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21. Cambodia has a total population of around 13.5 million people. It is one of the least developed countries with a per capita income of around 300 US dollars (1590 in PPP US dollars). It was ranked 130th among the 175 countries on the Human Development Index in the Human Development Report (HDR) for the year 2003. It covers an area of 181,035 sq. km. 22. Cambodia is a post-conflict country that has been devastated by three decades of internal strife and conflicts in its recent history. It is only in recent years that the country has achieved some semblance of peace and security for its people. These conflicts not only shattered the physical, social and economic foundations that are necessary for growth and development, but more importantly, the deliberate genocide of its intelligentsia by the Khmer Rouge regime had decimated the human capital base of the nation. The resulting skewed age distribution of the population and the truncated skills profile of the work force pose added challenges. The lack of qualified and experienced personnel is a major bottleneck to achieve a sustained development of Cambodia. Although, the rehabilitation and reconstruction of the education system’s infrastructure that was completely destroyed by the conflicts and civil wars has been a high priority of the Government, provision of basic education services remains a formidable challenge. 23. Rebuilding the human capital base, to a level that had existed before the Khmer Rouge regime, will probably take decades – a simple demographic fact about where Cambodia stands today. Notwithstanding all the challenges, a pre-requisite for achieving a sustained development of Cambodia is the rebuilding of a human capital base that can supply the skills needed by both the private and public sectors. Also, a successful implementation of the many reforms that are currently underway is likely to continue to be hampered by a lack of capacity within the public sector to effectively enforce and manage the implementation of the approved laws and regulations. It is important to note that while Cambodia can benefit from the experiences of its development partners in the formulation of policies and procedures, effective enforcement and management of the implementation of the approved policies, laws and regulation is likely to remain constrained, at least in the short- to medium-term, by the existing gaps in Cambodia’s human capital base. 24. At present, there is a lack of teachers at all levels to train the new generations. There is also a lack of medical personnel to provide the necessary health services[1], trained judiciary personnel to ensure the rule of law[2], and adequately educated and experienced civil servants to run the country. 25. In 2002, the total GDP of Cambodia was just under 4 billion US dollars (in current prices). In terms of the contribution of the main economic sectors to overall GDP, the agriculture, fisheries and forestry sector in 2002 accounted for about one-third of the GDP compared with 46 percent in 1993. The contribution of the industrial sector has more than doubled from under 13 percent in 1993 to more than 26 percent in 2002, due to the rapid expansion in the textile, wearing apparel and footwear industry and continued strong construction activity. Although there has been significant growth in tourist oriented services sector the share of the services sector in total GDP has declined from around 39 percent in 1993 to 34 percent in 2002 - as a result of the rapid expansion in the industrial sector. 26. It should be noted that even though the share of the agriculture, forestry and fisheries sector in total GDP has declined since 1993 it remains the employer of nearly three-quarter of the labour force. Since 85 percent of the population live in rural communities and 75 percent of the poor are farmer-headed households, the performance of the agriculture sector remains a key element for achieving sustained economic growth, poverty reduction, and the development of the rural economy. 27. Domestic revenues increased from 1,570.6 billion Riels (US$ 400.6 million) in 2001 to 1,743.9 billion Riels (US$ 444.8 million) in 2002, an increase of 13.7 percent. They consisted of 1,227.1 billion Riels in tax revenues, 500.5 billion Riels in non-tax revenues, and 16.3 billion Riels in capital revenues from privatization and other sources.
GDP, TOTAL
REVENUES AND EXPENDITURES: 2000 - 2002
28. Total expenditures processed through the National Treasury were approximately 1,922.4 billion Riels or US$ 490.3 million in 2002. These included 1,574.9 billion Riels or US$ 401.7 million on current expenditures, and 347.5 billion Riels or US$ 88.6 million on capital/development expenditures that were channelled through National Treasury. Total capital expenditure is estimated to be 1,208.5 billion Riels or US$ 308.2 million. 29. In 2002, the composition of total current expenditure of 1,574.9 billion Riels was as follows:
30. The civil administration includes in addition to the civil service, the national assembly and the various councils. The total expenditure of 77.7 million US dollars on salaries and wages in 2002 included personnel in all of these categories. According to the data from the Council of Administrative Reforms (CAR), there are approximately 165,000 civil servants. On average these civil servants were paid 19.50 US dollars per month in October 2001 and following a major revision of salaries 28.10 US dollars in October 2002. The Government’s target is to increase the average monthly salary to 51.50 US dollars by 2006. 31. The basic monthly salary of civil servants at the present time ranges from Riels 30,000 (US$ 7.50) to Riels 165,000 (US$ 41.25) for various categories of positions. In addition, functional and pedagogical allowances are paid where applicable. There is also a “AA” scheme in effect that pays the top 500-1000 public servants performing strategic functions (including managers, advisors, senior doctors and teachers) a fixed allowance of approximately 200 US dollars per month. In the case of judiciary, special supplementary allowances of between 325 to 625 US dollars are paid to judges of the provincial, appeals, and supreme courts. 32. Another proposal initiated by CAR concerns the so-called Priority Mission Groups (PMG). These would be composed of “carefully selected teams to carry out results-based design and implementation of state reforms”. In a first round about 1000 officials in nine ministries would be concerned. Members of the teams would receive allowances in the range of 50 to 150 US dollars. The scheme has not yet come into force but it has been suggested that donors provide funds to accelerate and extend the introduction of the scheme. 33. Notwithstanding the special allowances that are paid to 500-1000 senior public servants under the “AA” scheme or to judges, the majority of public servants are paid very low salaries. After a very significant increase in 2002, the average salary of a civil servant is still only about 28 US dollars per month[1]. For many civil servants it is much lower, starting at about 8 US dollars per month. At the same time, it is estimated that income in the order of 150 US dollars is the minimum needed to support a family in Phnom Penh. A socio-economic survey carried out by the Ministry of Planning in 2001 indicated that 280 US dollars were necessary to meet basic needs in Phnom Penh, 180 dollars in a provincial town and 80 dollars in rural areas[2]. 34. It is therefore not surprising that most civil servants try to supplement their income. They can do this by not attending work full time and instead taking a second job (although this is expressly forbidden in the Common Statute of Civil Servants). For some it is possible to supplement their income by working as counterparts in donor supported projects. Some also take leave of absence and work full time for donor supported programs. A few probably rely on unearned income, e.g. the renting out of a property or drawing a pension from an employment during the period of exile. Some have other family members earning income. Still others can supplement their income in other, more unofficial ways. For example, it is widely recognised that school teachers supplement their meagre pay by collecting fees from pupils attending public schools. 35. At the request of the Cambodian government, the World Bank prepared a report in 2001 on corruption in Cambodia. From this report, it appears that problems of low performance and low integrity are particularly prevalent in the judiciary, the customs services and the tax administration. Particularly striking is the fact that 2/3 of households interviewed, characterised the judicial system as very corrupt. It is also striking that public officials interviewed for the study indicated low salaries as the main cause of corruption. 36. Government’s ability to increase civil service salaries to an acceptable “living” wage level is constrained by the size of the total revenues available – that were less than 450 million dollars in 2002. The other option to increase the salaries is to reduce the number of civil servants employed. In the short term the feasibility of implementing such an option is limited not only by the existing political and constitutional arrangements of coalition governance structures but also by the fact that at the present time employment opportunities outside the public sector are very limited and it appears that people are being employed in the civil service not only to just deliver services but also as a measure to secure peace and security and as a social welfare function. It is estimated that over 225,000 persons enter the labour market each year. The creation of employment opportunities for these new entrants as well as the existing pool of unemployed or underemployed remains a formidable challenge for the Government. 37. Public sector reforms to create an efficient administration is a problem that faces most developing countries. A recent review of the public sector reform efforts in Tanzania and Bolivia was published by Danida in 2002. This discussion paper emphasized the importance of national ownership of the reform process that is considered not only a managerial but also a highly political issue. On the role of donors, it stressed that they should be willing to "let the national interest of the recipient country take priority over their own particular interest". |
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