CHAPTER II

PROGRESS IN 2006 AND FUTURE STRATEGIES AND PROSPECTS

2.01     As affirmed in the NSDP, 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. In steadfastly pursuing these goals it will strictly adhere to the main objectives, principles, strategies, programmes and plans already clearly outlined in the NSDP¹ unless there is specific need.

2.02     Using the Rectangular Strategy, this chapter²:

• highlights and critically analyses policies and all major developments in 2006 in all sectors, including causes for successes and shortfalls;

• provides comparative tables of data as in Chapter IV of NSDP showing progress or shortfalls in 2006; and

• outlines challenges and strategies ahead.

2.03     This chapter provides only a macro overview of critical developments, strategies and vital actions ahead. 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 Strategic Development Plans and the progress reports on the implementation of those plans. 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.

2.04     Poverty: Keeping rapid poverty alleviation and eventual eradication in clear and central focus, accent will continue to be made on creating more opportunities to the poor to come into the mainstream of contributors and participants and in providing 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 as already stated in the NSDP³.

2.05     RGC will continue to emphasise actions that would result in significant gains at the grass roots level where it matters most to the ordinary citizen and for speedy reduction of poverty. Accordingly, RGC will pursue broad strategies and actions outlined in the NSDP⁴ and which will be central to and govern all aspects of its work in the next few years.

2.06     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.  It 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 strategy⁵. The rest of this chapter is organised along the flow of RS as was done in the NSDP.

Core of the Rectangle Strategy: Good Governance

2.07     Good public governance, at the core of RS, postulates equitable and fair public participation in all matters through consultation, democratic methods of ensuring that the will and choices of the majority are adopted and implemented at the same time ensuring protection of the rights and welfare of the minority. Political stability, internal security and safety, adherence to the rule of law, and transparency, predictability and accountability of public institutions are vital for orderly economic and human progress and to safeguard the public gains from being eroded by disruptive forces. In this regard, it is noteworthy that:

• A major step in enhancing stability in governance through a landmark constitutional amendment enabling legislative work to be pursued through a absolute majority instead of needing 2/3rd votes which had acted as big stumbling block hitherto. This has now paved the way for speedy approval of legislation and forming of governments after elections which was held hostage to the earlier provisions in earlier elections; and

• The second commune elections involving all the 1,621 communes in the country, and with around 68% of the electorate casting their votes, were concluded in early April 2007 in a peaceful, free and fair manner, once again demonstrating that democracy is proactively promoted by Cambodians and has taken strong roots in the country becoming part of its political and social fabric.

2.08     To promote, ensure and sustain good governance as the most important pre-condition for achieving sustainable socio-economic development with equity, equal opportunity and social justice, four governance reform areas, viz., (a) fighting corruption, (b) legal and judicial reforms, (c) public administration reform including decentralisation and deconcentration, and (d) reform of the armed forces, especially demobilisation, continue to remain central to the RGC’s reform agenda and to the national efforts to reduce poverty levels among Cambodians. The major developments in 2006 are:

• As the Anti-Corruption Law proceeds through various stages of intense scrutiny, the already existing legal framework and institutional mechanisms are being invoked to reduce or at least prevent corruption. The RGC’s anti-corruption strategies are based on major policy measures, viz., educational activities for preventing corrupt deeds, enhancing law enforcement, and promoting advocacy. In this regard, the structure of Anti-Corruption Unit has been re-organised trough a RGC’s Sub-Decree on Anti-corruption, which was enacted on 22 August 2006. An Office for Receipt of Complaint has been established at the Council of Ministers with the aim of enhancing participation, supply and receipt of corruption-related information from the public. In addition, disciplinary actions have been taken on offending civil servants, custom officers, police officers, and conspirators in smuggling of right-steering wheel cars. However, pursuing anti-corruption policies is a long-term and challenging endeavour that requires adequate means including appropriate institutional framework, human and financial resources.

• The Action Plan (April 2005) for implementing of Legal and Judicial Reform Strategy (June 2003) has been pursued focusing on seven strategic objectives and actions articulated in the NSDP. As a result, the law on civil codes and procedures was promulgated on 06 July 2006; penal codes and procedures have been submitted to National Assembly for approval; civil codes have been endorsed by Council of Ministers; and penal codes have been already discussed in an inter-ministerial meeting. Other laws and regulations on various legal and judicial procedures, and laws and regulations on control over human trafficking and sexual exploitation and the law on anti-terrorism have also been drafted. In addition, the model of pilot court in Kandal Province has been already established; and a project for raising awareness about basic rights, improving the sustainability of publishing and disseminating the Royal Gazette, and conflict resolution outside of the court system have been vigorously pursued. Capacity development for judges and strengthening law enforcement at the court have been carried out. Strict and timely disciplinary action is being taken on delinquents in the system. Code of ethics for judges has been drafted and submitted to Supreme Council of Magistracy for approval.

• In 2006, the average monthly remuneration of civil servants increased to 45 US dollars (including the planned pay rise of 15%). In addition, the incentives for diligent and productive civil servants have been introduced through Priority Mission Group (PMG) and Merit-Based Pay Initiative (MBPI). The overall size of the Civil Service has been stabilised since 2002 (165,000 in 2002 to167,000 in 2006 excluding non-permanent staff). With only 31% of women in the civil service, increasing their representation continues to be an issue. However, as a measure to enhance the status of women, the financial support policy on social insurance to civil servants was amended to include death and maternal leave.

• The well orchestrated programme for decentralisation and deconcentration (D&D) has been proceeding according to plan. All the work in this regard have been brought under the overall direction and coordinating role of the Ministry of Interior (MOI) which has also assumed responsibility for further implementation of the D&D reform after the RGC’s SEILA Programme concluded on the 31 December 2006.  A national committee managed by MOI, National Committee for the Management of Decentralisation and Deconcentration – NCDD, was established by the Royal Decree 0806/355 dated 18 August 2006. In addition, to improve the function of commune and sangkat councils other regulations had been passed such as the guidelines on the procedures for village head selection and the guidelines on the provision of voter information sheet.

• In the first term of Commune-Sangkat Council, RGC has allocated the national budget to commune-sangkat fund (CSF) that accounted for 1.5%, 2.0%, 2.5%, 2.52%, and 2,54% of current budget revenues in 2002, 2003, 2004, 2005, and 2006 respectively (in total around 284,075 billion Riels), and has mobilised external resources (both grants and loans from EDPs) accounting for about 200 million US dollars) to support the implementation of D&D reform-related projects and programmes at all communes and sangkats .     

• By the end of 2006, the Organic Laws containing four volumes have been drafted and three volumes have been completed. Those three volumes of the draft Organic Laws have been under consideration of the Royal Government and some parts of these drafts are being revised to submit to the advisory group comprised of the public, civil society, EDPs for discussion and endorsement, and finally to the National Assembly for approval and becoming effective in 2007.

• In 2006, the budget allocation for commune and sangkat funds (CSF) accounted for 2.45% of the current expenditures of the national budget and around 30 million US dollars of external funds both grants and loans were allocated to implement D&D reform-related projects and programmes.   

• Reform and consolidation of the Armed Forces, including demobilisation and gradual establishment of more effective armed forces, is continuing according to plan. The share of Defence and Security in GDP has been stabilised around 2% (1.8% in 2005 and 2006) and is expected to be 1.7% by 2010. This share in the national budget has been steadily declining (22.93% in 2005 and 21.91% in 2006) and is expected to stabilise around 17.40% by 2010.

Environment for the Implementation of the Rectangular Strategy

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

2.10     Peace, political stability and social order constitute the fundamental basis on which any sustainable progress can take place. In addition to the constitutional changes referred to at para 2.07 above, the precious post-conflict reconciliation, democracy, social order and reduction in crime achieved in the past through dialogue and mutual adjustments are being enhanced; safety and security all over Cambodia have strengthened; all efforts are being made to ensure that second commune elections due in 2007 are conducted in a peaceful, inclusive, free and fair manner.

2.11     Integration of Cambodia into the region and the world:  On the regional and sub-regional levels, apart from its involvement in ASEAN, Cambodia is an active participant in various other cooperation initiatives and frameworks, such as Asia-Europe Meeting (ASEM), Asia Cooperation Dialogue (ACD), Greater Mekong Sub-Region (GMS), Ayeyawardi-Chaopraya-Mekong Economic Cooperation Strategy (ACMECS), Cambodia-Lao-Myanmar-Vietnam (CLMV) cooperation and Cambodian-Lao-Vietnam (CLV) Development Triangle.  Cambodia accords equal importance to its active participation and cooperation in all international bodies. The Cambodia’s accession to the World Trade Organisation (TWO) has revealed that Cambodia has been prepared to take part in global economic activities. The participation of Cambodia in regional and international affairs not only enhances the Cambodia’s political and economic prestige but also significantly contributes to keeping safety, security and peace in the region as well as the world.  A major goal of these efforts is to mmaximise the benefits arising from the integration of Cambodia into the region and the world with the aim of achieving RGC’s priority goals and strategies to reduce poverty rapidly in Cambodia. Much more efforts however have to be made to deepen, and benefit from, the integration process.

2.12     Partnership in development: The three (3) basic aspects of partnership between RGC and other stakeholders are relations with (1) civil society; (2) private sector; and (3) external development partners. In this regard:

• All efforts are being made 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. NGOs are represented at and contribute to the GDCC and in many TWGs and will be associated with the future CDCF meetings. A Law on Non-Government Organizations is being formulated soon with broad consultation with all relevant institutions and organizations.

• 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.

2.13     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. During 2006, important developments were:

• Adoption of a Strategic Framework for Development Cooperation to govern all RGC-EDP partnership efforts.

• Further strengthening and harmonisation of the TWG and GDCC mechanisms through an intense review involving full consultations with all stakeholders.

• The decision for RGC to assume full ownership and leadership of the annual aid-mobilisation consultations by transforming the CG process till now to a Cambodia Development Cooperation Forum (CDCF) from 2007.

• Streamlining the process of collection of data on EDP contribution on a timely basis to synchronise with the schedule for preparation of NSDP APR, PIPs, MTEF and annual budget.

2.14     Macro-Economic and Financial Environment:  The macro-economic data assumed for 2005 as the base year for NSDP, 2006-2010 underwent dramatic upward changes due to more precise assessments made after finalisation of the NSDP. Among the most notable factors are:

• GDP growth registering a phenomenal 13.4% in 2005 almost doubling the earlier estimate of 7% assumed in framing the NSDP, in spite of volatility imposed by external factors like continuing high oil prices.

• Very high growth in agriculture (crops) of 28.0⁶in 2005 against 8.0% assumed in NSDP, facilitated both by returns from investments in irrigation and very favourable weather conditions.

• The sudden surge in agriculture dwarfed the otherwise steady growth in other sectors and increased its share in GDP to 16.9%⁷ against 14.2% assumed in the NSDP.

• The base figures for 2005 assumed in NSDP have thus increased. Accordingly, the targets for the NSDP period have also increased, even though hey are based on the revised base figures.

• Per Capita GDP accounted for 1.86 million higher than 1.40 million Riels estimated in NSDP for 2005 and is expected to rise 2.888 million in 2010 (against the NSDP estimate of 2.243 million riels).

• The garment industry continues to lead in terms of overall contribution in the industrial and services sectors followed by tourism and construction. There is every expectation that such robust growth will continue.

• All macro-economic figures have accordingly undergone a revision and are reflected more fully in table 2.1 below and at annexes I:2 and I:3.

2.15     GDP growth is estimated at a high 10.8% during 2006 over and above the high surge in 2005. Inflation will be contained at 4.7%. Progressive, prudent and strict budgetary policies both on the revenue and expenditure sides increased government revenues to 11.5% of GDP from 10.6% in 2005 and expenditure to 13.8% from 13.3% in 2005. The exchange rate remained stable at a US$ to about 4,103 Riels. There has been a gradual progress in management of 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. Measures were put in place to have a strict rule and regulation in order to follow clear, transparent, public bidding procedures in disposal or lease of state property or rights, indeed in award of all state contracts. The year 2006 was observed as Year of Micro Finance and conferences and workshops on micro finance were organised with the aim of promoting better understanding and improving the efficiency of micro-finance institutions and enhancing the public knowledge of this sector.

Table 2.1: Key Macroeconomic Data⁸
(In percent of GDP unless otherwise indicated)

Sources:    Ministry of Economy and Finance

2.16     The long term goal continues to be to achieve more diverse and pro-poor economic growth. The already achieved macroeconomic stability has played a major role in providing the foundation for the very strong growth that has been achieved in Cambodia in recent years, and consequently for poverty reduction and will be sustained and strengthened in the future. With confidence and experience gained in successfully managing the economic scenario even during externally imposed economic factors such as the East Asia crisis in 1997, the massive structural and external changes that have taken place since then, and high oil prices during 2004 and 2005, every expectation that macro-economic projections outlined above will be fully reached and benefits become widespread to alleviate poverty. Among other major measures being pursued are:

• Further progress in implementing the Public Financial Management Reform Program (PFM) is which seeks to installing and ensuring much higher standards of management and accountability in the mobilization of all government current and capital resources and effectiveness and efficiency in the use of resources in their application to the operation of the Government’s NSDP and other priority programs. It is envisaged that an operational medium-term expenditure framework (MTEF) governs multi-year programming.

• Programme budgets have been introduced for 7 Priority Actions Programme (PAP) ministries (MOEYS, MOH, MWA, MAFF, MRD, MLMUPC, and MOJ) which will have impact on the poverty situation. The allocations to and timely use of funds in these ministries will be closely monitored to ensure achievement of expected results against indicators to improve result-orientation.

• Progressive increases in allocations and ensuring timely disbursements to priority pro-poor sectors -- For Agriculture - allocation was 0.7% of GDP in 2005, increasing to 0.91% in 2006; for Rural Development – allocation was 0.19% of GDP in 2005, increasing to 0.2% in 2006; for Health allocation of 0.89% in 2005 increasing to 0.96% in 2006; and for Education allocation of 1.38% in 2005 increasing to 1.65% in 2006⁹.

• Well coordinated efforts involving the concerned institutions (the National Bank of Cambodia (NBC) and the MEF) will continue to improve and consolidate gains in the Financial Sector which plays a crucial role in macro-economic stability and is vital for the pace and direction of economic growth and to enhance mobilisation of idle financial resources for productive investment. The Financial Sector Blueprint (FSB) is being updated and envisages the development of a sound, market-based financial system in next five years, to enhance resource mobilisation for sustainable economic growth.

• Financial sector reform will also focus on strengthening prudential supervision and the legal framework for financial sector regulation. The key legislative measures include the enactment of the Negotiable Instruments and Payment Transactions Law, and the proposed Secured Transaction Law already submitted to the National Assembly.

• Reforms to increase availability of and to improve access to micro-finance. Key measures include promoting the licensing and registration of microfinance institutions and facilitating the adoption of proper accounting and reporting requirements by the concerned enterprises. The need to expand this framework to other types of financial institutions such as financial service cooperatives, credit unions, and village savings banks is being explored.

2.17     RGC is well aware that, based on experiences the world over and on its own past experience, high economic growth as anticipated above would continue to be driven by market impulses, opportunities, compulsions and constraints. Growth induces changes from known and tested economic situations and calls for continuing structural adjustments in population and the economy. Skills tend to be created to meet emerging market demands sometimes skewing the higher and vocational education system which ideally should cater to creating a wide variety of skills to serve the nation in the long term. By now, the garment industry, construction and tourism constitute the growth areas. Although these bases for growth are very welcome in the sense of creating employment for a large number of people, such dependence on only a few sectors come with implications in regard to long-term economic sustainability. Policy implications need to focus on the following important issues among others:

• Growth needs to be diversified, both sectorally and geographically, to ensure long-term sustainability.

• The more advantaged sections of people – in terms of wealth, education, urban locations, etc., -- get a better access to and avail of advantages and benefits from growth.

• Fast growth also accelerates rural-urban migration in search of employment and ancillary occupations, decreasing the available labour for important agricultural activities in rural areas.

• Younger people tend to migrate leaving rural and remote areas with ageing populations with reduced productivity.

• While, as already witnessed between 1993 and 2004, growth has a significant impact on reducing poverty levels in the country as a whole, such levels continue to remain high in remote areas. This would continue and accentuate if growth is not managed properly.

• Any neglect of life-sustaining agricultural sector will have serious consequences for food security and nutrition of the people at large.

• These imbalances and distortions need to be corrected by diverting and directing growth to unserved interior areas as well.

2.18     Conscious of these and other attendant factors of changes which are necessary corollaries of economic growth, RGC will continue to keep a constant vigil as development progresses and will use pro-active policy instruments and incentives to diversify growth sectorally and geographically and will provide safety nets to ensure that already marginalized people are not further marginalized and rendered more vulnerable. The strategies envisaged for various sectors as mentioned in the following paragraphs and in Chapter III address these matters.

2.19     Religious and cultural issues are the bedrock for building, strengthening, and maintaining the very vital "social capital" that no amount of economic development can alone create or sustain. GC continues to accord high priority to preserving and enhancing the country's rich and unique cultural heritage both to preserve and develop the social fabric and also to attract "cultural tourists" to observe and admire Cambodia's past and present culture.

Rectangle 1: Enhancement of Agricultural Sector 

2.20     The four sides of this rectangle are: (a) improving and diversifying agricultural sector (including nutrition and rural development); (b) land reform and mine clearance; (c) fisheries reform; and (d) forestry reform (including environment protection).  Continued RGC’s efforts in mitigating anarchic deeds depleting natural resources and environment and in rehabilitating and enhancing irrigation potentials and favourable weather conditions have marked a significant progress in this sector in 2006.

2.21     In 2006, improved irrigation system, good weather conditions, use of improved seeds, and improved farm practices contributed to directly enhance crop production and indirectly to ensure food security, enhancing productivity and diversification. Improved rural transportation infrastructure has enabled more market access for agricultural products. The above-cited favourable conditions and increased applications of system of rice intensification (SRI) and organic farming methods have resulted in an increase in rice production, increasing by nearly 5% in farming period 2006-2007 compared to 2005-2006 (5.98 million tons in 2005 and 6.26 million tons in 2006). Other crops in particular cash crops production experienced a slight increase in 2006. Rehabilitating and enhancing irrigation potentials will continue to remain a high priority for the development of crop cultivation in Cambodia. A comprehensive Strategy for the Agricultural Sector as a whole is still to be developed. This Strategy will be finalised during the first quarter of 2007. The priority strategies in this sector for the plan period, 2006-2010, has been appropriately pursued.

2.22     Strengthening and enlarging animal production and animal husbandry and veterinary services will continue develop at a slow rate in the couples of years based on the recent development trend. This sub sector will remain crucial to the enhancement of agricultural sector as a whole.

2.23     In 2006, efforts have been actively pursued in managing fishery sector under the framework of fishery reform with considerable achievements including preparation and amendment of regulations to enforce the law on the establishment of fishery communities, development of aquaculture, researches, conservation, crackdown on illegal fishing, and extension, etc. To ensure sustainable access to fisheries resources for the poor will remain a major goal of the RGC in poverty reduction. In this regard, the five NSDP priorities articulated for this sub sector will have to be pursued in an efficient manner.

2.24     Overall food security situation has improved significantly in the last few years. The CDHS found reduction in malnutrition in children under 5 years from 45% in 2000 to 37% in 2005 but progress has been uneven among provinces. Concerted and targeted efforts in various sectors will 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". The progress so far made in increasing and ensuring food availability, improving food accessibility, and ensuring optimal food use and utilisation through health and nutrition education, micronutrient supplementation and fortification programmes (iron, Vitamin A), further enforcement of universal iodisation and food safety standards, etc, would be sustained for achieving the above-mentioned goal. In 2006, a “National Programme on Household Food Security and Poverty Reduction” was implemented in 180 target villages.

2.25     Efforts made in pursing forestry reform have significantly contributed to maintain the forest coverage in the last few years. The forest coverage has been estimated to be around 59% in 2006. Continued efforts in sustainable forest protection and management as well as in reforestation have also contributed to maintain the forest coverage up to 60% of the total land areas of the country in 2015 as targeted in CMDG.

2.26     Significant progress has been made in environmental protection and conservation. In 2006, three eco-tourism destinations have been established and two more destinations are being developed. In addition, more fishery communities in multi-purpose use areas and Tonlé Sap Lake and protected area communities have been set up and are contributing to drastic reduction in earth-filling of natural bodies of water and prevention illegal land encroachments and forest depletion. In addition to the land areas of 723 hectares taken back in 2005, RGC took back many illegally-occupied lands covering 2,455 hectares in protected areas in 2006. Till 2006, 77 protected area communities have been established and among those 8 communities were formed in 2006. The boundaries of 16 protected areas have been marked till 2006 and out of them 2 were done in 2006, and the official mapping of these protected areas has been conducted. However, environmental protection and the natural resource management continue to face constraints in regard to institutional and legal framework in particular the weak coordination among concerned agencies and authorities. The management of factory solid and liquid wastes has been improved contributing to reduction in their environmental impact.

2.27     Land reforms will continue to receive high priority for poverty reduction and socio-economic development. Accent will be on providing 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. Major efforts in attaining this priority and in overcoming these challenges are:

• The required policy and legal framework for effective implementation of the Land Law has been developed and approved, ranging from RGC’s Sub Decree to inter-ministerial Prakas, viz. Sub Decree on State Land Management; Prakas on Identification, Mapping, Classification of State Land; Guiding Circular on Measures to Tackle Illegal Land Occupancy; and the Inter-Ministerial Prakas on (a) Strengthening of Cadastral Commission, (b) The Mechanism for Agricultural Dissemination Service Delivery for Social-Land-Concession Using Farmers; etc. Besides, the draft Policy and Sub-Decree on Registration of Indigenous People’s Communities and the draft Policy on Land Evaluation System have been developed and discussed. In addition, an Authority for Land Dispute Resolution has been established in order to promote the efforts in resolving land conflicts.

• Continued efforts have been made in improving and implementing land registration procedures for systematic titling and sporadic titling. In 2006, 280,207 systematic and 11,754 sporadic titles have been respectively issued through registration procedure for systematic and for sporadic titling. To promote equal access and control over economic assets for both spouses, issue of joint land titles is being pursued.

• The land dispute resolution mechanism through the Cadastral Commission resolved 1,246 land dispute cases involving 6,641 households and land area of 2,394 hectares.

• Through the implementation of policy on in-place development and the distribution of mine-cleared land areas including land areas re-taken from illegal occupancy, the total land areas of 4,505.22 hectares have been distributed to 29,718 landless households for their legitimate land property. Based on the policy and sub-degree No. 19 on Social Land Concession, a pilot project being implemented in Memut and Kratie Districts by the inter-ministerial working group has measured and is being proceeding with the works on explicitly mapping, classifying and registering the private state land with the total areas of 6,317 hectares. 

• Transparency and accountability in the provision of services in land and construction domain, including land valuation system, have been improved.  

2.28     Continued efforts in de-mining operations have contributed to improve social and economic conditions of poor farming households in remote areas and to promote rural development. The 2006 De-mining and UXO de-fusing or destruction operations has increased mine-free land areas from 30,263 hectares (NSDP estimated figure: 32.974 hectares) in 2005 to 35,436 hectares in 2006. The number of human casualties has decreased by 50%, i.e., from 2005 actual figure of 875 (NSDP-estimated figure: 797) to 440 in 2006. The land areas rendered mine-free have been converted for social and economic purposes such as cropping areas, residential areas, and different social and economic infrastructures.

Table 2.2: Targets set for 2010 for the Agriculture Sector

2.29     Rural Development¹⁰, as a vital ingredient for enhancement of agriculture and poverty reduction, is cross-sectoral and also a priority activity for budget allocations and disbursement. It was thus selected for 2007 as a priority sector among other 6 priority sectors of the RGC under the pilot of the Public Financial Reform. Provision and enhancement of rural infrastructure, enhancement of health and sanitation in rural areas, and development of rural economy are the main activities in this sector and will continue to remain as the priorities and challenges ahead.

2.30     Rural infrastructure: In 2006, 92 new roads with the length of 264 km were constructed; 44 roads of 707 km were repaired; and 118 roads of 822 km were maintained. 70 small bridges and 160 culverts were built. In addition, 17 new school buildings with 72 class rooms and 3 community markets (2 in Kampong Thom and 1 in Phnom Penh) were established. To provide safer drinking water, well waters from 1,840 wells were tested. 3,500 family toilets and 22 public latrines were also provided. 

2.31     Health and sanitation in rural areas: In 2006, safe drinking water was additionally supplied to 71 districts in 23 provinces/municipalities. 1344 of all types of water supply wells were constructed and 610 of all types of wells were repaired. For this purpose, rural communities in water scarce areas were also provided with 18 ponds.

2.32     Development of rural economy: Low-interest-rate micro-credits of 5,214 million riels and 2,000 US dollars were given to rural people. Small-scale-business credits of 8.2 million riels were also provided to develop small rural businesses. In addition, rice and animal banks were operational to help poor people. Small scale irrigation systems were also constructed to supply water for agriculture. A new dam of 1,680m, 21 canals of 39,510m was constructed and 4 water gates were built. 26 canals with the length of 39,510m were repaired.

Table 2.3: 2010 Targets for Rural Development

Rectangle 2: Rehabilitation and Construction of Physical Infrastructure

2.33     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. The improvements achieved in these four areas have impacted positively on other social and economic sectors like education, health, tourism, trade, rural development as well as in integration into the region and the world. 

2.34     The major developments in physical infrastructure (including transport infrastructure and urban water supply) in 2006 were:

• The total length of paved primary and secondary roads is 2,732 km, increasing from 2,100 km in 2005, making the year 2006 as first to witness opening of the largest number of road and bridge construction sites.

• A Traffic Law is in place. The formulation of an adequate and efficient legal system for the transport sector and enforcement continue to remain a priority.

• Road traffic safety measures have been strengthened through (a) making the General Secretariat of the National Committee of Road Traffic Safety functional, (b) the production of TV spots on road traffic safety, and (c) the publication of road-traffic-safely-related documents.

• Road transport remains dominant in the transport sector.

• Railway transport accounted for only 20% of passengers (persons/km) and 10% of goods (tons/km) but plans are underway to make this infrastructure more useful and productive.

• Inland waterway transport is minimal. Waterway transport accounted for only 15% of passengers (persons/km) and 20% of goods (tons/km), though the total goods volume handled at the two international ports was 2.6 million tons in 2006, increasing by 15% compared to that in 2005. Dredging of all major waterways, particularly Mekong and Tonlé Sap rivers, has continued to facilitate river transport and will remain the immediate priority. Higher freight rates and inadequate work efficiency are considerable challenges in waterway transport.

• Upgradation of the three international airports has boosted further development of tourism sector, which contributes to bring about socio-economic progress through its multiplier effects. Eight domestic airports were repaired and maintained, especially their major parts such as runway, parking, and marking airport boundary according to the annual plan. Two more foreign airlines started flights to Cambodia in 2006 and international flights increased by 13% compared to 2005. Human resource development in civil aviation skills will remain a priority for the improvement in this sector in the years ahead.

• Efforts have been made in expanding the capacity of water supply in urban areas. In 2006, clean water producing capacity of Water Supply Authority in Sihanoukville and in Siem Reap town has been increased to 8,000 cubic metres per day while the capacity of Water Supply Authority of Battambang, Pausat, Kampong Tom, Kampong Cham, Kampot, and Svay Rieng provinces have been also upgraded, ranging from 2,500 to 8,000 cubic metres per day.    

2.35     Concerted efforts and investments in water resource management and irrigation in 2006 resulted in significant achievements as follows:

• Many of the existing irrigation and drainage systems particularly in high poverty incidence areas and along the border areas have been rehabilitated and reconstructed, with irrigating capacity for 89,211 hectares (75,101 hectares for wet-season rice cultivation and 14,110 hectares dry-season rice cultivation).

• Surface water storage capacity has been expanded and water harvesting technologies have been promoted.

• Measures on flood and drought mitigation and management have been developed and applied.

• Farmer Water User Communities with increasing membership and participation of women have been strengthened and expanded.

• Nationwide hydro-meteorological observing and monitoring systems to be able to provide to the public high quality, effective and real-time hydro-meteorological forecasts have been improved and installed. Three water-level measuring boards have been installed in Prey Veng, Kampong Cham and Kandal provinces; two meteorological observing and monitoring stations have been established in Rattanakiri and Mundulkiri; and two rain-water measuring stations have been installed.

2.36        The major developments in energy sector and electricity and in oil and gas in 2006 were:

• Continued efforts in pursuing the NSDP medium term strategy for energy sector and electricity have improved the country’s electrification situation especially at the rural areas. Electricity generated increased by 20% in 2006, i.e., increasing from 894.52 Gwh (the actual figure) in 2005 to 1,073 .28 Gwh in 2006. Electricity imported from Thailand and Vietnam has also increased by around 20% and around 60% respectively (from 56.83 Gwh and 25.40 Gwh in 2005 to 68.24 Gwh and 40.58 Gwh in 2006 respectively). 

• Offshore oil and gas exploration is progressing well and may start yielding in the not too distant future. Plans to use this energy resource and potential revenues coming from these sources in an optimal manner to benefit Cambodia and its citizens in the immediate and long term are being carefully studied and evaluated.

2.37     The major developments in information and communication technology in 2006 are:

• The telecommunications network has been expanded with increase in the number of telephone users (both mobile and fixed phone) to 1,179,000 or 7.98 per 100 people compared to 882,000 or 6.10 per 100 people in 2005. The expansion has occurred especially in rural areas with more access to e-mail and internet in all 24 provinces/municipalities.

• The coverage of and efficiency and quality of government mass media: Radio, TV and press agency have been expanded and improved.  About 70% of Cambodian population are able to receive news, education, and entertainment through the existing mass media, both government and private.

• More private investors have joined this sector and have substantially contributed to its development.

Rectangle 3: Private Sector Development and Employment Generation

2.38     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. The progress so far made towards achieving these priorities has significantly contributed to the recent developments in other sectors and to the enhancement of socio-economic conditions of rural population especially the poor.

2.39     The major development in strengthening the private sector and attracting investments in 2006 are:

• The Government-Private Sector Forum has continued to hold six monthly meetings. This and the Steering Committed and various sub-committees have provided the important venue for meaningful cooperation and understanding between the RGC and the private sector. An additional working group for improving employer-employees relations has been set up. Also, the management of mineral ore resources exploitation and the strengthening and enhancing trade activities have been added as priority areas for consideration.

• To enhance export-led, pro-poor growth through diversification, private sector investment in some specific, priority sectors has been encouraged, facilitated and provided with government support. Labour-intensive industries and export-oriented processing and manufacturing, tourism and related activities, and human resource development have been so far the main targets of private sector investment.

• Trade has become a major source for economic growth, an important factor for macroeconomic stability, and a significant contribution to poverty reduction. Export of garments increased by 12,709 billions Riels (over US$ 3 billions) in 2006. 1.5 million tons of rice was exported in 2006, doubling the level of 2005. However, exports of other Cambodian products still encounter many challenges. To address these issues, various initiatives and reform measures have been introduced to:

• 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.

2.40     The further developments of SMEs have contributed to benefiting rural communities in processing and adding value to products, as well as creating employment. These developments have also created an important link with the development of trade sector, as well as with larger enterprises.

2.41     Employment creation and better working conditions is a long-term goal of RGC aiming at enhancing the living standards of the population and ultimately alleviating poverty and accelerating economic growth. RGC has played a crucial role in creating job opportunity for all Cambodians especially the poor. With RGC’s assistance, 39,075 Cambodians have secured jobs in- and outside the country in 2006 (35,439 domestic; 3,636 in other countries) compared to the 2005 figure of 22,830 (20,550 domestic; 2,278 in other countries). Technical vocational education and training networks have been established to serve both men and women equitably, especially those who are poor, disabled and vulnerable groups and to respond to labour market needs. In 2006, 10,686 students graduated from public technical vocational education and training institutions (not including the figures of students trained at NGO and private training centres), increasing from the 2005 figure of 9,073 students. A survey on gender disparities in vocational training was conducted in many provinces and municipalities and gender mainstreaming in the curriculum of technical and vocational training has started. Safe, proper and hygienic workplace conditions and fair and just contractual terms for the labour force,  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, have been constantly addressed and ensured. Efforts in reducing the proportion of child labour for dangerous jobs have been carried out through various projects/programmes and policy measures. 16,000 children have been provided with informal education and vocational training. A five-year plan on the elimination of the severest form of child labour, 2006-2012 and other regulations pertaining to child labour and labour-related issues have been formulated and drafted.

2.42     Tourism: 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. Tourism has been growing at an exponential rate in the recent years. RGC’s continued efforts in implementing the tourism policies based on the basic principles articulated in the NSDP (the implementation of an open sky policy, strengthening intra-regional tourism, strengthening capacity to tackle any form of tourism-related criminal activities) and in improving physical infrastructure (roads, airports, ports) as well as providing a climate of peace and law and order have resulted in the remarkable progress of this sector. Cambodia received 1,700,041 international visitors in 2006, an increase of 19.59% over the 2005 figure, contributing an estimated foreign exchange earning of US$ 1,049 million and to generation of 250,000 jobs.

2.43     Among the challenges ahead are: the further improvement of physical infrastructure connecting to major tourist destinations; strengthening promotion measures and legal framework for handling tourist services; attracting tourists to more and diverse destinations, including eco-tourism, since it is largely confined to Siem Reap now (the recent opening of an upgraded Sihanoukville airport is a step in this direction); and also better addressing the issue of spreading the benefit of tourism spending to local companies and providers of goods and services, instead of bulk of the revenue being repatriated or used to purchase goods from abroad.

2.44     Social Safety Nets: Clearly targeted social sector interventions are critical to provide safety nets to the most vulnerable. The major developments in 2006 are:

• The number of homeless has been reduced by 1400. Appropriate measures have been taken to mitigate the misery and the influx of homeless into urban centres. Along with establishment of centres for victims of trafficking, non-discriminatory rehabilitation and health care education services have been provided to workers and victims of sexual trafficking.

• 1,985 children in conflict with the law and drug-addicted children, 1,238 drug-addicted people, and 693 homeless and street children have been assembled, re-integrated in the communities and provided with health and moral education services and vocational training.  Cambodia has become a country that follows The Hague Convention for Inter-Country Child Adoption.

• The draft law on Amputees’ Rights has been sent to the National Assembly for approval.

• Social insurance of the retired government employees has been set up and continuously improved in accordance with national economic development through government sub-decree. A government sub-decree on National Social Security Fund for government employees is being prepared as part of enhancing the well being of retired government employees.    

Rectangle 4: Capacity Building and Human Resource Development

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

2.46     Education: Education is a necessary and critical element for human development and poverty reduction. Strategies and priorities to address challenges in education sector are explicitly articulated in the Education Strategic Plan (ESP), 2006-2010.  Improved state of education sector in the school year 2005-2006 has revealed the RGC’s efforts in pursuing the priorities of education reform programme as articulated in ESP 2006-2010 and Education Sector Support Programme (ESSP), 2006-2010 with the aim of achieving the National Plan for Education for All, 2003-2015. Significant progress has been achieved in the recent past in the realisation of the major priorities of ESP 2006-2010 especially in increases in number of primary and lower secondary schools, in enrolment level in lower secondary education (enabling the completion of basic education up to standard 9), and in adult literacy (15-24). Nevertheless, it is recognised that there are still gaps relating to the availability of all the educational facilities for providing education services to children from the very poor households and households in remote areas.    Table 2.4 shows the latest data of this sector.

Table 2.4: Education Sector: Key Goals and Targets

2.47     The major variations in 2006 are:

• The number of primary and lower secondary schools increased from 6,180 in school year 2004-2005 to 6,277 in school year 2005-2006 and from 800 to 911 for the same period of time respectively.

• To reduce gaps in accessibility to education services for children from the very poor households and households in remote areas, more primary schools were built in remote areas. In school year 2005-2006, there were 513 such schools, with an increase of 195 schools against the 2000 number of 318; the net enrolment rate for remote areas increased from 82.5% in 2005 to 83.7 in 2006

• Equitable access to and the quality of public education services in urban and rural areas had been promoted for boys and girls.

• Lower secondary education has achieved a remarkable success, especially an increase in number of schools and net enrolment rate (see Cambodia at a Glance and Table 2.4).

• There was an increase in adult literacy rate (15-24), rising from 83.4% in 2005 to 84.7% in 2006.

• The transition rate from lower to upper secondary schools was 67.4%, higher than the targeted rate of 64.0%; in particular the rate for girls was 68.3%, higher than the targeted rate of 66.0%. 

• The net enrolment rate for primary schools (by sex and areas) and survival rates for grades 1-6 and 1-9 have declined. However, if there is a comparison between the school years 2004-2005 and 2005-2006, the gross enrolment rate increased from 119.7% to 124%. This has revealed that more children have obtained education, but the majority of them are over-school-aged children. This increasing trend was attributable to (1) more over-school-aged children attending grade 1 (the observation over the last five years has shown that this phenomenon has experienced a high increasing trend ranging from 30% to 60%) and (2) high level of repetition resulting in an increase in over-school-aged children.

• The transition rate from primary to lower secondary schools was 80.6%, lower than the target of 87.0%; in particular the rate for girls was 78.7%, lower than the target of 85.0%.

• To pursue a long-term strategy in this sector, continued investments and efforts have taken place for progress in tertiary and vocational education. Equity for admission to higher education has been improved through scholarship award scheme for outstanding students, poor students, students from remote areas, and female students. In 2006, 4 buildings of dormitories with the accommodating capacity of 500 students were established for poor students, in particular female students. However, the mechanism for managing and evaluating the quality of tertiary and vocational education has not yet been pursued, which requires further efforts grapple with this challenge.

• A revised National Curriculum and Learning Standards were officially approved in 2006. Nation-wide training and refresher courses on this new approach for basic education teachers have been introduced. Moreover, the RGC has focused on a national School Assessment process and strengthened the ability to evaluate student academic performance with the aim of providing quality education to ensure a better educated and trained work-force.

2.48     The goals and priorities set for the education sector in the NSDP continue to remain valid and will be vigorously pursued through the ESP, 2006-2010. As a priority sector under PFM, allocations and utilisation from the national budget have increased both in absolute and relative terms.

2.49     Health:  The 2005 Cambodia Demographic and Health Survey (CDHS) was nationally representative study conducted according to rigorous international standards. Its purpose was to provide updated and reliable data on fertility, family planning, infant and child mortality, maternal and child health, nutrition, malaria, knowledge of HIV/AIDS, prevalence of HIV, women’s status and domestic violence. It was also the first survey in Cambodia to provide population-based prevalence estimates for HIV. Its findings, preliminarily released from later half of 2006, have updated and/or changed the 2005 baseline data for important health indicators assumed in preparing the NSDP. Table 2.5 below presents the latest data:

Table 2.5: Health Sector: Priority Goals and Targets

Prevalence of smear positive TB, per 100,000 population=269 per 100,000 population (source: National TB Prevalence Survey in Cambodia 2002)

2.50     CDHS 2005 notes that, while there are clear variations between urban and remote or rural areas, the gross national averages indicate that:

• There was a “remarkable decline” in child mortality, with infant mortality dropping down by 30% since 2000.

• Two-thirds of children aged 12-23 months have received all the basic recommended vaccinations.

• 66% of women received antenatal care compared to only 38% in 2000.

• 44% of births were attended by trained birth attendants, an increase from 33% in 2000.

• HIV prevalence at only 0.6% is about 1/3rd of earlier estimates for 2005, placing Cambodia among the few countries in the globe that achieved goals in 2005. 

• The maternal mortality ratio has experienced no significant increase compared to the CDHS 2000 figures.

2.51     Among other important developments during 2006 were: The Health Sector Strategic Plan (HSP 2003-2007) is being implemented in close cooperation with all EDPs; the implementation of Minimum Package of Activities (MPA) is progressing well; the number of health centres providing full MPA increased to 439 in 2006; the number of referral hospitals with Complementary Package of Activities increased and the Equity Fund for poor patients are now being provided in 25 districts, up from 17 in 2004; the malaria cases treated at public health facilities have declined form 7.3 per thousand in 2005 to 5.1 in 2006; budget allocations and disbursement for the health sector have registered growth and stability; about 130 NGOs are involved in supporting the health sector, majority of them operating in remote areas.

2.52     RGC attaches the greatest importance to promoting good health and nutrition and prevention, timely detection and treatment of diseases among the population as a means of human development, so essential for any other sustainable progress. The goals and priorities set for the health sector in the NSDP continue to remain valid and will be vigorously pursued through the HSP, 2003-2007. Allocations from the national budget, both in absolute and relative terms, will continue to increase under the PFM.

2.53     HIV/AIDS: Apart from showing significantly lower level of infection than originally estimated (decreasing to 0.6% from earlier estimates of 1.9% in the age group 15-49), the CDHS 2005 also confirms that RGC’s advocacy, educational and promotional programmes have yielded very encouraging results., e.g., HIV/AIDs awareness levels in the population are very high and more than 80% of women and men of age 15-49 know the three major methods of preventing HIV infection.  The well-integrated programmes for HIV/AIDs awareness creation, prevention, testing, advocacy and support services and provision of supplies involving all stakeholders in a highly coordinated manner will continue.

2.54     Gender equity:  Gender imbalances and proactive promotion of women’s rights and equal place in all spheres of development are foremost in the agenda for progress in Cambodia through pursuit and implementation of the Strategic Plan for Women, called Neary Rattanak which embraces all sectors.            

2.55     In 2006, vigorous efforts were made to promote gender mainstreaming in the entire spectrum of Cambodian society, including in national policies and programmes, sectoral plans and community development planning and budgeting. These and other efforts for enhancing the rights and role of women in Cambodia will continue to be pursued earnestly. The national capacity to make analysis on gender equity is still limited. This requires firm commitment and close collaboration among all stakeholders.  Some important developments were:

• Up to date, five ministries (MOEYS, MAFF, MRD, MOH, and MOINF) have developed their Gender Mainstreaming Action Plans, four of which (MOEYS, MAFF, MRD, MOH) have commenced their plan implementation.

• Efforts have continued for increasing income-earning opportunities for women through increasing job-opportunities and support for SMEs by women.

• Many Centres for Women in Development were established in various provinces.

• An action plan has been prepared and is beginning to be implemented in pursuance of the law on preventing domestic violence and protecting the victims passed in 2005.

• A draft law for preventing trafficking in women and girls is under consideration. This law will be made consistent with the UN Protocol and the national penal code.

2.56     RGC’s pro-active and well-orchestrated Population Policy involves actions in many sectors such as health, education, environment, macro economy, gender, emigrations, youth, aging people, and others. The RGC is developing the capacity of human resources for integrating population-related issues in the development planning processes at all levels for planners and policy makers. CDHS 2005 has provided updated data showing positive results of implementation of this policy. Remarkable developments are as follow:

• Almost all women are familiar with some methods of contraception; and, 40% of married women were currently using a contraceptive method and 27.2% of married women were using modern birth spacing methods.

• women aged 15-49 begin having children at a median age of 22; teenage childbearing is quite rare, only about 8% of women of age 15-19 had begun childbearing; the median age of first marriage has been at 21 for women; the intervals between births is relatively long in Cambodia.

• Total  Fertility Rate has decreased from 4.0 live births per woman in 2000 to 3.4 live births per woman in 2005. The average number of wanted children per woman is 3.3.

• Age structure of Cambodian population has changed compared to that in 2000. The CDHS figures show that the proportions of population aged 15-64, under 15, and 65 and above are 57%, 39%, and 5% respectively.     

• The average family size has decreased from 5.4 in 2000 to 5 in 2005.  

• Cambodia has a large dependent children and adolescent population. However, with declining fertility the proportion of population aged under 15 has started to decline.

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