is being followed to create more jobs especially for young people entering the labour market and indeed for all Cambodians through various measures:

• Increase agricultural productivity to generate more rural employment opportunities, which will have important cross-sectoral multiplier effects including through increased demand for goods and services.

• Encourage domestic and foreign direct investments in priority sectors, especially agriculture, agro-industry, labour-intensive industries and projects, and tourism.

• Establish Technical Vocational Education and training networks to serve both men and women equitably, especially those who are poor, disabled and vulnerable groups, to respond to labour market needs, both short-term and long-term.

• Develop a labour database and statistical system with disaggregated data by gender, disabilities and other relevant social factors.

• Assist Cambodian labour seeking employment in other countries.

4.82   Very closely linked to and as an integral part of employment is ensuring safe, proper and hygienic workplace conditions and fair and just contractual terms for the labour force. RGC is constantly addressing these issues including setting minimum wage and holidays, reducing inequality in wages between men and women, resolution of disputes and disagreements through peaceful means without causing disruption to production and loss of wages to employees. Priorities include:

• Vigorously enforce the labour law and international conventions related to the role of trade unions to protect the rights and obligations of workers, employees and employers.

• Improve working conditions of workers and employees, including displaced workers both inside and outside the country workers and pregnant workers.

• Continue and strengthen efforts to reduce the proportion of working children (child labour).

• Strengthen the implementation of the Law on Social Security.

• Create a "National Social Security Fund".

• Examine feasible options for creation of pension funds especially for disabled persons and dependents, and insurance for work accidents as stipulated in the Labour Law.

4.83  Social Safety Nets: RGC will continue to provide alleviating social sector interventions which will include: reducing the vulnerability of the poor; measures to mitigate impact of natural disasters and calamities; help victims of such events; expand rehabilitation and reintegration programmes for the disabled, those affected by drug abuse, victims of trafficking and children in conflict with the law, as well as welfare programs for the elderly, orphans, poor widows and widowers, poor female headed households, female victims, the homeless, and veterans and their families; preventing criminal acts and ensuring safety at all levels with cooperation as partnership with EDPs and stakeholders. Priority strategies and actions to be taken include: the adoption and enforcement of important legislation; and establishment of rehabilitation centres for orphans, street people, disabled, elderly, and women and children victims of trafficking. Since drugs are a major concern for the security and well-being of the whole society, measures to prevent production, smuggling, sale and use of drugs will be strictly pursued by authorities concerned.  

Capacity Building and Human Resource Development

4.84  The last, but not the least, of the "growth" rectangles of RS covers predominantly social sectors, viz., Education, Health, Gender Equality and Population issues.

4.85  Education:  Education is universally accepted as a basic human right. It is also a major contributing factor in poverty reduction. The long-term objective is to ensure that all Cambodian children and youth have equal opportunity to quality education regardless of social status, geography, ethnicity, religion, language, gender or disabilities. Education will also engender a sense of national and civic pride, high standards of morals and ethics and optimism, as well as being responsible for the country and the citizens. The role of education is to enhance learners to become productive and live in harmony in a globalised society.

4.86  Education sector has been one of the acknowledged success stories in the Cambodian socio-economic scenario, in terms of reforms and achievements. However, many challenges remain, among them the importance and urgency to vastly enhance the quality of education. Cooperation among all stakeholders has been quite high in the recent past. Following the experience gained in implementation of the Education Strategic Plan (ESP), 2001-2005, an Education Strategic Plan, 2006-2010 (ESP 2006-2010) has been prepared through wide ranging consultations with all stakeholders and includes the goals for Education for All Plan, 2003-2015. It provides an overarching policy and implementation framework for improving the livelihoods of poor people using education as a critical factor in enhancing social development and economic growth. Emphasis is on education quality improvement at all levels, pre-school, primary, secondary, and Higher Education. This section highlights some of the major elements of ESP 2006-2010 to which further reference should be made for more details.

4.87  The backbone of any country is a "critical mass" of educated, skilled, talented and capable manpower in a variety of economic and social fields. At present, the provision of higher-level education, especially by the private sector, is somewhat lop-sided, responding to short-term market impulses like surge in demand for low and middle-level managerial staff. There is a mismatch between the long-term job profiles and educational attainments. For the country to grow and sustain growth, a whole range of skills is needed such as scientists, engineers, scholars and researchers, and specialists in multifarious fields. The challenge in the education sector is to provide facilities for imparting needed high quality education in a variety of fields, through vocational, technical and university level education and also to be able to attract students to such courses. In this regard, the role of the Accreditation Committee of Cambodia is critical in accrediting only those universities that meet minimum quality criteria, and for the development of a comprehensive Higher Education Strategy.

4.88  Among the major priorities of ESP 2006-2010 and the main policy thrusts are:

• Ensuring easy and equitable access to education, especially to the poor, girls, ethnic minorities and disadvantaged children, as well as those in high poverty areas.

• Universalisation of 9-year basic education to enhance opportunities in life.

• Increasing quality and efficiency of the education services, including through modernization and effective reform.

• Linkages of education and training to the short- and long-term labour market and the society, including life skills education and quality health and HIV/AIDS prevention education.

• Further development of youth and sports sector, with increased attention to youth in various walks of life.

• Institutional development and capacity building for decentralization.

4.89  Significant progress has been achieved in the recent past in increases in enrolment levels in primary and lower secondary schools (completion of basic education up to standard 9), though there are still severe gaps relating to the very poor and people in remote areas availing of all the facilities. While both enrolment levels and gender ratios at primary level would reach 100% target well before 2015, those at lower secondary level would fall short of target of 100% unless concerted efforts are made. The immediate major goals include:

• Reduce the distance children have to travel to primary and lower secondary schools by providing schools as close as possible to villages, especially those in remote areas.

• Facilitate attendance of girls at lower secondary and higher levels.

• Reduce costs to parents to ensure enrolment and attendance of poor children, thereby also reducing child labour.

• Improve quality of education up to and beyond basic levels, including revised curriculum and introduction of minimum standards of student achievement and a system of assessing student performance for grades 3, 6 and 9; teacher development and posting; quality assurance; and an accreditation system.

4.90   Even as a long-term strategy has to be developed and continued investments have to take place for progress in secondary, tertiary and vocational education during NSDP, the key goals and targets are:

Table 4.4: Education Sector: Key Goals and Targets

4.91   Key strategies and actions in the Education sector to achieve these and other goals are:

• Increase the coverage of pre-school children attending early childhood education programmes organised in schools, communities and homes.

• Increase the number of primary and lower-secondary schools, especially those in remote and underserved areas.

• Increase the number of both male and female teachers at these levels to improve teacher student ratios and proportion of female teaching staff, especially by providing incentives to work in remote areas.

• Upgrade teachers' qualifications by professional development linked to performance incentives.

• Pay special attention to increasing the salaries of teachers (already being undertaken) and making salaries available on time.

• Ensure quality of education through improved provision of educational materials, equipment, libraries, and laboratories.

• Develop quality standards for all levels and a national assessment system for basic education.

• On the basis of pilot projects already being taken up, increase the number of safe places (dormitories) for young girls coming from distant areas to attend the nearest lower secondary schools.

• Reduce burden on poor students (especially girls) by targeted scholarships (at primary, secondary and tertiary levels) and exemption from the rather widely prevalent informal payments to teachers.

• Expand and better target the primary school feeding program and grades 7-9 incentives program.

• Continue to assure adequate allocation and timely release of current budgets for education especially targeted towards basic education.

• Increase and improve adult literacy programmes, especially for women.

4.92   Health:  Improving the health status of the people is a top priority. Improving nutritional status as well as reproductive health, maternal and child health, removing causes of diseases and illnesses, taking preventative measures and providing medical care where needed are crucial to improving health status of people at large, especially the vulnerable with no means to access such care. There are many cross-sectoral and other factors that impinge on health status of the population. To mention a few, these are: poverty as a cause and consequence of poor health; financial constraints of the poor preventing their easy access to public sector health care services; improvements in water and sanitation; better education and higher literacy levels as well as better access to information and awareness; gender equity; social safety nets for the poor and disadvantaged; better nutrition through appropriate interventions; and so on. 

4.93  The Health Sector Strategic Plan (HSP), 2003-2007, to be extended to 2010 after review in 2006 (when updated data becomes available through CDHS), provides the framework of actions that will be taken to achieve the priorities in regard to: (a) health service delivery; (b) behavioural change; (c) quality improvement; (d) human resource development; (e) health financing; and (f) institutional development. HSP would be the guiding framework for all actions in the health sector; what follows -- including indicators in Table 4.5 -- are only some highlights, not fully comprehensive.

4.94  Health is one of the four priority sectors for PAP, which assures adequate allocation and timely release of budgetary funds both for current and capital expenditures. Still, in actual utilization of funds, the central level seems to use a larger share than the provinces and levels below. Because of many providers, both public and private, and expenditure incurred by individuals, many of them very poor, it is quite difficult to correctly estimate the amount spent on health care in Cambodia, but on a rough basis it is quite low, about US$ 33 per capita. Equity Funds have been introduced to supplement the existing system of exemptions from user fees and to improve access to health care for the poor. 17 pilots are underway in 13 provinces and municipalities, and Equity Funds will be scaled up in the near future. However, more sustainable ways of helping the poor in the longer-term have to be explored. Both to improve outreach for, and quality of, preventive and curative care, the Minimum Package of Activities (MPA) and Complementary Package of Activities (CPA) schemes are operational. NGOs are being associated under contractual terms in 11 pilot operational districts to ensure proper delivery of health care, especially in poorer and remote areas to reach the vulnerable sections of the population. These will be expanded to cover other areas.

Table 4.5: Health Sector: Priority Goals and Targets

4.95   Priority strategies and actions to be taken in the Health Sector are:

• Accelerate reforms wherever needed.

• Try and achieve better and cost-effective coordination among vertical disease control programmes and mainstream health service delivery.

• In addition to expanding and strengthening health equity funds to help poor avail of public health services, explore to find out more sustainable ways of helping the poor to easily access the health care system without paying fees or through targeted monetary assistance.

• In general, rationalise the cost-recovery system to ensure best practices.

• Find ways and means to improve better ways of hospital financing.

• Increase recruitment and training of midwives and ensure their appointment to areas of need.

• Increase the proportion of deliveries attended by skilled health personnel; and improve emergency obstetric care (EOC).

• Improve child health through universal coverage of the Child Survival Scorecard interventions, including nutrition interventions and Integrated Management of Childhood Illnesses (IMCI).

• Improve reproductive health services and information, including maternal child health and birth spacing; address youth sexual and reproductive health issues and services.

• Explore the possibility of expanding the existing scheme of village health volunteers for malaria control to one of low-cost village level health workers (VHWs), chosen by the community and imparted essential minimum knowledge to provide preventative and prophylactic health care.

• Construct and/or rehabilitate and upgrade more health centres (sub-district or commune level) and referral hospitals, especially in areas of high poverty.

• Improve educational and emergency services.

• Strengthen health laws and regulations and their enforcement, including those relating to medicines and drugs as well as food safety.

• Ensure adequate allocation and timely release of budget funds to health sector.

• Elicit, encourage and involve private sector in provision of health care, both in urban and rural areas.

4.96  HIV/AIDS:  HIV/AIDS prevention, treatment, care and impact mitigation efforts are important vectors contributing to the overall NSDP goal of poverty reduction and economic growth. Concerted efforts have resulted in reductions in prevalence observed since 1997; rapid expansion of services for people living with HIV through the Continuum of Care; increased levels of HIV knowledge throughout the population; and changes in policy environment such as enacting the Law on Prevention and Control of HIV/AIDS. However, the changing nature of the epidemic, from a concentration in high-risk groups to diffusion among general population, necessitates further strengthening of the national response to HIV/AIDS. RGC is committed to a multi-sectoral response, guided by the National Strategic Plan for a Comprehensive Response to HIV/AIDS, 2006-2010, with a strong decentralised response. Important priorities include:

• Promote the male and female condom programme in order to widely encourage and actively pursue use of condom by general population who are sexually active, including women, adolescents and youth.

• Through information, education, communication programs and personal counselling arrest transmission of HIV/AIDS to families.

• Increase and improve care and support services to those infected by HIV/AIDS.

4.97  Gender Equity:  RGC accords highest status for women who are the very foundation of Cambodia's society and economy. The Strategic Plan for women, "Neary Rattanak" or "women are precious gems" will continue with vigour aimed at providing Cambodian women with faith, value and hope in life through gender mainstreaming in all activities. RGC attaches a high priority to uplifting and enhancing the social status of women by focusing attention on implementation of a gender strategy, building the capacity of women in all sectors, changing social attitudes that discriminate against women, and ensuring the rights of women to actively and equally participate in nation building.

4.98  Very critical to poverty reduction are speedy removal of latent and overt barriers inherent in gender disparities such as unequal access to education, paid employment, land ownership, their reproductive health care, vulnerability to HIV/AIDS and trafficking, and the generally disadvantaged position in both family and society while at the same time bearing a heavy share in raising a family. While many women are in the labour force of the industrial sector, thanks to the till now fast growing garment sector where they predominate albeit as low level labour, the representation of women in policy and decision making levels, including the National Assembly and other democratic institutions, government service and others is still low and needs to improve considerably.

4.99  As a crosscutting issue this forms part of education, health, employment and other sections already covered earlier in this chapter.  The myriad and varied aspects of gender mainstreaming in the country will be attended to with vigour. At the national, as well as sub-national and grass root levels, attention will continue to be focused on: 

• Building commitment and capacity at all levels, including all government policies and programmes, in relation to gender sensitivity and mainstreaming.

• Promoting economic empowerment of women.

• Enhance legal protection for women.

4.100  NDSP will focus through spreading of awareness and active action on some key areas:

• Gender mainstreaming across the entire spectrum of Cambodian life, including in all levels of government and in budgeting process.

• Directly tackle issues of domestic violence, trafficking of women (by rooting out corruption and strict enforcement of laws) and cultural norms that tacitly sustain gender inequality in many facets of social and domestic life.

• Increase female access to productive assets such as financial capital, reduce gender-based discrimination in the workforce market, and provide the enabling environment to permit greater female entry into high quality employment. 

• Address political and legal challenges such as: increasing female participation in formal and informal decision-making structures and processes; improving female access to high level positions in public administration; strictly and speedily enforcing legal codes dealing with domestic violence; passing the anti-trafficking law; and, implementation of the national action plan for protection of victims of violence.

4.101  Population Policy:  This is also a broad cross-cutting issue involving many other sectors such as health, education, environment, macro economy, gender equality, drug issues, and others. The current high rate of population growth, at 1.8% per annum places a heavy burden on public services and resources and is a contributory factor to intractable levels of poverty. Priorities to be addressed include:

• Support to all couples and individuals to decide freely and responsibly on the number and spacing of their children, and to have access to information, education and services and means to do so.

• Reduce potential impact on rural-urban migration.

• Integrate population variables including ageing and migration issues into social and economic policies, plans and programmes at all levels.

4.102  Costs, Resources and Programming: Achievement of all interim goals and targets during the NSDP period, 2006-2010, will involve a large amount of financial and technical resources both in the public and private sectors. These are considered in the next chapter (V), together with the likely amount of resources that would be available and the programming modalities through PIP and annual budgets.

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